02:57 PM EDT, 08/15/2025 (MT Newswires) -- Dillard's (DDS) weakening earnings will impact its stock price, UBS said in a Thursday note, adding that the company is poised for a challenging second half of the year.

The brokerage said it expects the company to lose market share to retail channels that offer more attractive value, which could dampen the departmental store chain's long-term sales and margins.

UBS sees company's operating performance to take a hit in second half of 2025 as gross margin percentage is expected to worsen owing to elevated inventory levels and tariff-linked product cost pressures.

The brokerage raised its full year 2025 earnings per share forecast by 7% because of outperformance in second quarter. It also increased fiscal 2026-2027 EPS estimate by 3%.

UBS increased price target to $175 from $170, while maintaining sell rating.

Shares in the company were up nearly 3% in recent trading Friday.

Price: 513.90, Change: +15.17, Percent Change: +3.04