What do the rich know that you don’t?
Where they shop is helping to grow their investments.
The high-end, luxury department stores are on the rise, with profits growing higher and higher. But not all stores are created equal, and some stand out for good reasons, some for bad.
Standing out for all of the right reasons, Dillard’s, Inc. (NYSE:DDS) reported the highest increase in net income for the most recent quarter of this group, with an impressive 27% improvement year over year.
Revenue remained flat at $1.55 billion for both 2012 and 2013. However, same-store sales improved by 5%, and adjusted net income increased from $111.2 million up to $117.2 million. The company operates a construction business, CDI Contractors, that is included in net sales. Total merchandise sales (which exclude CDI) were also flat at $1.53 billion over the 2012 figure of $1.52 billion.
Dillard’s, Inc. (NYSE:DDS) current valuation ranks it among the leading stores. The company carries $622 million in debt, but overall has a strong balance sheet with $156 million in cash. Dillard’s operated 283 stores and 18 clearance centers as of the end of the quarter.
Saks Inc (NYSE:SKS) may tout a sleek exterior, but financially, things are fairly flat. Revenue for the most recent quarter was $793.2 million, up 5% from $753 million the year before. Net income, before adjustments, was $30.1 million, down from $32.7 million the year previous. Adjusted net income was $20 million. Despite flat net income, same-store sales increased over the year previous. What is more notable is that the 2012 same-store number had also increased 4.8% from 2011.
Just after earnings were announced, the stock jumped more than 20%. Some felt this was because the earnings were strong. However, the earnings are fairly average, even mediocre, compared to the direct competition. The real story was the rumor that the store might merge or be bought out, and that drove the price up. For investors who owned the stock already, things are looking good. But the price is a bit bloated considering Saks Inc (NYSE:SKS)’s most recent earnings, and I wouldn’t recommend jumping in now.
Macy’s, Inc. (NYSE:M) is not to be overlooked. The parent company of high-end retailer Bloomingdale’s does not release earnings for individual store chains, so numbers reflect all brands under the corporate umbrella. And what an impressive umbrella it is! Macy’s, Inc. (NYSE:M) reported first quarter net income earnings of $217 million, up 20% from $181 million the year earlier. Net revenue was up 4% with $6.38 billion compared to $6.14 billion the year previous. Same-store sales followed net revenue and improved 3.8%.
The company recently announced a 25% dividend increase. This was the third dividend increase in two years for the retailer.
Nordstrom, Inc. (NYSE:JWN)‘s net earnings were down 3% to $145 million compared with $149 million for the same quarter last year. Total revenue was $2.7 billion for a nearly 5% increase over last year’s $2.5 billion.
The company blamed the weather for lower than expected sales and low shopper turnout, but that sentiment doesn’t hold up. Lower shopper turnout would be reflected in lower same-store sales but the company actually saw same-store sales increase 2.7%. However, that number is a significantly lower number that the previous year’s same-store increase of 8.5%. The company hopes that a good summer shopping season will turn things back around. However, from an investment point of view, relying on the weather to make a profit is a silly thing to do.