DDS - Dillard's

[Stuart D]

DDS just dropped below $60 again.

[Gregmal]

Earnings tomorrow so that should be the mover/actionable event. Wouldn't touch it before then.

[Gregmal]

After some review of the results and subsequent market action, Ive taken a small trading position in here with the intent to load up if we see sub $50.

 

https://seekingalpha.com/pr/17789121-dillard-s-inc-reports-fourth-quarter-and-fiscal-year-results

 

Share Repurchase

 

During the 13 weeks ended February 1, 2020, the Company purchased $36.7 million (approximately 0.5 million shares) of Class A Common Stock under its $500 million share repurchase program. During the 52 weeks ended February 1, 2020, the Company purchased $138.3 million (approximately 2.2 million shares). Subsequent to February 1, 2020, the Company has purchased $52.8 million (0.8 million shares) of Class A Common Stock. Total shares outstanding (Class A and Class B Common Stock) at February 24, 2020 and February 2, 2019 were $23.4 million and 26.3 million, respectively. As of February 24, 2020, authorization of $215.9 million remained under the program.

 

 

Another squeeze brewing.

 

EDIT: and oh yea, in case anyone gives a shit(I dont) theyre actually opening a couple new stores too, so business cant be that bad.

[griezeman23]

After some review of the results and subsequent market action, Ive taken a small trading position in here with the intent to load up if we see sub $50.

 

https://seekingalpha.com/pr/17789121-dillard-s-inc-reports-fourth-quarter-and-fiscal-year-results

 

Share Repurchase

 

During the 13 weeks ended February 1, 2020, the Company purchased $36.7 million (approximately 0.5 million shares) of Class A Common Stock under its $500 million share repurchase program. During the 52 weeks ended February 1, 2020, the Company purchased $138.3 million (approximately 2.2 million shares). Subsequent to February 1, 2020, the Company has purchased $52.8 million (0.8 million shares) of Class A Common Stock. Total shares outstanding (Class A and Class B Common Stock) at February 24, 2020 and February 2, 2019 were $23.4 million and 26.3 million, respectively. As of February 24, 2020, authorization of $215.9 million remained under the program.

 

 

Another squeeze brewing.

 

EDIT: and oh yea, in case anyone gives a shit(I dont) theyre actually opening a couple new stores too, so business cant be that bad.

 

Any guess on true float? My very rough math (like 5 minutes worth of work) is that the shares sold short roughly match the true float available while BB says its roughly 70%.

[OracleofCarolina]

https://www.sec.gov/Archives/edgar/data/28917/000091957420006291/d8629158_13-g.htm

 

Ted buying Dillard’s.......hmmmmm...

[Gregmal]

So was Gregmal, all week. Over 100% of float is short. Borrow has gone up 5 fold in short period of time, and where shares are available, is over 100%.

 

Company has bought back, by my estimates, over 1M shares since July.

[MrB]

Gonna be a fun day. 18.3m-4m-7.3m-4.5m- a million here and a million there...and before you know it you have a real short squeeze on 6.5m

[MrB]

Yup...it's a fun day!

https://www.cnbc.com/quotes/?symbol=DDS

[Gregmal]

Yea, whats nuts is there was plenty of stock to buy between 43-45 AH on Friday.

[MrB]

1.5m volume already

[manuelbean]

I guys, does anyone have a clue as to if this squeeze can continue? I was reading this post https://moxreports.com/dillards-infinity-squeeze/ that was previously posted here and it seems that if shorts can't find stocks to cover, things can get pretty wild pretty quickly.

 

 

[Gregmal]

I guys, does anyone have a clue as to if this squeeze can continue? I was reading this post https://moxreports.com/dillards-infinity-squeeze/ that was previously posted here and it seems that if shorts can't find stocks to cover, things can get pretty wild pretty quickly.

 

Ive found the best way to trade this over the years has been to watch volume surges and just roll up the option chain while taking dollars off the table. I exited the majority today on the rocket fueled surge to 61. Forced buying created quick spikes, such as what occurred between 9:52 and 10. First Half hour, last half hour, and 2-3 are also usually most active squeeze periods. Theres a lot of pattern recognition necessary when it comes to trading these things, but once you get it down its fairly easy.

[manuelbean]

I wrote this post in the General Ideas section, but I think it got deleted. Maybe the moderator thought this should go in Dillard's topic:

 

I'm trying to model Dillard's financials and I got stuck in the Property Plant & Equipment. I wonder if someone can help me.

 

I've attached an Excel File so you can see what I'm talking about:

 

A- Gross PP&E

B - CAPEX

C - Cash from the sale of PP&E

D  -Gross PP&E (+) capex) (-) cash from the sale of PP&E

E - Difference between D (-) A

 

If one adds last year's Gross PP&E to this year's CAPEX, one should get this year's Gross PP&E, right?

 

Maybe not. If the company has been selling assets, one should also subtract the cash from those sales, right?

 

The thing is, when I do that math, the row "E" should show a "ZERO", but it's far from that. Why does this happen?

 

The only reason I can think of is that each year there are assets that become completely depreciated, thus disappearing from the books entirely.

 

Am I thinking correctly? Am I missing something?

Thank you

Dillards_Modelling.xlsx

[manuelbean]

Hi Wabuffo, are you referring to my first post on the "General Discussion" forum? I can't find it. I thought someone had deleted it. That's why I brought it here.

[wabuffo]

Am I thinking correctly? Am I missing something?

 

The cash from sale of PP&E is at fair market value/salvage value.  The gross book value is its historical cost at acquisition so it is likely not the same value as the sales proceeds.    You are selling depreciated PP&E that you acquired at say, $100, but only getting $30 for it when you sell it because its old PP&E.  Meanwhile you are adding new capex at $100.  The missing component is the accumulated depreciation/mark-to-fair market value (gain or loss vs depreciated BV) on the old PP&E you are getting rid of by selling it that makes up the difference.

 

The missing elements to "Cash from sale of PP&E" to match it to Gross PP&E/Capex is:

 

(A) fair market value cash sale from PP&E + (B) accumulated depreciation on sold PP&E + © loss/(gain) on sale of PPE vs its GAAP BV = (D) gross book value of PPE from sale.   

 

(B) and © are what are causing the difference between (A) from the cash flow statement and (D) what you thought you were using in your formula.

 

I'm sure there's more technical stuff that I'll get corrected on - but that's your short answer.

 

wabuffo

[Xerxes]

Hi Wabuffo, are you referring to my first post on the "General Discussion" forum? I can't find it. I thought someone had deleted it. That's why I brought it here.

 

Manuelbean

 

You had created your thread in Fairfax bucket as oppose to General Topic.

It is still there.

 

On a different note, in case it has not been mentioned I saw on news that either Ted or Todd bought a stake of Dillard personally (not through BRK)

[manuelbean]

thanks Wabuffo, I'll need some time to understand what you wrote.

 

[MrB]

Just a heads up for anyone following this closely.

Two mall REIT bankruptcies announced https://wolfstreet.com/2020/11/02/years-of-brick-and-mortar-meltdown-punctuated-by-pandemic-pushed-two-mall-reits-into-bankruptcy-cbl-pennsylvania-real-estate-investment-trust/

 

Just been digging through their financials to find proxies for Dillard's property values. Turns out 43 properties (5.8m sq ft) of Dillards in CBL malls with a lot of data on the sales per sq ft, rent/sq ft etc and they break it out nicely in terms of Tier 1 - 3 malls. Basically shows that rental income for the malls in which Dillard's sits the avg base rents are in the low $30 range, which will value Dillard's 43 stores at $1.7Bn-$2.4Bn (10%/7% cap rate). In sq ft (5.8m sq ft) this represents 12% of Dillard's 48m sq ft property portfolio. Dillard's EV is $1.7Bn today.

 

Anyway, point is these two bankruptcies might be interesting to some. 

 

 

[Foreign Tuffett]

Just a heads up for anyone following this closely.

Two mall REIT bankruptcies announced https://wolfstreet.com/2020/11/02/years-of-brick-and-mortar-meltdown-punctuated-by-pandemic-pushed-two-mall-reits-into-bankruptcy-cbl-pennsylvania-real-estate-investment-trust/

 

Just been digging through their financials to find proxies for Dillard's property values. Turns out 43 properties (5.8m sq ft) of Dillards in CBL malls with a lot of data on the sales per sq ft, rent/sq ft etc and they break it out nicely in terms of Tier 1 - 3 malls. Basically shows that rental income for the malls in which Dillard's sits the avg base rents are in the low $30 range, which will value Dillard's 43 stores at $1.7Bn-$2.4Bn (10%/7% cap rate). In sq ft (5.8m sq ft) this represents 12% of Dillard's 48m sq ft property portfolio. Dillard's EV is $1.7Bn today.

 

Anyway, point is these two bankruptcies might be interesting to some.

 

If I am understanding your post right, that isn't a meaningful comparison. The low $30 base rent average includes all the inline store space, which pay much more per square foot than the anchor boxes do.

 

Dillard's obviously owns and operates exclusively anchors.

[Gregmal]

I love Dillards, but I wouldn't dare waste time trying to justify it as a true investment. Appreciate it for what it currently is, one of the best trading/event driven stocks in the market.

[MrB]

Just a heads up for anyone following this closely.

Two mall REIT bankruptcies announced https://wolfstreet.com/2020/11/02/years-of-brick-and-mortar-meltdown-punctuated-by-pandemic-pushed-two-mall-reits-into-bankruptcy-cbl-pennsylvania-real-estate-investment-trust/

 

Just been digging through their financials to find proxies for Dillard's property values. Turns out 43 properties (5.8m sq ft) of Dillards in CBL malls with a lot of data on the sales per sq ft, rent/sq ft etc and they break it out nicely in terms of Tier 1 - 3 malls. Basically shows that rental income for the malls in which Dillard's sits the avg base rents are in the low $30 range, which will value Dillard's 43 stores at $1.7Bn-$2.4Bn (10%/7% cap rate). In sq ft (5.8m sq ft) this represents 12% of Dillard's 48m sq ft property portfolio. Dillard's EV is $1.7Bn today.

 

Anyway, point is these two bankruptcies might be interesting to some.

 

If I am understanding your post right, that isn't a meaningful comparison. The low $30 base rent average includes all the inline store space, which pay much more per square foot than the anchor boxes do.

 

Dillard's obviously owns and operates exclusively anchors.

We were kicking that around again just yesterday. Problem with that argument is that valued purely on base rent what the argument implies is that anchor space is worth between 10%-30% of non anchor space, making it by far the least valuable space in a mall. This contradicts the reason an anchor can get away with paying such low rent in the first place. In our view the argument has some legs to it, but it's not as simple as just comparing the rent per sq ft.

 

More problematic is what the $127/sq ft in sales for DDS says about the value of their property portfolio. Here the counter is the skew is significant, but unsurprising; 20% of their properties = 80% of the value.

 

As Gregmal pointed out; event driven idea, but in our view property is the downside protection and any way you cut it, it seems more than sufficient to us.