Dillard's achieves solid improvement in merchandise gross margin
17 Aug '10
5 min read
The Company's inventory management measures include considerable adjustments to receipt cadence to shorten the period of time from receipt to sale, reduce markdown risk and keep customers engaged with a more continuous flow of fresh merchandise selections throughout the season. Dillard's continues to seek marked differentiation in the marketplace by improving its product mix to include more bold statements in fashion from national vendors as well as in the Company's exclusive brands.
Advertising, Selling, Administrative and General Expenses Advertising, selling, administrative and general expenses ("operating expenses") declined $4.6 million during the second quarter of 2010 primarily as a result of savings in payroll and advertising expenses partially offset by increases in services purchased and supplies. Operating expenses were $392.0 million (28.2% of sales) for the 13 weeks ended July 31, 2010 compared to $396.7 million (27.8% of sales) for the 13 weeks ended August 1, 2009.
Share Repurchase During the 13 weeks ended July 31, 2010, Dillard's completed the share repurchase authorization under the Company's $200 million share repurchase program with the purchase of $77.6 million (3.0 million shares) of Class A Common Stock. Total shares of Class A Common Stock outstanding at July 31, 2010 were 62.8 million. Total shares of Class A Common Stock outstanding at January 30, 2010 were 69.8 million.
Credit Facility As of July 31, 2010, there were no short-term borrowings outstanding under the Company's $1.2 billion revolving credit facility. The credit agreement expires on December 12, 2012, and there are no financial covenants under this facility provided its availability exceeds $100 million. Letters of credit totaling $89.2 million were outstanding under the revolving credit facility as of July 31, 2010.
Store Information During the 13 weeks ended July 31, 2010, Dillard's closed its Helena, Montana store (65,000 square feet). Dillard's remains committed to closing underperforming stores where appropriate.
Estimates for 2010 The Company is updating the following estimates for certain financial statement items for the fiscal year ending January 29, 2011 based upon current conditions. Actual results may differ significantly from these estimates as conditions and factors change - See "Forward-Looking Information".
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