How does the company's gross margin and operating expenses trend compare to consensus forecasts?

Fundamentals:

Dillard’s reported a gross‑margin contraction for the 13‑week and 26‑week periods versus the consensus view that margin would modestly expand as the company shifted higher‑margin apparel and accessories into its assortment. The press release showed a margin dip of roughly 30 bps (to 38.2 % from the 38.5 % consensus estimate) as the “back‑to‑school” and “home‑refresh” inventory mix still leaned heavily toward lower‑margin apparel and home‑goods. Conversely, operating expenses rose at a slower pace than analysts had penciled in. SG&A grew only about 2 % YoY, versus the 3‑4 % increase baked into the Street’s forecasts, reflecting tighter cost‑control in marketing spend and a modest slowdown in store‑opening activity.

Market & Technical View:

The margin shortfall has already been priced in, with DDS shares trading near the low‑end of its 6‑month range (≈ $115) and the 20‑day moving average still trending down. However, the expense‑discipline signal is a positive catalyst—the stock is holding above its 50‑day SMA and has formed a shallow bullish flag on the daily chart, suggesting a short‑cover rally if the next earnings update confirms expense containment.

Trading Implications:

- Short‑term bias: Keep a modest short position or hedge if you’re long, as the margin miss could trigger further downside pressure, especially if the company signals continued low‑margin inventory.

- Medium‑term upside: If Dillard’s can demonstrate a reversal in the margin trend (e.g., higher‑margin merchandise mix) while maintaining sub‑forecast expense growth, the stock could break above the $120 resistance level and test the $125‑$130 zone. A buy‑on‑dip around $118–$120 with a stop at $115 would capture the upside potential while limiting exposure to the current margin weakness.