Dillard’s strong performance giving hope to Daytona’s Volusia Mall
DAYTONA BEACH — Recent news that Macy’s will close its longtime department store at Volusia Mall by the end of April has fueled speculation that the enclosed shopping center’s days could be numbered.
“Guess the Volusia Mall is going out of business,” wrote Tim Lauxman in a comment posted on The News-Journal’s Developing Daytona Beach Facebook group page.
Another reader, James Stropnik, wrote: “I predict Volusia Mall will be a ghost town in less than a year.”
Despite those dire predictions, there is a big reason for hope that rumors of Volusia Mall’s death may be premature. Make that three of them.
Namely, the astonishingly strong performance as of last of Dillard’s Inc., the Little Rock, Arkansas-based department store chain that operates not one, but three locations at Volusia Mall.
Dillard’s in its most recent quarterly earnings report stated that its net income jumped nearly six-fold year-over-year to $31.9 million in the 13-week period that ended Oct. 31.
For the same quarter in 2019, the chain only rang up $5.5 million in net income.
It marked the second consecutive quarter that Dillard’s has made significant year-over-year earnings gains, a feat that’s all the more remarkable considering the ongoing coronavirus pandemic.
Include investor website The Motley Fool among the impressed.
Motley Fool writer Adam Levine-Weinberg wrote about Dillard’s better-than-expected performance in a Dec. 2 article headlined: “This department store stock could soar in 2021.”
“Improving profitability, a strong track record for cash generation, low debt and a massive real estate portfolio make this department store stock surprisingly attractive,” he wrote.
“Tight inventory management has allowed Dillard’s to cut back on clearance discounts,” he wrote of how the chain has managed to out-perform most of its brick-and-mortar retail rivals.
Dillard’s saw its stock price plunge when the pandemic began to a low of $22.50 in April, down from $71 a share in January of last year. The stock (NYSE: DDS) has rebounded since then closing above $60 a share on Wednesday, up more than $5 on the day.
But that only tells part of the story.
‘Big-box store with appeal of a boutique’
“Dillard’s offers great well-made clothes at great prices,” said Port Orange resident Donna Codiane, who used to compete with the chain when she managed a women’s apparel store at Volusia Mall in the 1980s called Casual Corner.
Codiane who now is a publisher of a local real estate guide became a regular Dillard’s customer after she stopped working at the mall.
She said another secret to Dillard’s success is its “great service and extremely knowledgeable staff.”
Dillard’s started out at Volusia Mall with just one store, but over the years added a second and finally a third when other department store chains closed their locations there, she said. The stores are now divided into different categories.
The first store, called Dillard’s West, offers women’s apparel as well as shoe, jewelry and cosmetics departments. It was originally an Ivey’s department store.
The next to open was Dillard’s East which previously was a Belk-Lindsey store. It now carries men’s apparel and shoes as well as home furnishings.
Dillard’s South was the last to open. It was previously a May-Cohens department store. It specializes in juniors and children’s apparel.
Mary Maholias, a Realtor with Realty Pros Assured in Ormond Beach, said she loves shopping at Dillard’s because “they’ve got an incredible depth of inventory that appeals to a variety of customers,” she said. “And their customer service is exceptional. It’s like a big-box store with the appeal of a boutique.”
“The shoe department’s amazing,” she added.
Maholias is both a Dillard’s customer as well as a veteran of the retail industry who worked as an assistant buyer for a Jordan Marsh department store in Tampa before moving to the Daytona Beach area a few years ago.
“When I first came here, I was perplexed at why Dillard’s had three stores (at Volusia Mall), but I came to realize it makes it easier for people to shop,” she said.
Volusia Mall management officials did not return phone calls seeking comment. A spokesperson for Dillard’s also could not be reached for comment.
Ted Teschner, a longtime mall merchant who owns the Mr. Dunderbak’s restaurant/deli that is now in its 46th year in business, said he sees more people carrying Dillard’s shopping bags than any other store.
“They have their sales down to a science,” he said. “Their annual sale on Jan. 1 is the craziest thing I’ve ever seen,” he added.
The Dillard’s New Year’s Day clearance event typically draws Black Friday-sized crowds of bargain-hunting shoppers. “They also have end-season sales and do a good job of contacting regular customers. We get emails from them almost daily. I recently bought a pair of shorts for like $5 that are normally 35 to 40 bucks.”
Teschner said a number of Dillard’s employees are regular customers at his restaurant. “The staff seems happy with their jobs,” he said.
Caution signs
That said, overall revenues at traditional department store chains are down across the board, including Dillard’s which reported a 26{85e7f5b37d2b3b32ff943ebdbb52de90edc4132ca8c2134f6732351e5442126f} year-over-year decline in the third quarter.
Codiane, while a fan of Dillard’s, admits she hasn’t been to Volusia Mall since the pandemic began. “I do shop online with (Dillard’s),” but even then not as much as she used to now that she primarily works from home as opposed to commuting to an office.
CBL & Associates Properties, the Tennessee-based company that owns Volusia Mall, recently filed for Chapter 11 bankruptcy protection. It blamed its deepening financial losses in part to the ongoing pandemic.
Still, Teschner said sales at his restaurant were about the same this past holiday shopping season as they were in 2019 even with the pandemic and reduced mall hours.
Other mall store managers he has spoken to have reported similar results, he added.
The struggles of both CBL as well as Macy’s appear to be largely a reflection of how the companies are doing as a whole, not Volusia Mall in particular, he said.
And reports of “zombie malls” in other parts of the country where the vast majority of stores are closed don’t match the scene at Volusia Mall, at least not yet.
Teschner estimates that Volusia Mall remains 90{85e7f5b37d2b3b32ff943ebdbb52de90edc4132ca8c2134f6732351e5442126f} occupied.
J.C. Penney is another department store chain that has been struggling and periodically closing some of its locations. So far, its store at Volusia Mall has managed to stay off those store closure lists, but there is no guarantee that it will remain that way.
Volusia Mall does have a handful of vacant storefront spaces. One has been turned into a location for temporary pop-up stores.
But the mall these days consists of more than just what’s inside. In recent years, it has added several standalone restaurants along West International Speedway Boulevard that include IHOP, Bahama Breeze and Olive Garden near the corner of ISB and Bill France Boulevard.
There’s also the standalone Cheddar’s and Applebee’s restaurants in the mall’s front parking lot as well as a recently built multi-tenant retail building that is now home to Metro Diner and Bonefish Grill.
The mall in early 2019 lost another anchor tenant: the Sears department store at the east end, near Mr. Dunderbak’s.
The two-story store where Sears used to be is actually a separate building that is attached to the mall but was owned by Sears Holdings as opposed to CBL.
Macy’s also owns its own building as does Dillard’s.
Hopes were raised that a new store would replace the former Sears department store when the Sears building at the mall was sold in August 2019 for $5.9 million to a new entity led by Sears’ former chairman Eddie Lampert. A year-and-a-half later, the building remains vacant.
Longtime tenant ‘cautiously optimistic’
Mr. Dunderbak’s has been a fixture at Volusia Mall since December 1975. It opened a year after the mall itself which welcomed its first customers on Oct. 15, 1974.
Offering 1.1 million square feet of retail space, Volusia Mall remains the Volusia-Flagler area’s largest shopping center.
“The market will ultimately decide what happens with Volusia Mall,” said Teschner who temporarily expanded his inside-the-mall restaurant last year by leasing a vacant storefront space next door.
Teschner said he is now in talks with the mall about continuing to temporarily lease the next-door space until a permanent new tenant can be found.
“I’m cautiously optimistic,” he said, adding that he intends to continue running Mr. Dunderbak’s for at least a few more years. “Who knows what’s around the corner.”
Clayton Park is business editor of The Daytona Beach News-Journal. He can be reached at [email protected].