Dillard’s Inc. (DDS) has been doing a commendable job on the back of its ongoing growth initiatives, fashionable and trendy merchandise offerings, healthy balance sheet, shareholder-friendly moves and strong quarterly earnings. Notably, the company has amassed a year-to-date return of 29.4%.

Moreover, this leading fashion apparel, cosmetics and home furnishings retailer reached the 52-week high mark of $126.05 yesterday, eventually closing trade at $125.81.

We applaud Dillard’s continuous efforts to capitalize on growth opportunities in its brick and mortar stores and e-Commerce business that help it retain existing customers as well as attract new ones. On the store front, the company has been gaining from enhanced brand relations, focus on in-trend categories, store remodels and rewarding store personnel. Meanwhile, e-Commerce growth is backed by strategically enhancing merchandise assortments and effective inventory management.

We expect the company’s focus on increasing productivity at existing stores, developing a leading omni-channel platform and enhancing its domestic operations, to support its waning top and bottom lines. Furthermore, the company’s strategy of offering fashion-forward and trendy products along with exceptional customer care service, acts as a catalyst for attracting more customers.

Additionally, the company boasts a strong balance sheet and cash flow position, which provide financial flexibility with respect to shareholder-friendly moves as well as store and online business expansions. The company’s commitment to return value to shareholders is evident from its recently approved share repurchase program to buy back up to $500 million worth of its Class A shares. Alongside, the company also declared a cash dividend of 6 cents a share, to be paid to both its Class A and Class B shareholders on Feb 2, 2015.

Dillard’s sound financial status is also evident from the fact that its net cash flow from operations for the first nine months of fiscal 2014 came in at $209.9 million, compared with $173 million in the prior-year period. Also, it had cash balance of $91.9 million at the third quarter-end.

Coming to its quarterly earnings, the company reported third-quarter fiscal 2014 adjusted earnings of $1.21 per share, marking a year-over-year improvement of nearly 7%. However, this Zacks Rank #4 (Sell) company has been facing issues with its top-line performance, as revenues slipped marginally to $1,499.2 million in the third quarter. Merchandise comparable-store sales were down 1%.

Moreover, slight caution slips in regarding the stock’s future performance as the company reiterated its guidance for fiscal 2014, indicating significant capital expenditures planned for the year.

Other Stocks to Consider

Better-ranked stocks in the broader retail sector include The Kroger Co. (KR), Safeway Inc. (SWY) and Foot Locker Inc. (FL), all carrying a Zacks Rank #2 (Buy).

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