Dillard’s, Inc. (NYSE: DDS) (the “Company” or “Dillard’s”)
announced operating results for the 13 and 26 weeks ended July 29,
2023. 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, “The cautious consumer we noted in the first quarter
continued in the first few weeks of the second, leading to a sales
decline of 3%. We exited the quarter with inventory flat year over
year while maintaining a strong retail gross margin of 40.4%. We
repurchased $103 million of stock and ended the quarter with $924
million in cash and short-term investments.”
Highlights of the Second Quarter (compared to the prior year
second quarter):
- Total retail sales decreased 3%
- Comparable store sales decreased 3%
- Net income of $131.5 million compared to $163.4
million
- Earnings per share of $7.98 compared to $9.30
- Retail gross margin of 40.4% of sales compared to 41.5% of
sales
- Operating expenses were $412.6 million (26.3% of sales)
compared to $401.3 million (25.3% of sales)
- Share repurchase of $103.4 million (approximately 358,000
shares)
- Ending inventory unchanged (as a percentage) year over
year
Second Quarter Results
Dillard’s reported net income for the 13 weeks ended July 29,
2023 of $131.5 million, or $7.98 per share compared to $163.4
million, or $9.30 per share, for the prior year second quarter.
Sales – Second Quarter
Net sales for the 13 weeks ended July 29, 2023 and July 30, 2022
were $1.567 billion and $1.589 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 13 weeks ended
July 29, 2023 and July 30, 2022 were $1.499 billion and $1.553
billion, respectively. Total retail sales decreased 3% for the
13-week period ended July 29, 2023 compared to the prior year
second quarter. Sales in comparable stores decreased 3%. The
Company noted continuing consumer caution, particularly in the
first few weeks of the second quarter. Cosmetics was the strongest
performing category followed by home and furniture. Ladies’
accessories and lingerie, ladies’ apparel and shoes were the
weakest categories.
Gross Margin – Second Quarter
Consolidated gross margin for the 13 weeks ended July 29, 2023
was 38.8% of sales compared to 40.8% of sales for the prior year
second quarter.
Retail gross margin (which excludes CDI) for the 13 weeks ended
July 29, 2023 was 40.4% of sales compared to 41.5% of sales for the
prior year second quarter. Gross margin increased significantly in
home and furniture and increased moderately in ladies’ accessories
and lingerie compared to the prior year second quarter. Gross
margin decreased significantly in men’s apparel and accessories and
decreased moderately in juniors’ and children’s apparel.
Inventory remained unchanged (as a percentage) for the 13 weeks
ended July 29, 2023 compared to the 13 weeks ended July 30,
2022.
Selling, General & Administrative Expenses – Second
Quarter
Consolidated selling, general and administrative expenses
(“operating expenses”) for the 13 weeks ended July 29, 2023 were
$412.6 million (26.3% of sales) compared to $401.3 million (25.3%
of sales) for the prior year second quarter. The increase in
operating expenses is primarily due to increased payroll and
payroll-related expenses.
Highlights of the 26 Weeks (compared to the prior year 26
weeks):
- Total retail sales decreased 4%
- Comparable store sales decreased 4%
- Net income of $333.0 million compared to $414.5
million
- Earnings per share of $19.89 compared to $23.07
- Retail gross margin of 43.0% of sales compared to 44.5% of
sales
- Operating expenses were $818.9 million (26.0% of sales)
compared to $802.1 million (25.1% of sales)
- Share repurchase of $217.3 million (approximately 715,000
shares)
26-Week Results
Dillard’s reported net income for the 26 weeks ended July 29,
2023 of $333.0 million, or $19.89 per share. This compares to
$414.5 million, or $23.07 per share, for the prior year 26-week
period. Included in net income for the 26 weeks ended July 29, 2023
is a pretax gain of $2.0 million ($1.5 million after tax or $0.09
per share) primarily related to the sale of a store property.
Included in net income for the prior year 26-week period 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.
Sales – 26 Weeks
Net sales for the 26 weeks ended July 29, 2023 and July 30, 2022
were $3.151 billion and $3.200 billion, respectively.
Total retail sales for the 26 weeks ended July 29, 2023 and July
30, 2022 were $3.013 billion and $3.133 billion, respectively.
Total retail sales decreased 4% for the 26-week period ended July
29, 2023 compared to the prior year 26-week period. Sales in
comparable stores decreased 4%.
Gross Margin – 26 Weeks
Consolidated gross margin for the 26 weeks ended July 29, 2023
was 41.3% of sales compared to 43.7% of sales for the prior year
26-week period.
Retail gross margin for the 26 weeks ended July 29, 2023 was
43.0% of sales compared to 44.5% of sales for the prior year
26-week period.
Selling, General & Administrative Expenses – 26
Weeks
Operating expenses for the 26 weeks ended July 29, 2023 were
$818.9 million (26.0% of sales) compared to $802.1 million (25.1%
of sales) for the prior year 26-week period. The increase in
operating expenses is primarily due to increased payroll and
payroll-related expenses.
Share Repurchase
During the 13 weeks ended July 29, 2023, the Company purchased
$103.4 million (approximately 358,000 shares) of Class A Common
Stock at an average price of $289.32 per share. During the 26 weeks
ended July 29, 2023, the Company purchased $217.3 million
(approximately 715,000 shares) at an average price of $303.98 per
share. As of July 29, 2023, authorization of $458.1 million
remained under the May 2023 program.
Total shares outstanding (Class A and Class B Common Stock) at
July 29, 2023 and July 30, 2022 were 16.4 million and 17.2 million,
respectively.
Store Information
Dillard’s has announced the upcoming closure of its MacArthur
Center location in Norfolk, Virginia (240,000 square feet). The
store is expected to close in September, 2023.
The Company operates 274 Dillard’s stores, including 27
clearance centers, spanning 29 states (totaling 46.9 million square
feet) and an Internet store at dillards.com.
Dillard’s, Inc. and
Subsidiaries
Condensed Consolidated Statements
of Income (Unaudited)
(In Millions, Except Per Share
Data)
13 Weeks Ended
26 Weeks Ended
July 29, 2023
July 30, 2022
July 29, 2023
July 30, 2022
% of
% of
% of
% of
Net
Net
Net
Net
Amount
Sales
Amount
Sales
Amount
Sales
Amount
Sales
Net sales
$
1,567.4
100.0
%
$
1,588.6
100.0
%
$
3,151.3
100.0
%
$
3,200.3
100.0
%
Service charges and other income
30.0
1.9
29.3
1.8
60.0
1.9
60.4
1.9
1,597.4
101.9
1,617.9
101.8
3,211.3
101.9
3,260.7
101.9
Cost of sales
958.8
61.2
941.2
59.2
1,850.1
58.7
1,802.6
56.3
Selling, general and administrative
expenses
412.6
26.3
401.3
25.3
818.9
26.0
802.1
25.1
Depreciation and amortization
44.8
2.9
47.9
3.0
90.6
2.9
94.1
2.9
Rentals
5.0
0.3
5.3
0.3
9.3
0.3
10.4
0.3
Interest and debt expense, net
0.1
0.0
9.7
0.6
0.3
0.0
20.2
0.6
Other expense
4.7
0.3
2.0
0.1
9.4
0.3
3.9
0.1
Gain on disposal of assets
0.2
0.0
—
0.0
2.0
0.1
7.2
0.2
Income before income taxes
171.6
10.9
210.5
13.3
434.7
13.8
534.6
16.7
Income taxes
40.1
47.1
101.7
120.1
Net income
$
131.5
8.4
%
$
163.4
10.3
%
$
333.0
10.6
%
$
414.5
13.0
%
Basic and diluted earnings per share
$
7.98
$
9.30
$
19.89
$
23.07
Basic and diluted weighted average shares
outstanding
16.5
17.6
16.7
18.0
Dillard’s, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets (Unaudited)
(In Millions)
July 29,
July 30,
2023
2022
Assets
Current Assets:
Cash and cash equivalents
$
774.3
$
492.9
Accounts receivable
59.7
36.4
Short-term investments
150.2
74.0
Merchandise inventories
1,192.7
1,193.4
Federal and state income taxes
—
35.7
Other current assets
103.3
97.8
Total current assets
2,280.2
1,930.2
Property and equipment, net
1,098.9
1,159.7
Operating lease assets
30.4
37.1
Deferred income taxes
46.0
30.2
Other assets
56.9
64.4
Total Assets
$
3,512.4
$
3,221.6
Liabilities and Stockholders’ Equity
Current Liabilities:
Trade accounts payable and accrued
expenses
$
803.1
$
890.8
Current portion of long-term debt
—
44.8
Current portion of operating lease
liabilities
8.1
10.4
Federal and state income taxes
115.6
—
Total current liabilities
926.8
946.0
Long-term debt
321.4
321.3
Operating lease liabilities
22.3
26.5
Other liabilities
332.4
278.8
Subordinated debentures
200.0
200.0
Stockholders’ equity
1,709.5
1,449.0
Total Liabilities and Stockholders’
Equity
$
3,512.4
$
3,221.6
Dillard’s, Inc. and
Subsidiaries
Condensed Consolidated Statements
of Cash Flows (Unaudited)
(In Millions)
26 Weeks Ended
July 29,
July 30,
2023
2022
Operating activities:
Net income
$
333.0
$
414.5
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property
and other deferred cost
91.4
94.9
Gain on disposal of assets
(2.0)
(7.2)
Accrued interest on short-term
investments
(3.1)
—
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable
(2.7)
3.4
Increase in merchandise inventories
(72.5)
(113.3)
Increase in other current assets
(12.4)
(18.2)
Decrease (increase) in other assets
4.5
(0.2)
Decrease in trade accounts payable and
accrued expenses and other liabilities
(24.9)
(40.1)
Increase (decrease) in income taxes
86.6
(54.7)
Net cash provided by operating
activities
397.9
279.1
Investing activities:
Purchase of property and equipment and
capitalized software
(63.8)
(61.1)
Proceeds from disposal of assets
2.1
8.1
Proceeds from insurance
—
4.8
Purchase of short-term investments
(148.1)
(24.7)
Proceeds from maturities of short-term
investments
150.0
—
Net cash used in investing activities
(59.8)
(72.9)
Financing activities:
Cash dividends paid
(6.8)
(7.5)
Purchase of treasury stock
(217.3)
(422.6)
Net cash used in financing activities
(224.1)
(430.1)
Increase (decrease) in cash and cash
equivalents and restricted cash
114.0
(223.9)
Cash and cash equivalents and restricted
cash, beginning of period
660.3
716.8
Cash and cash equivalents, end of
period
$
774.3
$
492.9
Non-cash transactions:
Accrued capital expenditures
$
12.0
$
9.8
Accrued purchase of treasury stock and
excise taxes
2.2
6.0
Stock awards
1.3
2.3
Accrued purchase of short-term
investments
—
49.3
Lease assets obtained in exchange for new
operating lease liabilities
2.0
0.6
Estimates for 2023
The Company is providing the following estimates for certain
financial statement items for the 53-week period ending February 3,
2024 based upon current conditions. Actual results may differ
significantly from these estimates as conditions and factors change
- See “Forward-Looking Information.”
In Millions
2023
2022
Estimated
Actual
Depreciation and amortization
$
180
$
188
Rentals
22
23
Interest and debt (income) expense,
net
(5)
31
Capital expenditures
140
120
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 53-week period ended February 3, 2024 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) general retail industry
conditions and macro-economic conditions including inflation,
rising interest rates, bank failures, economic recession 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 (including the Inflation
Reduction Act of 2022); changes in legislation and governmental
regulations, affecting such matters as the cost of employee
benefits or credit card income, such as the Consumer Financial
Protection Bureau’s recent proposal to amend Regulation Z to limit
the dollar amounts credit card companies can charge for late fees;
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; COVID-19 and other epidemic, pandemic or
public health issues and their effects on public health, our supply
chain, the health and well-being of our employees and customers and
the retail industry in general; potential disruption of
international trade and supply chain efficiencies; 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, and other risks and
uncertainties, including those detailed from time to time in our
periodic reports filed with the Securities and Exchange Commission,
particularly those set forth under the caption “Item 1A, Risk
Factors” in the Company’s Annual Report on Form 10-K for the fiscal
year ended January 28, 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230810699996/en/
Dillard’s, Inc. Julie J. Guymon 501-376-5965
julie.guymon@dillards.com
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