Dillard's reports good results in key operational areas

17 May '10

4 min read

Dillard's, Inc. announced operating results for the 13 weeks ended May 1, 2010.

Highlights of the 13 weeks ended May 1, 2010 included:

• Net income of $48.8 million, or $0.68 per share, compared to prior year net income of $7.7 million, or $0.10 per share. (See further discussion of Net income below.)
• A comparable store sales increase of 2% for the quarter.
• Improved merchandise gross margin performance of 300 basis points of sales compared to the prior year first quarter.
• Operating expense savings of $20.7 million, an improvement of 100 basis points of sales to 27.1% from 28.1% for the prior year first quarter.
• Cash flow from operations of $80.3 million compared to $42.4 million for the prior year first quarter.
• Repurchase of approximately $105 million (4.2 million shares) of Class A Common Stock under the Company's $200 million share repurchase program.
• An ending cash position of $305.3 million at May 1, 2010 with no short term borrowings outstanding under the Company's $1.2 billion revolving credit facility.
• Comparable store inventory decline of 12% compared to the prior year first quarter.

Dillard's Chief Executive Officer, William T. Dillard, II, stated, "We are encouraged by our solid first quarter performance as we report good results in our key operational areas including inventory management and cost control. Notably, we achieved strong cash flow which enabled us to confidently execute our share repurchase program, underscoring our commitment to our shareholders and to the Company."

Net Income
Net income for the 13 weeks ended May 1, 2010 was $48.8 million, or $0.68 per share, compared to net income for the 13 weeks ended May 2, 2009 of $7.7 million, or $0.10 per share. Included in net income for the 13 weeks ended May 1, 2010 are non-cash pretax asset impairment and store closing charges of $2.2 million ($1.4 million after tax or $0.02 per share).

Included in net income for the 13 weeks ended May 2, 2009 is a pretax gain of $1.5 million ($0.9 million after tax or $0.01 per share) on the early extinguishment of debt related to the repurchase of certain unsecured notes.

Net Sales/Total Revenues
Net sales for the 13 weeks ended May 1, 2010 were $1.454 billion compared to net sales for the 13 weeks ended May 2, 2009 of $1.474 billion. Net sales include the operations of the Company's construction business, CDI Contractors, LLC ("CDI").

Total merchandise sales, excluding CDI, for the 13-week period ended May 1, 2010 were $1.429 billion, increasing 1% compared to $1.415 billion for the 13-week period ended May 2, 2009. Merchandise sales in comparable stores increased 2% for the 13-week period ended May 1, 2010.

Gross Margin/Inventory
Gross margin from retail operations (which excludes CDI) improved approximately 300 basis points of sales during the 13 weeks ended May 1, 2010 compared to the 13 weeks ended May 2, 2009 as a result of the Company's improvements in inventory management and resulting decrease in markdown activity. These improvements include notable changes to the cadence of merchandise receipts to shorten the time span between receipt of product and point of sale. The Company will continue to emphasize these shorter cycle times throughout the fiscal year in its continuing effort to reduce markdown risk and keep customers engaged with a more continuous flow of fresh merchandise selections. Inventory in comparable stores declined 12% at May 1, 2010 compared to May 2, 2009.

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