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As Macy’s, Kohl’s and J.C. Penney grapple with what success means for a mid-tier department store in the 21st century — fending off activist investors, taking on new owners or announcing new strategies — Southern department store chain Dillard’s quietly plugs along.

The company grabbed 0.4% of market share in the second quarter compared to other department stores, according to research from M Science, though it isn’t immune to the downturn in discretionary spending that several retailers have observed in recent weeks. In its latest quarter, revenue barely budged year over year, store comps were flat and women’s apparel sales were weak. Unlike fellow publicly traded department stores Kohl’s and Macy’s, which both lowered their expectations for 2022, Dillard’s doesn’t provide earnings guidance, though UBS analysts expect its sales, margins and profits to decline in the second half of the year. Still, other analysts see some strength in the 84-year-old regional retailer compared to its peers.

“Our sense is that Dillard’s will see a much softer landing than some other players like Macy’s and Kohl’s,” GlobalData Managing Director Neil Saunders said in emailed comments, noting that Dillard’s customer base is older and wealthier and therefore somewhat less affected by inflation. “Even so, slowdowns in more marginal customer groups and a more cautious mindset among almost all shoppers are starting to catch up with Dillard’s and we believe the company is now entering a softer period of growth.”

All in the family

In the past few years, Macy’s and Kohl’s have tussled with activist investors who pressured them to look into monetizing their real estate, spinning off their e-commerce operations, or, in the case of Kohl’s, shaking up the board and even putting the business up for sale. J.C. Penney, meanwhile, is now owned by two of its landlords after declaring bankruptcy in 2020.

By contrast, at Dillard’s, the founder’s son leads the company, with the help of other family members employed there, and they’re firmly in control of the company’s class B stock and board. Indeed, despite being a public company, Dillard’s in many ways remains a family-run business. CEO William Dillard, who worked at his father’s store as a child, has been in the C-suite since the late 1970s, when he became chief operating officer; he took the helm as chief executive two decades later, according to a 2016 video profile presented by the University of Arkansas Business School. 

“We are one of a very few remaining retailers with the founding family still at the helm and we are super proud of that,” Corporate Spokesperson Julie Johnson Guymon said by email. “They are all very much engaged in the day-to-day operations of Dillard’s and are quite visible throughout the company. The leadership and experience of the Dillard family has seen this company through eight decades of tremendous challenges and extraordinary success. Lately, its been extraordinary success.”

The department store does have its own issues with sometimes messy or “fusty” stores, but its shopkeeping standards are superior to many rival department stores, according to GlobalData’s Saunders. “They are pleasant to shop and customer service is very good,” he said by email. “I think because it is family run they try to keep on top of traditional retail values.”

What Dillard’s has

Macy’s, Kohl’s and J.C. Penney are all working hard to revamp their private labels — an effort to reap the wider margins of owned brands and differentiate their merchandise — with mixed results.

Macy’s and Penney have gone so far as poaching former Target executives to lead those efforts, a nod to the mass merchant’s prowess in the space. But perhaps they should be hiring from Dillard’s. The department store boasts 52 owned brands or exclusive brand partnerships in women’s, men’s, children’s and home; its largest private women’s apparel, footwear and accessories label, Antonio Melani, has its own Instagram page and regularly releases its own designer collaborations and capsule collections. Moreover, strong brands like Pendleton that are difficult to find elsewhere are found at Dillard’s, according to Saunders.

The retailer over a decade ago decided to move upmarket and focus on fashion; last year, its private labels accounted for 23% of its sales, according to Guymon. The retailer works with outside and in-house designers and more recently with social media influencers to develop and market these items.

”We realized that traditional department stores pretty much all looked the same,” Guymon said. “We all carried largely the same brands from the same vendors, which led to fighting on price as the only differentiating factor in the customer’s mind. This, to us, is a race to the bottom where nobody wins. We began to reach out to limited distribution, higher profile brands and to reach out to a customer who is more motivated by fashion than by price. This is our place in the market. We get far more excited about fashion and newness than we do over price. The Dillard’s customer is the same way. To give us even more differentiation, we developed our own, exclusive brands.”





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