Watch out for Dillard’s, Inc. (DDS): Macy’s, Inc. (M), Nordstrom, Inc. (JWN)

Recently, departmental stores have been in focus as they released their earnings, with most of the companies topping analyst expectations. Lets take a brief look at the 4Q performance of major departmental store stocks.

Dillard’s, Inc. (NYSE:DDS):

Dillard’s, Inc. (NYSE:DDS) is a relatively smaller player in the departmental stores space with 304 stores, primarily in the Midwest, southwest, and southeast areas of the United States. It has its own branded clothing line and also derives sales from its online platform.  The company suffered dwindling same-store sales for nearly a decade before returning to growth in 2010, and has now reported same-store sales gains for 10 straight quarters.

All three major ratings firms have lifted Dillard’s, Inc. (NYSE:DDS) rating this year on the strength of its operating performance. It reported 4Q12 sales increase of 7%, with Comparable Same Store Sales (SSS) of 3% (marking the Company’s 10th consecutive quarterly comparable sales increase). Positive sales performance and gross margin expansion driven by cost control helped to increase its cash flow, and as a result the company announced a special dividend of $5 per share.

Macy’s, Inc. (NYSE:M)

Dillard’s, Inc. (NYSE:DDS) closest competitor Macy’s, Inc. (NYSE:M), which operates the famous Bloomingdale, has around 40 stores under the names of Macy’s and Bloomingdales, and 7 Bloomingdales Outlet stores, as well as macys.com and bloomingdales.com. It reported strong 4Q12 results, increasing sales by 7.2% with SSS growth of 3.9%. It had a strong 2012 as a result of successful execution of its strategies and 48% surge in its online sales. It also guided for a strong FY13 with EPS of $3.90 to $3.95 and SSS of 3.5% (vs. Analyst expectations of $3.85).

Nordstrom, Inc. (NYSE:JWN)

A slightly more upscale chain, the omnipresent Nordstrom, Inc. (NYSE:JWN) operates 240 stores in 31 states, including 117 full-line stores and 119 Nordstrom Racks. It operates under two segments: Retail, which includes its full priced stores, off-price Nordstrom Rack stores, and its online store nordstrom.com, and Credit, which operates Nordstrom fsb, a federal savings bank, which provides a private label credit card and a debit card.

It reported strong 4Q12 sales of $3.7 billion, up 13% with SSS growth of 6.1%. The company benefitted from revived demand in its designer merchandise after the recent economic recession, and also benefitted from an extra week during the period. However, it provided a weak outlook for FY13, guiding EPS of $3.65 to $3.80 and 4.5% to 6.5% increase in total sales with same-store sales growth of 3.5% to 5.5% (vs. Analysts expectations of EPS $3.97 and revenue growth of 7.1%).