Dillard’s, Inc. (NYSE: DDS) (the “Company” or “Dillard’s”)
announced operating results for the 13 and 39 weeks ended October
28, 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 sales environment remained challenging in the third
quarter with particular weakness beginning in September. Our focus
on producing profitable sales with inventory control paid off -
with retail gross margin of 45.3% and inventory down 1% year over
year. We repurchased $48 million of stock and had $893 million of
cash and short-term investments remaining.”
Highlights of the Third Quarter (compared to the prior year
third quarter):
- Total retail sales decreased 6%
- Comparable store sales decreased 6%
- Net income of $155.3 million compared to $187.9
million
- Earnings per share of $9.49 compared to $10.96
- Retail gross margin of 45.3% of sales compared to 45.7% of
sales
- Operating expenses were $421.8 million (28.6% of sales)
compared to $413.8 million (26.8% of sales)
- Share repurchase of $48.0 million (approximately 151,000
shares)
- Ending inventory decreased 1% year over year
Third Quarter Results
Dillard’s reported net income for the 13 weeks ended October 28,
2023 of $155.3 million, or $9.49 per share compared to $187.9
million, or $10.96 per share, for the prior year third quarter.
Included in net income for the 13 weeks ended October 28, 2023 is a
pretax gain of $4.0 million ($3.1 million after tax or $0.19 per
share) primarily related to the sale of a store property.
Sales – Third Quarter
Net sales for the 13 weeks ended October 28, 2023 and October
29, 2022 were $1.476 billion and $1.544 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
October 28, 2023 and October 29, 2022 were $1.409 billion and
$1.499 billion, respectively. Total retail sales decreased 6% for
the 13-week period ended October 28, 2023 compared to the prior
year third quarter. Sales in comparable stores decreased 6%. The
Company noted a challenging sales environment during the quarter
with particular weakness beginning in September. Cosmetics was the
strongest performing category followed by home and furniture.
Juniors’ and children’s apparel was the weakest category.
Gross Margin – Third Quarter
Consolidated gross margin for the 13 weeks ended October 28,
2023 was 43.5% of sales compared to 44.6% of sales for the prior
year third quarter.
Retail gross margin (which excludes CDI) for the 13 weeks ended
October 28, 2023 was 45.3% of sales compared to 45.7% of sales for
the prior year third quarter. Gross margin increased moderately in
home and furniture and ladies’ apparel category. Gross margin was
flat in cosmetics and down slightly in men’s apparel and
accessories, juniors’ and children’s apparel and shoes. Gross
margin was down moderately in ladies’ accessories and lingerie.
Inventory decreased 1% for the 13 weeks ended October 28, 2023
compared to the 13 weeks ended October 29, 2022.
Selling, General & Administrative Expenses – Third
Quarter
Consolidated selling, general and administrative expenses
(“operating expenses”) for the 13 weeks ended October 28, 2023 were
$421.8 million (28.6% of sales) compared to $413.8 million (26.8%
of sales) for the prior year third quarter. The increase in
operating expenses is primarily due to increased payroll and
payroll-related expenses.
Highlights of the 39 Weeks (compared to the prior year 39
weeks):
- Total retail sales decreased 5%
- Comparable store sales decreased 4%
- Net income of $488.3 million compared to $602.5
million
- Earnings per share of $29.38 compared to $34.05
- Retail gross margin of 43.7% of sales compared to 44.9% of
sales
- Operating expenses were $1,240.7 million (26.8% of sales)
compared to $1,215.9 million (25.6% of sales)
- Share repurchase of $265.2 million (approximately 866,000
shares)
39-Week Results
Dillard’s reported net income for the 39 weeks ended October 28,
2023 of $488.3 million, or $29.38 per share. This compares to
$602.5 million, or $34.05 per share, for the prior year 39-week
period. Included in net income for the 39 weeks ended October 28,
2023 is a pretax gain of $6.0 million ($4.6 million after tax or
$0.28 per share) primarily related to the sale of two store
properties.
Included in net income for the prior year 39-week period 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.
Sales – 39 Weeks
Net sales for the 39 weeks ended October 28, 2023 and October
29, 2022 were $4.628 billion and $4.744 billion, respectively.
Total retail sales for the 39 weeks ended October 28, 2023 and
October 29, 2022 were $4.423 billion and $4.633 billion,
respectively. Total retail sales decreased 5% for the 39-week
period ended October 28, 2023 compared to the prior year 39-week
period. Sales in comparable stores decreased 4%.
Gross Margin – 39 Weeks
Consolidated gross margin for the 39 weeks ended October 28,
2023 was 42.0% of sales compared to 44.0% of sales for the prior
year 39-week period.
Retail gross margin for the 39 weeks ended October 28, 2023 was
43.7% of sales compared to 44.9% of sales for the prior year
39-week period.
Selling, General & Administrative Expenses – 39
Weeks
Operating expenses for the 39 weeks ended October 28, 2023 were
$1,240.7 million (26.8% of sales) compared to $1,215.9 million
(25.6% of sales) for the prior year 39-week period. The increase in
operating expenses is primarily due to increased payroll and
payroll-related expenses.
Share Repurchase
During the 13 weeks ended October 28, 2023, the Company
purchased $48.0 million (approximately 151,000 shares) of Class A
Common Stock at an average price of $318.01 per share. During the
39 weeks ended October 28, 2023, the Company purchased $265.2
million (approximately 866,000 shares) at an average price of
$306.41 per share. As of October 28, 2023, authorization of $410.2
million remained under the May 2023 program.
Total shares outstanding (Class A and Class B Common Stock) at
October 28, 2023 and October 29, 2022 were 16.3 million and 17.1
million, respectively.
Store Information
Dillard’s closed its MacArthur Center location
in Norfolk, Virginia (240,000 square feet) during the third
quarter. The Company operates 273 Dillard’s stores, including 27
clearance centers, spanning 29 states (totaling 46.7 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
39 Weeks Ended
October 28, 2023
October 29, 2022
October 28, 2023
October 29, 2022
% of
% of
% of
% of
Net
Net
Net
Net
Amount
Sales
Amount
Sales
Amount
Sales
Amount
Sales
Net sales
$
1,476.4
100.0
%
$
1,544.1
100.0
%
$
4,627.7
100.0
%
$
4,744.4
100.0
%
Service charges and other income
27.8
1.9
29.0
1.9
87.9
1.9
89.3
1.9
1,504.2
101.9
1,573.1
101.9
4,715.6
101.9
4,833.7
101.9
Cost of sales
834.5
56.5
855.7
55.4
2,684.6
58.0
2,658.3
56.0
Selling, general and administrative
expenses
421.8
28.6
413.8
26.8
1,240.7
26.8
1,215.9
25.6
Depreciation and amortization
44.7
3.0
46.7
3.0
135.3
2.9
140.8
3.0
Rentals
4.9
0.3
5.3
0.3
14.3
0.3
15.7
0.3
Interest and debt (income) expense,
net
(1.8
)
(0.1
)
7.0
0.5
(1.5
)
0.0
27.1
0.6
Other expense
4.7
0.3
1.9
0.1
14.1
0.3
5.8
0.1
Gain on disposal of assets
4.0
0.3
—
0.0
6.0
0.1
7.2
0.2
Income before income taxes
199.4
13.5
242.7
15.7
634.1
13.7
777.3
16.4
Income taxes
44.1
54.8
145.8
174.8
Net income
$
155.3
10.5
%
$
187.9
12.2
%
$
488.3
10.6
%
$
602.5
12.7
%
Basic and diluted earnings per share
$
9.49
$
10.96
$
29.38
$
34.05
Basic and diluted weighted average shares
outstanding
16.4
17.1
16.6
17.7
Dillard’s, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets (Unaudited)
(In Millions)
October 28,
October 29,
2023
2022
Assets
Current Assets:
Cash and cash equivalents
$
842.0
$
532.7
Accounts receivable
57.4
40.5
Short-term investments
51.3
198.0
Merchandise inventories
1,629.2
1,644.7
Other current assets
85.7
99.5
Total current assets
2,665.6
2,515.4
Property and equipment, net
1,094.6
1,146.1
Operating lease assets
34.4
36.7
Deferred income taxes
47.6
30.8
Other assets
55.7
63.6
Total Assets
$
3,897.9
$
3,792.6
Liabilities and Stockholders’ Equity
Current Liabilities:
Trade accounts payable and accrued
expenses
$
1,181.2
$
1,293.7
Current portion of long-term debt
—
44.8
Current portion of operating lease
liabilities
8.5
10.3
Federal and state income taxes
12.5
7.4
Total current liabilities
1,202.2
1,356.2
Long-term debt
321.4
321.3
Operating lease liabilities
26.2
26.2
Other liabilities
334.5
279.5
Subordinated debentures
200.0
200.0
Stockholders’ equity
1,813.6
1,609.4
Total Liabilities and Stockholders’
Equity
$
3,897.9
$
3,792.6
Dillard’s, Inc. and
Subsidiaries
Condensed Consolidated Statements
of Cash Flows (Unaudited)
(In Millions)
39 Weeks Ended
October 28,
October 29,
2023
2022
Operating activities:
Net income
$
488.3
$
602.5
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property
and other deferred cost
136.5
141.9
Gain on disposal of assets
(6.0
)
(7.2
)
Accrued interest on short-term
investments
(4.2
)
(1.2
)
Changes in operating assets and
liabilities:
Increase in accounts receivable
(0.5
)
(0.7
)
Increase in merchandise inventories
(509.0
)
(564.6
)
Decrease (increase) in other current
assets
4.6
(18.4
)
Decrease (increase) in other assets
0.2
(0.2
)
Increase in trade accounts payable and
accrued expenses and other liabilities
354.6
425.2
Decrease in income taxes
(17.4
)
(18.9
)
Net cash provided by operating
activities
447.1
558.4
Investing activities:
Purchase of property and equipment and
capitalized software
(104.7
)
(94.8
)
Proceeds from disposal of assets
6.3
8.1
Proceeds from insurance
4.5
4.9
Purchase of short-term investments
(148.1
)
(196.8
)
Proceeds from maturities of short-term
investments
250.0
—
Net cash provided by (used in) investing
activities
8.0
(278.6
)
Financing activities:
Cash dividends paid
(10.1
)
(11.0
)
Purchase of treasury stock
(263.3
)
(452.9
)
Net cash used in financing activities
(273.4
)
(463.9
)
Increase (decrease) in cash and cash
equivalents
181.7
(184.1
)
Cash and cash equivalents and restricted
cash, beginning of period
660.3
716.8
Cash and cash equivalents, end of
period
$
842.0
$
532.7
Non-cash transactions:
Accrued capital expenditures
$
10.9
$
8.8
Accrued purchase of treasury stock and
excise taxes
4.6
—
Stock awards
1.3
2.3
Lease assets obtained in exchange for new
operating lease liabilities
9.2
3.4
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
(3
)
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, a potential U.S. Federal
government shutdown, 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 SOFR and
other base borrowing rates; 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 ongoing
conflicts in the Middle East and 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/20231109258591/en/
Dillard’s, Inc. Julie J. Guymon 501-376-5965
julie.guymon@dillards.com
Dillards (NYSE:DDS)
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