Earnings Release
Dillard’s, Inc. Reports First Quarter Results
Dillard’s, Inc. (DDS) (the "Company" or "Dillard’s") announced
operating results for the 13 weeks ended April 29, 2017. This release
contains certain forward-looking statements. Please refer to the
Company’s cautionary statements regarding forward-looking information
included below under "Forward-Looking Information."
First Quarter Results
Dillard’s reported net income for the 13 weeks ended April 29, 2017 of
$66.3 million, or $2.12 per share, compared to net income of $77.4
million, or $2.17 per share, for the prior year first quarter.
Net sales for the 13 weeks ended April 29, 2017 were $1.418 billion and
$1.503 billion for the 13 weeks ended April 30, 2016. Net sales includes
the operations of the Company’s construction business, CDI Contractors,
LLC ("CDI").
Total merchandise sales (which excludes CDI) for the 13-week period
ended April 29, 2017 were $1.386 billion and $1.449 billion for the
13-week period ended April 30, 2016. Total merchandise sales decreased
4% for the 13-week period ended April 29, 2017. Sales in comparable
stores for the period also decreased 4%. Sales of ladies’ apparel
notably outperformed other merchandise categories during the first
quarter followed by the juniors’ and children’s apparel category. Weaker
performances were noted in cosmetics, home and furniture, and ladies’
accessories and lingerie. Sales were strongest in the Western region
followed by the Eastern and Central regions, respectively.
Dillard’s Chief Executive Officer, William T. Dillard, II, stated,
"While our sales decline weighed heavily on our operating results, we
remained active in returning cash to shareholders through $93 million of
share repurchase and dividends. We still ended the quarter with $302
million of cash largely due to better cash management."
Gross Margin/Inventory
Gross margin from retail operations (which excludes CDI) improved 65
basis points of sales for the 13 weeks ended April 29, 2017 compared to
the prior year first quarter. Consolidated gross margin for the 13 weeks
ended April 29, 2017 improved 108 basis points of sales compared to the
prior year first quarter. Inventory increased 4% at April 29, 2017
compared to April 30, 2016.
Selling, General & Administrative Expenses
Selling, general and administrative expenses ("operating expenses") were
$398.5 million (28.1% of sales) and $398.4 million (26.5% of sales)
during the 13 weeks ended April 29, 2017 and April 30, 2016,
respectively.
Share Repurchase
During the 13 weeks ended April 29, 2017, the Company purchased $91.1
million (approximately 1.7 million shares) of Class A Common Stock under
its $500 million share repurchase program. At April 29, 2017 the
remaining authorization under the February 2016 plan was $162.7 million.
Total shares outstanding (Class A and Class B Common Stock) at April 29,
2017 and April 30, 2016 were 30.5 million and 35.2 million, respectively.
Store Information
During the quarter, Dillard’s opened its new replacement store at The
Mall at Greenhills in Nashville, Tennessee (180,000 square feet). The
Company purchased a former Macy’s location at Layton Hills Mall in
Layton, Utah (160,000 square feet) and a store at Temple Mall in Temple,
Texas that will replace a leased location at that center. Dillard’s
expects to open both stores in the fall of 2017.
Dillard’s operates 268 Dillard’s locations and 25 clearance centers
spanning 29 states and an Internet store at www.dillards.com.
Total store square footage is 49.2 million.
Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In Millions, Except Per Share Data)
April 29, 2017
April 30, 2016
Net sales
$ 1,418.1
100.0 %
$ 1,503.2
100.0 %
Service charges and other income
34.8
2.5
35.6
2.4
Cost of sales
870.0
61.4
938.6
62.4
Selling, general and administrative expenses
398.5
28.1
398.4
26.5
Depreciation and amortization
60.0
4.2
60.6
4.0
Interest and debt expense, net
15.7
1.1
15.7
1.0
Gain on disposal of assets
--
0.0
0.1
0.0
Income before income taxes
102.5
7.2
119.6
8.0
Net income
$
66.3
4.7 %
$
77.4
5.2 %
Basic and diluted earnings per share
$
2.12
$
2.17
Basic and diluted weighted average shares
31.3
35.7
Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
Cash and cash equivalents
$
301.5
$
150.3
Accounts receivable
39.4
42.5
Merchandise inventories
1,713.9
1,647.9
Other current assets
38.0
42.0
Total current assets
2,092.8
1,882.7
Property and equipment, net
1,764.5
1,889.3
Total Assets
$ 4,114.9
$
4,025.6
Liabilities and Stockholders’ Equity
Trade accounts payable and accrued expenses
$ 1,058.3
$
846.8
Current portion of long-term debt and capital leases
90.5
3.3
Federal and state income taxes
86.9
49.8
Total current liabilities
1,235.7
899.9
Long-term debt and capital leases
529.9
620.1
Other liabilities
238.3
241.3
Deferred income taxes
220.6
252.3
Subordinated debentures
200.0
200.0
Stockholders’ equity
1,690.4
1,812.0
Total Liabilities and Stockholders’ Equity
$ 4,114.9
$
4,025.6
Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Adjustments to reconcile net income to net cash provided by
Depreciation and amortization of property and other deferred cost
60.6
61.2
Gain on disposal of assets
--
(0.1 )
Changes in operating assets and liabilities:
Decrease in accounts receivable
8.8
4.6
Increase in merchandise inventories
(307.5 )
(273.4 )
(Increase) decrease in other current assets
(1.7 )
2.4
Decrease in other assets
1.4
1.1
Increase in trade accounts payable and accrued expenses and other
214.4
159.5
Increase (decrease) in income taxes payable
35.1
(12.6 )
Net cash provided by operating activities
77.4
20.1
Purchase of property and equipment
(34.5 )
(17.7 )
Proceeds from disposal of assets
--
0.1
Proceeds from insurance
1.9
--
Distribution from joint venture
0.3
--
Net cash used in investing activities
(32.3 )
(17.6 )
Principal payments on long-term debt and capital lease obligations
(0.2 )
(0.2 )
Cash dividends paid
(2.3 )
(2.5 )
Purchase of treasury stock
(88.1 )
(52.4 )
Net cash used in financing activities
(90.6 )
(55.1 )
Decrease in cash and cash equivalents
(45.5 )
(52.6 )
Cash and cash equivalents, beginning of period
347.0
202.9
Cash and cash equivalents, end of period
$
301.5
$
150.3
Accrued capital expenditures
$
3.2
$
3.4
Accrued purchases of treasury stock
3.0
6.0
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
