Oppressive economic continues to hit Dillard's operations
Dillard's Inc announced operating results for the 13 weeks ended November 1, 2008. Net loss for the 13 weeks ended November 1, 2008 was $56.0 million ($0.76 per share) compared to net loss of $11.3 million ($0.15 per share) for the 13 weeks ended November 3, 2007.
Included in net loss for the 13 weeks ended November 1, 2008 are asset impairment and store closing charges of $9.3 million ($6.0 million after tax or $0.08 per share) related to closure of under-performing stores and $4.4 million ($2.8 million after tax or $.04 per share) of hurricane-related expenses. Included in net loss for the 13 weeks ended November 3, 2007 is a pretax gain of $11.1 million ($7.0 million after tax or $0.09 per share) related to hurricane recovery and asset impairment and store closing charges of $3.7 million ($2.3 after tax or $0.03 per share).
Dillard's Chief Executive Officer, William Dillard, II, stated, "The oppressive economic environment clearly weighed heavily on our results during the third quarter. We continue to take aggressive action to navigate these challenging times."
"We announced the closure of 21 under-performing stores during 2008, dramatically reduced capital spending for 2008 and 2009 and are executing appropriate operating expense reduction measures throughout the Company. These efforts are not only designed to position ourselves to weather near-term economic uncertainty but also to position Dillard's well for the long term." Accordingly, Dillard's highlights the following key financial strengths:
-- Dillard's maintains a $1.2 billion revolving credit facility with JP Morgan Chase Bank as the lead agent. The credit agreement expires December 12, 2012 and there are no financial covenants under this facility provided availability exceeds $100 million. Expected availability on the credit facility following the Company's peak borrowing requirement remains well in excess of $500 million.
-- Total maturities of long-term debt in 2009 and 2010 are less than $26 million.
-- Dillard's owns approximately 86% of its total store square footage.
-- The closure of 21 under-performing stores will result in over $50 million reduction in working capital requirement for 2009.
-- Capital expenditures in 2009 are expected to be approximately $120 million compared to approximately $192 million in 2008 primarily as a result of dramatically reduced store opening activity. Dillard's will begin construction of three stores during 2009 with one opening in 2009 and the other two opening in February and March of 2010. Dillard's opened 10 new stores in 2008.
-- Dillard's recently announced a strategic staff reduction of approximately 8% of its salaried associates as part of its ongoing efforts to reduce operating expenses. The positions were comprised mainly of salaried managers and support professionals including 60 in the Company's Little Rock, Arkansas headquarters.
-- Dillard's expects approximately $100 million in savings in operating expenses (advertising, selling, administrative and general or "S G & A" expenses) in 2008 as a result of recent expense cutting measures. Management estimates additional S G & A savings in 2009 to be approximately $70 million as a result of recent actions including the recently-announced strategic staff reduction.