DDS heads into its August 13 earnings report with short sellers holding unusually firm ground against a stock that has climbed 23% in a single month.
The short side of the trade is meaningful and has barely budged. Short interest runs at 8.2% of the free float — roughly 957,000 shares — and has fallen only 5% over the past month despite the sharp price rally. That persistence at elevated levels underpins an ORTEX short score of 74.5, placing DDS in the top few percent of shorted names universe-wide. Borrow conditions remain accessible rather than stressed: availability is running at around 91% of outstanding short interest, meaning lenders still have room to accommodate new shorts, and the cost to borrow is just 0.68% — low in absolute terms, though it has roughly doubled over the past week. The lending market is tightening, not squeezed.
The price surge and the stubborn short base set up a clear debate heading into the print. Bears have a structural case: gross margin contracted 110 basis points to 37.5% in the most recent quarter, missing consensus, and forward earnings estimates are under pressure — DDS ranks in just the 2nd percentile on 12-month forward EPS growth. JP Morgan carries an Underweight rating with a $449 target, well below the current $646 close, and UBS maintains a Sell with a $465 target. The consensus mean target of $537 implies roughly 17% downside from here. Bulls point to resilient comparable-store sales — up 1% in Q2 — and a share count that has shrunk dramatically through buybacks, helping per-share metrics hold up even as top-line growth stays modest. The family-controlled ownership structure, with the Dillard family collectively holding well over half the shares between Newport Trust and individual family members, keeps the float tight and amplifies moves in either direction.
The peer backdrop sharpens the contrast. KSS fell 8% on the week and M dropped 6.4% — both highly correlated department store names — while DDS gained 4.5%. That divergence is notable. It reflects either genuine relative strength in Dillard's execution, or a squeeze dynamic driven by the elevated short base meeting a thin float, or both.
Thursday's print will test whether the margin recovery bulls need is actually materialising, or whether the department-store headwinds dragging on Kohl's and Macy's are equally present inside Dillard's income statement.
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