UBS sees significant sales and margin deceleration for Dillard’s

UBS reiterated a Sell rating and $160 price target on Dillard’s (NYSE:) in a note Monday, despite its recent survey data.

Analysts told investors that they believe the company’s EPS will fall at a faster rate than Street expectations.

“In the near-term, we think consumer spending will deteriorate, and this will lead to significant sales and margin deceleration for Dillard’s,” the analysts wrote. “Over the long-term, we think the Street underestimates the pressure on DDS’ earnings from share loss to other channels with a more appealing value proposition.”

UBS forecasts a -22% 5-year EPS CAGR and while its FY23 EPS estimate for DDS is 30% below consensus.

Some of the takeaways from the firm’s Evidence Lab’s 6th annual U.S. Off-Price and Department Stores Retailers Consumer Survey include high prices as the main reason consumers don’t shop at Dillard’s, the company lagging peers in key attributes and the company’s customer age profile shifting.

While the survey highlights some positives and negatives on Dillard’s, the analysts stated that it hadn’t changed their view of the stock.