Why Dillard's Stock Jumped Today

Shares of Dillard's (NYSE: DDS) surged on Thursday after the department store chain reported impressive fiscal third-quarter sales and earnings.

As of 1:40 p.m. ET, Dillard's stock price was up more than 16%.

Dillard's enjoyed healthy consumer spending in a challenging economic environment

Dillard's total retail sales rose by 3% to $1.4 billion in the quarter ended Nov. 1. The gains were driven by a 3% rise in comparable-store sales.

The retailer saw solid growth in sales of ladies' apparel and accessories, as well as children's apparel, during the quarter.

Efficient inventory management helped Dillard's retail gross margin improve to 45.3%, up from 44.5% in the prior-year period. The company's net income, in turn, increased by 4% to $129.8 million. Stock buybacks contributed to a 7.5% jump in earnings per share to $8.31, which was well above Wall Street's estimates.

Management is allocating capital effectively

Dillard's share repurchases have amplified shareholder value creation. Over the 39 weeks ending on Nov. 1, the retailer scooped up roughly 300,000 shares for $107.8 million, or $359.16 per share. With the stock currently trading north of $700 following today's gains, these purchases have been an excellent use of shareholder capital.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.