bond price

DILLARD’S, Inc.

Student Name

Presentation Date

CUSIP: 254063AR1 Current Price: 117.647

Moody’s rating: Baa3 YTM: 4.784%

S&P rating: BBB- Coupon: 7.875

Maturity: January 1, 2023 Duration:

Available: 250,000 Minimum: 5

Company Background

Dillard’s, Inc. ranks among the nation’s largest fashion retailers, with annual sales exceeding $6.6 billion.

The company focuses on delivering style, service and value to its shoppers by offering compelling

apparel, cosmetics, and home selections complemented by exceptional customer care. Dillard’s stores

offer a broad selection of merchandise and feature products from both national and exclusive brand

sources. Dillard’s, Inc., is a regional department store chain operating 277 Dillard’s locations and 20

clearance centers in 29 states and an Internet store at www.dillars.com. The majority of its retail stores

are concentrated in the southwest, southeast, and Midwest. Texas, Florida and Arizona account for

approximately 40% of Dillard’s total stores.

Financial Position

(Discuss financial condition not necessarily same ratios. Support your case of buy or sell here.) The

company has a modest leverage ratio with debt/EBITDA near 1.4 times and EBITDA/interest expense

around 7 times. The company has a consistent operating performance, and a sizable portfolio of

company owned real estate. The company’s liquidity is deteriorating, cash and equivalents have

decreased from 400 Million to 100 Million in the past year. Net cash provided by operating activities has

decreased by more than 100% in the past year. Current liabilities have increased by 50% in the past

year. More than 20% of its stores are located in Texas which is highly influenced by oil prices.

Conclusions and Recommendations

1. Dillard’s ranks among the nation’s largest fashion retailers

2. Moderate EBITDA/interest

3. Liquidity has deteriorated

4. The lower financial performance in the current year makes it a risky buy

5. How many bonds to buy and at what price?