Dillard’s, Inc. (NYSE: DDS) (the “Company” or “Dillard’s”)
announced operating results for the 13 and 26 weeks ended July 30,
2022. This release contains certain forward-looking statements.
Please refer to the Company’s cautionary statements included below
under “Forward-Looking Information.”
Chief Executive Officer William T. Dillard, II stated,
“Business softened in the quarter as we lapped the strongest second
quarter in our history. Our first half performance was far better
than last year’s with net income up 21%, earnings per share up 44%
and gross margin up 240 basis points. We repurchased $412 million
of stock during the half versus $171 million last year.”
Highlights of the 26 Weeks (compared to the prior year 26
weeks):
- Total retail sales increased 10%
- Comparable store sales increased 10%
- Net income of $414.5 million compared to $343.9
million
- Earnings per share of $23.07 compared to $16.03
- Retail gross margin of 44.5% of sales compared to 42.1% of
sales
- Operating expenses were $802.1 million (25.1% of sales)
compared to $702.5 million (24.2% of sales)
- Share repurchase of $412.3 million (approximately 1,610,000
shares)
26-Week Results
Dillard’s reported net income for the 26 weeks ended July 30,
2022 of $414.5 million, or $23.07 per share, compared to $343.9
million, or $16.03 per share, for the prior year 26-week period.
Included in net income for the 26 weeks ended July 30, 2022 is a
pretax gain of $7.2 million ($5.6 million after tax or $0.31 per
share) primarily related to the sale of a store property.
Included in net income for the prior year 26-week period ended
July 31, 2021 is a pretax gain of $24.7 million ($19.2 million
after tax or $0.89 per share) primarily related to the sale of
three store properties.
Sales – 26 Weeks
Net sales for the 26 weeks ended July 30, 2022 and July 31, 2021
were $3.200 billion and $2.899 billion, respectively. Net sales
includes the operations of the Company’s construction business, CDI
Contractors, LLC (“CDI”).
Total retail sales (which excludes CDI) for the 26-week periods
ended July 30, 2022 and July 31, 2021 were $3.133 billion and
$2.836 billion, respectively. Total retail sales increased 10% for
the 26-week period ended July 30, 2022. Sales in comparable stores
increased 10%.
Gross Margin – 26 Weeks
Consolidated gross margin for the 26 weeks ended July 30, 2022
was 43.7% of sales compared to 41.3% of sales for the prior year
26-week period.
Retail gross margin (which excludes CDI) for the 26 weeks ended
July 30, 2022 improved 240 basis points of sales to 44.5% compared
to 42.1% for the prior year 26-week period.
Inventory increased 7% at July 30, 2022 against a 13% decrease
at July 31, 2021.
Selling, General & Administrative Expenses – 26
Weeks
Consolidated selling, general and administrative expenses
(“operating expenses”) for the 26 weeks ended July 30, 2022
increased $99.6 million to $802.1 million (25.1% of sales) compared
to $702.5 million (24.2% of sales) for the prior year 26-week
period primarily due to continued increases in payroll and payroll
related expenses.
Highlights of the Second Quarter (compared to the prior year
second quarter):
- Comparable store sales were flat
- Net income of $163.4 million compared to net income of
$185.7 million
- Earnings per share of $9.30 compared to $8.81
- Retail gross margin of 41.5% of sales compared to 41.7% of
sales
- Operating expenses were $401.3 million (25.3% of sales)
compared to $365.9 million (23.3% of sales)
- Share repurchase of $225.8 million (approximately 875,000
shares)
Second Quarter Results
Dillard’s reported net income for the 13 weeks ended July 30,
2022 of $163.4 million, or $9.30 per share, compared to net income
of $185.7 million, or $8.81 per share, for the 13 weeks ended July
31, 2021.
Sales – Second Quarter
Net sales for the 13 weeks ended July 30, 2022 and July 31, 2021
were $1.589 billion and $1.570 billion, respectively.
Total retail sales for the 13-week periods ended July 30, 2022
and July 31, 2021 were $1.553 billion and $1.539 billion,
respectively. Total retail sales increased 1% for the 13-week
period ended July 30, 2022. Sales in comparable stores were flat.
Stronger performing categories included men’s apparel and
accessories and cosmetics. Ladies’ apparel was the weakest
performing category.
Gross Margin – Second Quarter
Consolidated gross margin for the 13 weeks ended July 30, 2022
was 40.8% of sales compared to 41.0% of sales for the prior year
second quarter. The Company achieved a gross margin exceeding 40%
for the sixth consecutive quarter.
Retail gross margin for the 13 weeks ended July 30, 2022
declined 20 basis points of sales to 41.5% compared to 41.7% for
the prior year second quarter.
Selling, General & Administrative Expenses – Second
Quarter
Consolidated operating expenses for the 13 weeks ended July 30,
2022 were $401.3 million (25.3% of sales) compared to $365.9
million (23.3% of sales) for the prior year second quarter.
Retail operating expenses were $399.5 million (25.7% of sales)
compared to $364.2 million (23.7% of sales). The increase in
operating expenses is primarily due to increased payroll and
payroll-related expenses in the current highly competitive and
inflationary wage environment.
Share Repurchase
During the second quarter, the Company purchased $225.8 million
(approximately 875,000 shares) of Class A Common Stock at an
average price of $258.11 per share under its share repurchase
program.
During the 26 weeks ended July 30, 2022, the Company purchased
$412.3 million (approximately 1,610,000 shares) of Class A Common
Stock at an average price of $256.10 per share. For the same period
last year, the Company repurchased $171.0 million of stock
(approximately 1,359,000 shares). As of July 30, 2022,
authorization of $199.7 million remained under the February 2022
program.
Total shares outstanding (Class A and Class B Common Stock) at
July 30, 2022 and July 31, 2021 were 17.2 million and 20.7 million,
respectively.
Store Information
The Company has announced the upcoming closing of locations in
Sikes Senter in Wichita Falls, Texas and East Hills Mall in St.
Joseph, Missouri. Both locations are expected to close during the
third quarter. Dillard’s confirmed its commitment to The Empire
Mall in Sioux Falls, South Dakota. The new store is expected to
open in the fall of 2023 and will mark the Company’s 30th state of
operation.
The Company operates 250 Dillard’s locations and 29 clearance
centers spanning 29 states and an Internet store at dillards.com. Total square footage at July 30,
2022 was 47.5 million square feet.
Dillard’s, Inc. and
Subsidiaries
Condensed Consolidated Statements
of Income (Unaudited)
(In Millions, Except Per Share
Data)
13 Weeks Ended
26 Weeks Ended
July 30, 2022
July 31, 2021
July 30, 2022
July 31, 2021
% of
% of
% of
% of
Net
Net
Net
Net
Amount
Sales
Amount
Sales
Amount
Sales
Amount
Sales
Net sales
$
1,588.6
100.0
%
$
1,570.4
100.0
%
$
3,200.3
100.0
%
$
2,898.9
100.0
%
Service charges and other income
29.3
1.8
31.0
2.0
60.4
1.9
60.1
2.1
1,617.9
101.8
1,601.4
102.0
3,260.7
101.9
2,959.0
102.1
Cost of sales
941.2
59.2
927.2
59.0
1,802.6
56.3
1,701.3
58.7
Selling, general and administrative
expenses
401.3
25.3
365.9
23.3
802.1
25.1
702.5
24.2
Depreciation and amortization
47.9
3.0
50.0
3.2
94.1
2.9
96.5
3.3
Rentals
5.3
0.3
5.1
0.3
10.4
0.3
10.2
0.4
Interest and debt expense, net
9.7
0.6
10.8
0.7
20.2
0.6
22.3
0.8
Other expense
2.0
0.1
2.1
0.1
3.9
0.1
7.1
0.2
Gain on disposal of assets
—
0.0
—
0.0
7.2
0.2
24.7
0.9
Income before income taxes
210.5
13.3
240.3
15.3
534.6
16.7
443.8
15.3
Income taxes
47.1
54.6
120.1
99.9
Net income
$
163.4
10.3
%
$
185.7
11.8
%
$
414.5
13.0
%
$
343.9
11.9
%
Basic and diluted earnings per share
$
9.30
$
8.81
$
23.07
$
16.03
Basic and diluted weighted average
shares
17.6
21.1
18.0
21.5
Dillard’s, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets (Unaudited)
(In Millions)
July 30,
July 31,
2022
2021
Assets
Current Assets:
Cash and cash equivalents
$
492.9
$
669.5
Accounts receivable
36.4
34.4
Short-term investments
74.0
—
Merchandise inventories
1,193.4
1,112.8
Federal and state income taxes
35.7
122.8
Other current assets
97.8
66.3
Total current assets
1,930.2
2,005.8
Property and equipment, net
1,159.7
1,237.4
Operating lease assets
37.1
44.1
Deferred income taxes
30.2
26.8
Other assets
64.4
69.4
Total Assets
$
3,221.6
$
3,383.5
Liabilities and Stockholders’ Equity
Current Liabilities:
Trade accounts payable and accrued
expenses
$
890.8
$
881.5
Current portion of long-term debt and
finance lease liabilities
44.8
0.4
Current portion of operating lease
liabilities
10.4
12.1
Total current liabilities
946.0
894.0
Long-term debt
321.3
365.9
Operating lease liabilities
26.5
31.5
Other liabilities
278.8
282.5
Subordinated debentures
200.0
200.0
Stockholders’ equity
1,449.0
1,609.6
Total Liabilities and Stockholders’
Equity
$
3,221.6
$
3,383.5
Dillard’s, Inc. and
Subsidiaries
Condensed Consolidated Statements
of Cash Flows (Unaudited)
(In Millions)
26 Weeks Ended
July 30,
July 31,
2022
2021
Operating activities:
Net income
$
414.5
$
343.9
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property
and other deferred cost
94.9
97.7
Gain on disposal of assets
(7.2
)
(24.7
)
Proceeds from insurance
—
2.3
Loss on extinguishment of debt
—
2.8
Changes in operating assets and
liabilities:
Decrease in accounts receivable
3.4
2.2
Increase in merchandise inventories
(113.3
)
(25.0
)
Increase in other current assets
(18.2
)
(10.9
)
Increase in other assets
(0.2
)
(1.1
)
(Decrease) increase in trade accounts
payable and accrued expenses and other liabilities
(40.1
)
111.7
Decrease in income taxes
(54.7
)
(6.5
)
Net cash provided by operating
activities
279.1
492.4
Investing activities:
Purchase of property and equipment and
capitalized software
(61.1
)
(41.2
)
Proceeds from disposal of assets
8.1
29.3
Proceeds from insurance
4.8
2.8
Purchase of short-term investments
(24.7
)
—
Net cash used in investing activities
(72.9
)
(9.1
)
Financing activities:
Principal payments on long-term debt and
finance lease liabilities
—
(0.3
)
Cash dividends paid
(7.5
)
(6.6
)
Purchase of treasury stock
(422.6
)
(164.2
)
Issuance cost of line of credit
—
(3.0
)
Net cash used in financing activities
(430.1
)
(174.1
)
(Decrease) increase in cash and cash
equivalents
(223.9
)
309.2
Cash and cash equivalents, beginning of
period
716.8
360.3
Cash and cash equivalents, end of
period
$
492.9
$
669.5
Non-cash transactions:
Accrued capital expenditures
$
9.8
$
14.5
Accrued purchase of treasury stock
6.0
6.8
Stock awards
2.3
1.1
Accrued purchase of short-term
investments
49.3
—
Lease assets obtained in exchange for new
operating lease liabilities
0.6
3.8
Estimates for 2022
The Company is providing the following estimates for certain
financial statement items for the fiscal year ending January 28,
2023 based upon current conditions. Actual results may differ
significantly from these estimates as conditions and factors change
- See “Forward-Looking Information.”
In Millions
2022
2021
Estimated
Actual
Depreciation and amortization
$
190
$
199
Rentals
23
23
Interest and debt expense, net
35
43
Capital expenditures
130
104
Forward-Looking Information
This report contains certain forward-looking statements. The
following are or may constitute forward looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995: (a) statements including words such as “may,” “will,”
“could,” “should,” “believe,” “expect,” “future,” “potential,”
“anticipate,” “intend,” “plan,” “estimate,” “continue,” or the
negative or other variations thereof; (b) statements regarding
matters that are not historical facts; and (c) statements about the
Company’s future occurrences, plans and objectives, including
statements regarding management’s expectations and forecasts for
the remainder of fiscal 2022 and beyond, statements concerning the
opening of new stores or the closing of existing stores, statements
concerning capital expenditures and sources of liquidity and
statements concerning estimated taxes. 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) the COVID-19 pandemic and its effects on public health,
our supply chain, the health and well-being of our employees and
customers, and the retail industry in general; other general retail
industry conditions and macro-economic conditions including
inflation and changes in traffic at malls and shopping centers;
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 and interest rates on 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 the Company’s ability to meet labor
needs amid nationwide labor shortages and an intense competition
for talent, changes in consumer spending patterns, debt levels and
their ability to meet credit obligations; high levels of
unemployment; 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; the elimination of LIBOR;
potential disruption from terrorist activity and the effect on
ongoing consumer confidence; other epidemic, pandemic or public
health issues; potential disruption of international trade and
supply chain efficiencies; any government-ordered restrictions on
the movement of the general public or the mandated or voluntary
closing of retail stores in response to the COVID-19 pandemic;
global conflicts (including the recent conflict in Ukraine) 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 29, 2022, contain other information on factors that may
affect financial results or cause actual results to differ
materially from forward-looking statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220811005159/en/
Dillard’s, Inc. Julie J. Guymon 501-376-5965
julie.guymon@dillards.com
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