What Happened?

Shares of department store chain Dillard’s (NYSE: DDS) jumped 16% in the afternoon session after it reported stronger-than-expected third-quarter financial results, beating both sales and profit forecasts. 

The department store operator announced earnings per share of $8.31, easily surpassing analyst estimates of $6.17. Quarterly sales grew 2.7% year on year to $1.49 billion, which also beat Wall Street's expectations. The company also noted that comparable store sales increased by 3%. Furthermore, Dillard's operating margin improved significantly, rising to 14.7% from 11.3% in the same period a year earlier, highlighting greater efficiency. The positive results signaled solid momentum for the retailer ahead of the holiday shopping season.

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What Is The Market Telling Us

Dillard’s shares are quite volatile and have had 16 moves greater than 5% over the last year. But moves this big are rare even for Dillard's and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was about 2 months ago when the stock gained 5.5% on the news that its wholly-owned subsidiary, CDI Contractors, named former Arkansas Secretary of Commerce Mike Preston as its next CEO. 

The general contractor and construction management company announced that Mark Beach, its current president and CEO, planned to retire. Dillard's President Alex Dillard commented on the change, stating, “We believe we have assembled a great leadership team at CDI with Mike, Jonathan and Matt.” He also noted that Preston was well known across the state as a leader in economic development. The positive statement from Dillard's leadership suggested confidence in the appointment and the future direction of the subsidiary, which investors viewed favorably.

Dillard's is up 52.7% since the beginning of the year, and at $688.29 per share, has set a new 52-week high. Investors who bought $1,000 worth of Dillard’s shares 5 years ago would now be looking at an investment worth $14,454.

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