Dillard’s, Inc. (NYSE: 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
% ofNetSales
Amount
% ofNetSales
Amount
% ofNetSales
Amount
% ofNetSales
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) (In Millions) July 29, 2017
July 30, 2016 Assets Current Assets: 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 Other
assets 255.9 254.5 Total Assets $ 3,749.3 $
3,843.0 Liabilities and Stockholders' Equity Current
Liabilities: 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) (In
Millions) 26 Weeks Ended July 29, 2017 July 30,
2016 Operating activities: Net income $ 49.2 $ 89.5 Adjustments to
reconcile net income to net cash provided by operating activities:
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 liabilities 35.8 77.1 Decrease in income taxes
(73.6 ) (82.8 ) Net cash provided by operating activities 22.1
86.7 Investing activities: 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 ) Financing activities: 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 Non-cash transactions: Accrued capital
expenditures $ 3.9 $ 3.6 Stock awards 0.9 0.9
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.”
In Millions 2017 2016 Estimated Actual Depreciation
and amortization $ 240 $ 244 Rentals 28 26 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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version on businesswire.com: http://www.businesswire.com/news/home/20170810005223/en/
Dillard’s, Inc.Julie Johnson Bull,
501-376-5965julie.bull@dillards.com
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