Earnings Release
Dillard’s, Inc. Reports Second Quarter Results
Dillard’s, Inc. (DDS) (the "Company" or "Dillard’s") announced
operating results for the 13 and 26 weeks ended July 29, 2017. This
release contains certain forward-looking statements. Please refer to the
Company’s cautionary statements included below under "Forward-Looking
Information."
26 Week Results
Dillard’s reported net income for the 26 weeks ended July 29, 2017 of
$49.2 million, or $1.62 per share, compared to net income of $89.5
million, or $2.55 per share, for the prior year 26-week period.
Net sales for the 26 weeks ended July 29, 2017 and the 26 weeks ended
July 30, 2016 were $2.845 billion and $2.956 billion, respectively. Net
sales includes the operations of the Company’s construction business,
CDI Contractors, LLC ("CDI"). Total merchandise sales (which excludes
CDI) for the 26-week period ended July 29, 2017 were $2.770 billion and
$2.853 billion for the 26-week period ended July 30, 2016. Total
merchandise sales decreased 3% for the 26-week period ended July 29,
2017. Sales in comparable stores for the period decreased 2%.
Second Quarter Results
Dillard’s reported a net loss for the 13 weeks ended July 29, 2017 of
$17.1 million, or $0.58 per share, compared to net income of $12.1
million, or $0.35 per share, for the prior year second quarter.
Net sales for the 13 weeks ended July 29, 2017 and the 13 weeks ended
July 30, 2016 were $1.427 billion and $1.452 billion, respectively.
Total merchandise sales for the 13-week period ended July 29, 2017 were
$1.385 billion and $1.403 billion for the 13-week period ended July 30,
2016. Total merchandise sales decreased 1% for the 13-week period ended
July 29, 2017. Sales in comparable stores for the period decreased 1%.
Sales increased slightly in ladies’ apparel. Sales were consistent with
the company trend in juniors’ and children’s apparel, ladies’
accessories and lingerie and men’s apparel and accessories. Sales in
shoes were slightly below trend. Below trend performances were noted in
cosmetics and home and furniture. Sales were slightly above trend in the
Eastern region, consistent with trend in the Western region and below
trend in the Central region.
Dillard’s Chief Executive Officer, William T. Dillard, commented on the
quarter, "Significant markdowns led to a disappointing loss as we dealt
with inventory, which was up 2% at quarter end."
Gross Margin/Inventory
Gross margin from retail operations (which excludes CDI) declined 235
basis points of sales for the 13 weeks ended July 29, 2017 compared to
the prior year second quarter primarily due to increased markdowns.
Consolidated gross margin for the 13 weeks ended July 29, 2017 declined
217 basis points of sales compared to the prior year second quarter.
Inventory increased 2% at July 29, 2017 compared to July 30, 2016.
Selling, General & Administrative Expenses
Selling, general and administrative expenses ("operating expenses") were
$401.6 million (28.2% of sales) and $395.0 million (27.2% of sales)
during the 13 weeks ended July 29, 2017 and July 30, 2016, respectively.
The increase in operating expenses is primarily due to increased selling
payroll and services purchased.
Share Repurchase
During the 13 weeks ended July 29, 2017, the Company purchased $69.5
million (1.4 million shares) of Class A Common Stock under its $500
million share repurchase program. During the year-to-date period ended
July 29, 2017, the Company purchased $160.6 million (3.1 million shares)
under the program. As of July 29, 2017, authorization of $93.2 million
remained under the program. Total shares outstanding (Class A and Class
B Common Stock) at July 29, 2017 and July 30, 2016 were 29.1 million and
34.3 million, respectively.
Credit Facility
The Company announced that it has amended and extended into a new $800
million senior unsecured revolving credit facility consistent with the
Company’s liquidity needs. A $200 million expansion option remains in
place and pricing is unchanged. The new maturity date is August 9, 2022.
Store Information
The Company operates 268 Dillard’s locations and 25 clearance centers
spanning 29 states and an Internet store at www.dillards.com.
Total square footage at July 29, 2017 was 49.1 million square feet.
Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In Millions, Except Per Share Data)
13 Weeks Ended
26 Weeks Ended
July 29, 2017
July 30, 2016
July 29, 2017
July 30, 2016
Amount
% of
Amount
% of
Amount
% of
Amount
% of
Net sales
$ 1,427.2
100.0 %
$ 1,452.4
100.0 %
$ 2,845.3
100.0
%
$ 2,955.7
100.0 %
Service charges and other income
36.6
2.6
36.3
2.5
71.4
2.5
71.8
2.4
1,463.8
102.6
1,488.7
102.5
2,916.7
102.5
3,027.5
102.4
Cost of sales
1,007.1
70.6
993.4
68.4
1,877.1
66.0
1,931.9
65.4
Selling, general and administrative expenses
401.6
28.2
395.0
27.2
800.1
28.1
793.5
26.8
Depreciation and amortization
59.9
4.2
60.6
4.2
119.9
4.2
121.2
4.1
Rentals
6.5
0.5
5.9
0.4
12.7
0.4
11.9
0.4
Interest and debt expense, net
15.8
1.1
16.0
1.1
31.5
1.1
31.7
1.1
Gain on disposal of assets
--
0.0
0.8
0.1
--
0.0
0.9
0.0
(Loss) income before income taxes
(27.1 )
(1.9 )
18.6
1.3
75.4
2.7
138.2
4.7
Income taxes (benefit)
(10.0 )
6.5
26.2
48.7
Net (loss) income
$
(17.1 )
(1.2 )%
$
12.1
0.8 %
$
49.2
1.7
%
$
89.5
3.0 %
Basic and diluted (loss) earnings per share
$
(0.58 )
$
0.35
$
1.62
$
2.55
Basic and diluted weighted average shares
29.4
34.5
30.3
35.1
Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
July 29, 2017
July 30, 2016
Cash and cash equivalents
$
135.1
$
128.3
Accounts receivable
39.2
41.2
Merchandise inventories
1,527.4
1,499.3
Federal and state income taxes
20.3
22.0
Other current assets
37.9
45.9
Total current assets
1,759.9
1,736.7
Property and equipment, net
1,733.5
1,851.8
Total Assets
$ 3,749.3
$
3,843.0
Liabilities and Stockholders’ Equity
Trade accounts payable and accrued expenses
$
873.6
$
760.6
Current portion of long-term debt and capital leases
249.1
3.2
Total current liabilities
1,122.7
763.8
Long-term debt and capital leases
368.8
617.7
Other liabilities
238.9
242.1
Deferred income taxes
216.2
250.7
Subordinated debentures
200.0
200.0
Stockholders’ equity
1,602.7
1,768.7
Total Liabilities and Stockholders’ Equity
$ 3,749.3
$
3,843.0
Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
July 29, 2017
July 30, 2016
Adjustments to reconcile net income to net cash provided by
Depreciation and amortization of property and other deferred cost
121.0
122.4
Gain on disposal of assets
--
(0.9 )
Changes in operating assets and liabilities:
Decrease in accounts receivable
9.0
5.9
Increase in merchandise inventories
(121.0 )
(124.8 )
Increase in other current assets
(0.7 )
(0.7 )
Decrease in other assets
2.4
1.0
Increase in trade accounts payable and accrued expenses and other
35.8
77.1
Decrease in income taxes
(73.6 )
(82.8 )
Net cash provided by operating activities
22.1
86.7
Purchase of property and equipment
(63.0 )
(42.0 )
Proceeds from disposal of assets
0.1
1.0
Proceeds from insurance
1.9
--
Distribution from joint venture
0.9
--
Net cash used in investing activities
(60.1 )
(41.0 )
Principal payments on long-term debt and capital lease obligations
(2.8 )
(2.8 )
Cash dividends paid
(4.5 )
(5.0 )
Purchase of treasury stock
(166.6 )
(112.5 )
Net cash used in financing activities
(173.9 )
(120.3 )
Decrease in cash and cash equivalents
(211.9 )
(74.6 )
Cash and cash equivalents, beginning of period
347.0
202.9
Cash and cash equivalents, end of period
$
135.1
$
128.3
Accrued capital expenditures
$
3.9
$
3.6
Estimates for 2017
The Company is providing the following estimates for certain financial
statement items for the fiscal year ending February 3, 2018 based upon
current conditions. Actual results may differ significantly from these
estimates as conditions and factors change - See "Forward-Looking
Information."
Depreciation and amortization
$ 240
$ 244
Interest and debt expense, net
63
63
Capital expenditures
125
105
Forward-Looking Information
The foregoing contains certain "forward-looking statements" within the
definition of federal securities laws. The following are or may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995: statements including (a) words
such as "may," "will," "could," "believe," "expect," "future,"
"potential," "anticipate," "intend," "plan," "estimate," "continue," or
the negative or other variations thereof, and (b) statements regarding
matters that are not historical facts. The Company cautions that
forward-looking statements contained in this report are based on
estimates, projections, beliefs and assumptions of management and
information available to management at the time of such statements and
are not guarantees of future performance. The Company disclaims any
obligation to update or revise any forward-looking statements based on
the occurrence of future events, the receipt of new information, or
otherwise. Forward-looking statements of the Company involve risks and
uncertainties and are subject to change based on various important
factors. Actual future performance, outcomes and results may differ
materially from those expressed in forward-looking statements made by
the Company and its management as a result of a number of risks,
uncertainties and assumptions. Representative examples of those factors
include (without limitation) general retail industry conditions and
macro-economic conditions; economic and weather conditions for regions
in which the Company’s stores are located and the effect of these
factors on the buying patterns of the Company’s customers, including the
effect of changes in prices and availability of oil and natural gas; the
availability of consumer credit; the impact of competitive pressures in
the department store industry and other retail channels including
specialty, off-price, discount and Internet retailers; changes in
consumer spending patterns, debt levels and their ability to meet credit
obligations; changes in tax legislation; changes in legislation,
affecting such matters as the cost of employee benefits or credit card
income; adequate and stable availability and pricing of materials,
production facilities and labor from which the Company sources its
merchandise; changes in operating expenses, including employee wages,
commission structures and related benefits; system failures or data
security breaches; possible future acquisitions of store properties from
other department store operators; the continued availability of
financing in amounts and at the terms necessary to support the Company’s
future business; fluctuations in LIBOR and other base borrowing rates;
potential disruption from terrorist activity and the effect on ongoing
consumer confidence; epidemic, pandemic or other public health issues;
potential disruption of international trade and supply chain
efficiencies; world conflict and the possible impact on consumer
spending patterns and other economic and demographic changes of similar
or dissimilar nature. The Company’s filings with the Securities and
Exchange Commission, including its Annual Report on Form 10-K for the
fiscal year ended January 28, 2017, contain other information on factors
that may affect financial results or cause actual results to differ
materially from forward-looking statements.
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SOURCE: Dillard’s, Inc.
Julie Johnson Bull, 501-376-5965
