Department store chain Dillard’s has reported sales growth for the first fiscal quarter despite several external headwinds.

The company’s total retail sales for the quarter ended May 2 rose 3.4 per cent year-on-year to $1.518 billion, comparable store sales up 3 per cent.

GlobalData MD Neil Saunders said the company kicked off its new fiscal year “in style” despite lapping some soft prior year comparatives.

“After a spell of softer performance, this puts Dillard’s back on a path of growth even at a time when there are some headwinds from poor consumer confidence and a modest reluctance to spend. That Dillard’s has overridden these concerns – and has done so in a department store sector that still lags overall retail – comes down to a number of factors,” he said.

According to the analyst, the chain’s customer base is somewhat more robust than average, as it held up significantly better than the overall average amid shrinking confidence.

The second factor is that Dillard’s continues to provide strong assortments, good standards of presentation, and excellent customer service, Saunders continued. The chain has invested in its stores through several ongoing refresh projects, helping to improve the customer experience across areas like beauty. 

The bottom line saw a significant 53 per cent uplift in net income, driven mainly by a settlement of payment card interchange fees. Excluding this, net income was up 4 per cent.

“Looking ahead, Dillard’s will start to come up against some tougher prior year numbers,” Saunders said. 

“It will also see some of the benefit of tax refunds fade in the back half of the year. Even so, the addition of a new store, a position of financial stability, and propositional clarity will all continue to serve it well,” he added.

In the last fiscal year, the company’s retail sales remained flat, while net income was down from $593.5 million to $570.2 million.