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Fashionably high returns

Investment from 5,700 USD

Expires: 15/02/2019

Expected
yearly returns
135%

Dillard’s is one of the biggest department store companies in the US. It sells clothing and cosmetics, as well as household items both of their own brand and from other manufacturers. The company operates through a large number of stores (293 outlets) across 29 states. The highest concentration of Dillard’s stores can be found in the American Southwest, Southeast, and Midwest. The company was founded in 1938 in Little Rock, Arkansas, where it still keeps its headquarters. The following companies are among Dillard’s largest shareholders: BlackRock (8.05%), Morgan Stanley (2.84%), JPMorgan Chase & Co (2.50%), Nomura (2.40%), Goldman Sachs Group (2.05%), Bank of America Corporation (0.81%).

Growth factors:

  • Active advertising campaigns will lead to increased sales (the company invests a significant amount of funds in advertising) and push up Dillard’s share price.
  • Successful implementation of a cost management strategy. In particular, Dillard’s now owns most of its trade area (from a total trade area of 15 million square metres, Dillard’s owns 13.4 million), which saves the company a lot of money on rent and increases their competitiveness.
  • Dillard’s shares are trading with the following discounts compared to its peers:
    - 53% for P/BV;
    - 21% for EV/Revenue;
    - 17% for EV/EBITDA.
  • Despite a significant amount of spending on development, the company remains profitable; its return on equity is 7.25%, its return on assets is 2.9%, and the return on invested capital is 6.99%.
  • The company’s financial sustainability is not under threat. The ratio of total debt to assets is around 19.77%, the ratio of total debt to EBITDA is a very low 1.67, while the ratio of net debt to EBIDTA is 1.43.

Investment period ends:
15/02/2019

Expected yield is calculated according to 90% capital protection and the price of the base asset at expiry, equal to 86 USD.

Technical Analysis:

Dillard’s share price has broken up the 50-, 100-, and 200-day moving averages and has left the Ichimoku indicator cloud upwards. In addition to this, the price has broken up out of the downwards channel and is now at the beginning of a long-term upwards trend. Significant technical levels: 142.98; 125.33; 112.69; 100.75; 89.73; 76.26; 68.31; 60.65; 46.88; 38.61.

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