Dillard’s, Inc. (NYSE: DDS) (the “Company” or “Dillard’s”)
announced operating results for the 13 and 39 weeks ended October
29, 2022. This release contains certain forward-looking statements.
Please refer to the Company’s cautionary statements included below
under “Forward-Looking Information.”
Dillard’s Chief Executive Officer William T. Dillard, II
stated, “While we were up against an unprecedented third quarter,
we achieved a 3% comparable store sales increase and reported our
seventh consecutive quarter of gross margin over 40%. Inventory
control remains a priority as we have seen its powerful effects on
our business. To date this year, our net income is up 11% over last
year’s strong performance and earnings per share is up
32%.”
Highlights of the 39 Weeks (compared to the prior year 39
weeks):
- Total retail sales increased 8%
- Comparable store sales increased 8%
- Net income of $602.5 million compared to $541.2
million
- Earnings per share of $34.05 compared to $25.76
- Retail gross margin of 44.9% of sales compared to 43.7% of
sales
- Operating expenses were $1.216 billion (25.6% of sales)
compared to $1.096 billion (25.0% of sales)
- Share repurchase of $436.6 million (approximately 1,709,000
shares)
39-Week Results
Dillard’s reported net income for the 39 weeks ended October 29,
2022 of $602.5 million, or $34.05 per share, compared to $541.2
million, or $25.76 per share, for the prior year 39-week period.
Included in net income for the 39 weeks ended October 29, 2022 is a
pretax gain of $7.2 million ($5.6 million after tax or $0.32 per
share) primarily related to the sale of a store property.
Included in net income for the prior year 39-week period ended
October 30, 2021 is a pretax gain of $24.7 million ($19.2 million
after tax or $0.91 per share) primarily related to the sale of
three store properties.
Sales – 39 Weeks
Net sales for the 39 weeks ended October 29, 2022 and October
30, 2021 were $4.744 billion and $4.380 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 39-week periods
ended October 29, 2022 and October 30, 2021 were $4.633 billion and
$4.296 billion, respectively. Total retail sales increased 8% for
the 39-week period ended October 29, 2022. Sales in comparable
stores increased 8%.
Gross Margin – 39 Weeks
Consolidated gross margin for the 39 weeks ended October 29,
2022 was 44.0% of sales compared to 43.0% of sales for the prior
year 39-week period.
Retail gross margin (which excludes CDI) for the 39 weeks ended
October 29, 2022 improved approximately 120 basis points of sales
to 44.9% compared to 43.7% for the prior year 39-week period.
Inventory increased 8% at October 29, 2022 compared to October
30, 2021.
Selling, General & Administrative Expenses – 39
Weeks
Consolidated selling, general and administrative expenses
(“operating expenses”) for the 39 weeks ended October 29, 2022 were
$1.216 billion (25.6% of sales) compared to $1.096 billion (25.0%
of sales) for the prior year 39-week period. The increase of
approximately $120 million is primarily due to continued increases
in payroll and payroll-related expenses.
Highlights of the Third Quarter (compared to the prior year
third quarter):
- Comparable store sales increased 3%
- Net income of $187.9 million compared to net income of
$197.3 million
- Earnings per share of $10.96 compared to $9.81
- Retail gross margin of 45.7% of sales compared to 46.7% of
sales
- Operating expenses were $413.8 million (26.8% of sales)
compared to $393.2 million (26.5% of sales)
- Share repurchase of $24.3 million (approximately 99,000
shares)
Third Quarter Results
Dillard’s reported net income for the 13 weeks ended October 29,
2022 of $187.9 million, or $10.96 per share, compared to net income
of $197.3 million, or $9.81 per share, for the 13 weeks ended
October 30, 2021.
Sales – Third Quarter
Net sales for the 13 weeks ended October 29, 2022 and October
30, 2021 were $1.544 billion and $1.481 billion, respectively.
Total retail sales for the 13-week periods ended October 29,
2022 and October 30, 2021 were $1.499 billion and $1.460 billion,
respectively. Total retail sales increased 3% for the 13-week
period ended October 29, 2022. Sales in comparable stores increased
3%. Stronger performing categories included cosmetics, men’s
apparel and accessories, home and furniture and shoes. Juniors’ and
children’s apparel was the weakest performing category.
Gross Margin – Third Quarter
Consolidated gross margin for the 13 weeks ended October 29,
2022 was 44.6% of sales compared to 46.2% of sales for the prior
year third quarter.
Retail gross margin was 45.7% compared to 46.7% for the prior
year third quarter. The Company achieved gross margin exceeding 40%
for the seventh consecutive quarter.
Selling, General & Administrative Expenses – Third
Quarter
Consolidated operating expenses for the 13 weeks ended October
29, 2022 were $413.8 million (26.8% of sales) compared to $393.2
million (26.5% of sales) for the prior year third quarter.
Retail operating expenses were $411.9 million (27.5% of sales)
compared to $391.5 million (26.8% 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 third quarter, the Company purchased $24.3 million
(approximately 99,000 shares) of Class A Common Stock at an average
price of $245.60 per share under its share repurchase program.
During the 39 weeks ended October 29, 2022, the Company
purchased $436.6 million (approximately 1,709,000 shares) of Class
A Common Stock at an average price of $255.49 per share.
As of October 29, 2022, authorization of $175.4 million remained
under the February 2022 program.
Total shares outstanding (Class A and Class B Common Stock) at
October 29, 2022 and October 30, 2021 were 17.1 million and 19.4
million, respectively.
Store Information
During the third quarter, the Company closed locations in Sikes
Senter in Wichita Falls, Texas and East Hills Mall in St. Joseph,
Missouri. Today, the Company will open its newly remodeled,
replacement building at Westgate Mall in Amarillo, Texas. The
building replaces a leased location at that center where the
Company operates a dual-anchor format.
The Company operates 249 Dillard’s locations and 28 clearance
centers spanning 29 states and an Internet store at dillards.com.
Total square footage at October 29, 2022 was 47.3 million square
feet.
Dillard’s, Inc. and
Subsidiaries
Condensed Consolidated Statements
of Income (Unaudited)
(In Millions, Except Per Share
Data)
13 Weeks Ended
39 Weeks Ended
October 29, 2022
October 30, 2021
October 29, 2022
October 30, 2021
% of
% of
% of
% of
Net
Net
Net
Net
Amount
Sales
Amount
Sales
Amount
Sales
Amount
Sales
Net sales
$
1,544.1
100.0
%
$
1,481.0
100.0
%
$
4,744.4
100.0
%
$
4,379.9
100.0
%
Service charges and other income
29.0
1.9
30.9
2.1
89.3
1.9
91.0
2.1
1,573.1
101.9
1,511.9
102.1
4,833.7
101.9
4,470.9
102.1
Cost of sales
855.7
55.4
796.3
53.8
2,658.3
56.0
2,497.6
57.0
Selling, general and administrative
expenses
413.8
26.8
393.2
26.5
1,215.9
25.6
1,095.7
25.0
Depreciation and amortization
46.7
3.0
50.2
3.4
140.8
3.0
146.6
3.3
Rentals
5.3
0.3
4.9
0.3
15.7
0.3
15.2
0.3
Interest and debt expense, net
7.0
0.5
10.6
0.7
27.1
0.6
32.9
0.8
Other expense
1.9
0.1
2.1
0.1
5.8
0.1
9.2
0.2
Gain on disposal of assets
—
0.0
—
0.0
7.2
0.2
24.7
0.6
Income before income taxes
242.7
15.7
254.6
17.2
777.3
16.4
698.4
15.9
Income taxes
54.8
57.3
174.8
157.2
Net income
$
187.9
12.2
%
$
197.3
13.3
%
$
602.5
12.7
%
$
541.2
12.4
%
Basic and diluted earnings per share
$
10.96
$
9.81
$
34.05
$
25.76
Basic and diluted weighted average shares
outstanding
17.1
20.1
17.7
21.0
Dillard’s, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets (Unaudited)
(In Millions)
October 29,
October 30,
2022
2021
Assets
Current Assets:
Cash and cash equivalents
$
532.7
$
619.7
Accounts receivable
40.5
28.5
Short-term investments
198.0
—
Merchandise inventories
1,644.7
1,525.9
Federal and state income taxes
—
99.8
Other current assets
99.5
102.9
Total current assets
2,515.4
2,376.8
Property and equipment, net
1,146.1
1,218.8
Operating lease assets
36.7
41.2
Deferred income taxes
30.8
34.8
Other assets
63.6
68.6
Total Assets
$
3,792.6
$
3,740.2
Liabilities and Stockholders’ Equity
Current Liabilities:
Trade accounts payable and accrued
expenses
$
1,293.7
$
1,285.8
Current portion of long-term debt and
finance lease liabilities
44.8
0.2
Current portion of operating lease
liabilities
10.3
11.4
Federal and state income taxes
7.4
—
Total current liabilities
1,356.2
1,297.4
Long-term debt
321.3
366.0
Operating lease liabilities
26.2
29.3
Other liabilities
279.5
283.3
Subordinated debentures
200.0
200.0
Stockholders’ equity
1,609.4
1,564.2
Total Liabilities and Stockholders’
Equity
$
3,792.6
$
3,740.2
Dillard’s, Inc. and
Subsidiaries
Condensed Consolidated Statements
of Cash Flows (Unaudited)
(In Millions)
39 Weeks Ended
October 29,
October 30,
2022
2021
Operating activities:
Net income
$
602.5
$
541.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property
and other deferred cost
141.9
148.3
Gain on disposal of assets
(7.2
)
(24.7
)
Proceeds from insurance
—
2.9
Loss on extinguishment of debt
—
2.8
Accrued interest on short-term
investment
(1.2
)
—
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable
(0.7
)
8.2
Increase in merchandise inventories
(564.6
)
(438.1
)
Increase in other current assets
(18.4
)
(49.2
)
Increase in other assets
(0.2
)
(2.5
)
Increase in trade accounts payable and
accrued expenses and other liabilities
425.2
528.1
(Decrease) increase in income taxes
(18.9
)
11.0
Net cash provided by operating
activities
558.4
728.0
Investing activities:
Purchase of property and equipment and
capitalized software
(94.8
)
(79.7
)
Proceeds from disposal of assets
8.1
29.3
Proceeds from insurance
4.9
3.8
Distribution from joint venture
—
1.5
Purchase of short-term investments
(196.8
)
—
Net cash used in investing activities
(278.6
)
(45.1
)
Financing activities:
Principal payments on long-term debt and
finance lease liabilities
—
(0.5
)
Cash dividends paid
(11.0
)
(9.7
)
Purchase of treasury stock
(452.9
)
(410.3
)
Issuance cost of line of credit
—
(3.0
)
Net cash used in financing activities
(463.9
)
(423.5
)
(Decrease) increase in cash and cash
equivalents
(184.1
)
259.4
Cash and cash equivalents, beginning of
period
716.8
360.3
Cash and cash equivalents, end of
period
$
532.7
$
619.7
Non-cash transactions:
Accrued capital expenditures
$
8.8
$
7.2
Stock awards
2.3
1.1
Lease assets obtained in exchange for new
operating lease liabilities
3.4
4.5
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
32
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/20221110005334/en/
Dillard’s, Inc. Julie J. Guymon 501-376-5965
julie.guymon@dillards.com
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