Dillard's (DDS) stock will remain under pressure as weakness in the company's earnings is expected to persist in the near term, UBS Securities said in a Thursday note.

The company reported Thursday fiscal Q1 earnings of $10.39 per diluted share, down from $11.09 a year earlier, as revenue for the quarter ended May 3 declined to $1.55 billion from $1.57 billion a year earlier.

UBS said the decline in the company's fiscal Q1 comparable sales and its elevated inventory back the anticipated weakness in near-term earnings. The investment firm said it also expects structural market share losses beyond 2025, potentially leading to further deterioration of its sales and margins.

UBS analysts said they believe that "DDS' fundamentals remain challenged." While the company's cost controls and share repurchases mitigated declines in earnings, these are limited earnings drivers and will not fully offset softer sales and gross margins, the analysts added.

UBS has a sell rating on Dillard's with a $170 price target, up from $150.

Price: 413.57, Change: +3.13, Percent Change: +0.76