Sears Holding Corp. (SHLD)
&
Dillard’s Inc. (DDS)
Competition within the Department Store Industry
April 29, 2008
Managerial Finance
6400:602-801
Om Samtani
Hannah Stone
Matt Quirk
Anne Stith
Executive Summary
The Department Store Industry is facing challenges in what has been characterized as a weak economic environment (). Sears Holding Corp (SHLD) maintains approximately 2,000 Sears and 1,400 Kmart stores in the United States (). In comparison, Dillard’s Inc. (DDS) holds claim to 329 stores, a difference of 3,071 locations nationwide, while remaining a fierce competitor. Consumers desire to remain fashionable by adopting new styles, sporting quality brand names, and benefiting from high-level services from select stores have contributed to SHLD and DDS continued success in the industry.
As indicated by the accompanying analysis, SHLD has higher liquidity ratios, as demonstrated by its cash as a higher percentage of the total assets. which demonstrate its advantage over DDS to meet short-term solvency obligations.
The leverage ratios also favor SHLD, showing its long-term solvency, which is also better when compared to DDS. These ratios include debt financing, EBIT to interest, and debt to equity. The EBIT to interest ratio is influenced by SHLD’s policy to not pay out dividends to its shareholders. This allows them to have a large amount of cash on hand to expand operations. These leverage ratios give the reader an insight into SHLD long-term strategy regarding their intent to capture additional market share.
The total asset turnover for SHLD is much higher than that for DDS, which exhibits its ability to operate mo ...