November 14, 2013 - Little Rock, Arkansas - Dillard's, Inc. (DDS-NYSE) (the "Company" or "Dillard's") announced operating results for the 13 and 39 weeks ended November 2, 2013. This release contains certain forward-looking statements. Please refer to the Company's cautionary statements regarding forward-looking information included below under "Forward-Looking Information".
Highlights of the Company's Third Quarter Performance
Third Quarter Results
Dillard's reported net income for the 13 weeks ended November 2, 2013 of $50.9 million, or $1.13 per share compared to net income of $48.5 million, or $1.01 per share, for the 13 weeks ended October 27, 2012. Included in net income for the prior year third quarter is a net after-tax credit totaling $2.4 million or $0.05 per share comprised of the following items:
Excluding these items, Dillard's would have reported $46.1 million ($0.96 per share) for the prior year third quarter.
Dillard's Chief Executive Officer, William T. Dillard, II, stated, "Another positive comparable store sales increase and expense control highlighted our third quarter at Dillard's, as did our aggressive execution of $187 million of share buyback. In spite of a somewhat disappointing 30 basis point decline in merchandise gross margin, we were pleased to deliver increased net income. As we enter our 75th anniversary holiday season, we are looking forward to serving our customers nationwide at an exceptional level."
39 Week Results
Dillard's reported net income for the 39 weeks ended November 2, 2013 of $204.6 million, or $4.43 per share compared to net income of $174.5 million, or $3.55 per share, for the prior year 39-week period.
Included in net income for the 39-week period ended November 2, 2013 is a net after-tax credit totaling $4.4 million ($0.09 per share) comprised of the following three items:
Excluding this credit, Dillard's would have reported net income of $200.2 million ($4.34 per share) for the 39-week period ended November 2, 2013.
Included in net income for the prior year 39-week period ended October 27, 2012 is a net after-tax credit totaling $2.4 million ($0.04 per share) comprised of the following two items:
Excluding this credit, Dillard's would have reported net income of $172.1 million ($3.51 per share) for the 39-week period ended October 27, 2012.
Net Sales - 13 Weeks
Net sales for the 13 weeks ended November 2, 2013 were $1.469 billion and $1.450 billion for the 13 weeks ended October 27, 2012. Net sales include the operations of the Company's construction business, CDI Contractors, LLC ("CDI").
Total merchandise sales (which exclude CDI) for the 13-week period ended November 2, 2013 were $1.437 billion and $1.425 billion for the 13-week period ended October 27, 2012. Total merchandise sales increased 1% for the 13-week period ended November 2, 2013. Sales in comparable stores for the period increased 1%.
Sales trends were notably strong in ladies' accessories and lingerie followed by shoes and ladies' apparel. Sales were weakest in the home and furniture category. Sales trends were strongest in the Central region, followed by the Eastern and Western regions, respectively.
Net Sales - 39 Weeks
Net sales for the 39 weeks ended November 2, 2013 were $4.498 billion and $4.487 billion for the 39 weeks ended October 27, 2012. Total merchandise sales for the 39-week period ended November 2, 2013 were $4.426 billion and $4.403 billion for the 39-week period ended October 27, 2012. Total merchandise sales increased 1% for the 39-week period ended November 2, 2013. Sales in comparable stores for the period increased 1%.
Gross margin from retail operations (which excludes CDI) decreased 30 basis points of sales to 36.8% for the 13 weeks ended November 2, 2013 compared to 37.1% for the prior year third quarter. Consolidated gross margin for the 13 weeks ended November 2, 2013 decreased 40 basis points of sales to 36.2% from 36.6% during the prior year third quarter. Inventory increased 6% at November 2, 2013 compared to October 27, 2012.
Selling, General & Administrative Expenses
Selling, general and administrative expenses ("operating expenses") decreased 40 basis points of sales during the third quarter ended November 2, 2013. Operating expenses were $404.4 million and $404.6 million for the 13 weeks ended November 2, 2013 and October 27, 2012, respectively. Decreases in advertising expense and taxes other than income taxes were partially offset by increased payroll, primarily selling payroll.
During the quarter ended November 2, 2013, the Company repurchased $186.9 million (2.4 million shares) of Class A Common Stock at an average price of $77.80 per share under the Company's share repurchase plan. Share repurchase activity for the year-to-date period ended November 2, 2013 was $301.6 million (3.9 million shares) at an average cost of $78.30 per share. Remaining authorization under the share repurchase program at November 2, 2013 was $40.4 million.
Total shares outstanding (Class A and Class B Common Stock) at November 2, 2013 and October 27, 2012 were 43.9 million and 47.1 million, respectively.
Other short-term borrowings were $170.0 million and $27.0 million at November 2, 2013 and October 27, 2012, respectively. The Company expects to have no short-term borrowings at February 1, 2014.
"Making Christmas Merry for 75 Years"
Dillard's is proudly marking its 75th year of holiday service. This year, Dillard's has adapted the "Dillard's. The Style of Your Life" campaign to "Dillard's. Making Christmas Merry for 75 Years" in celebration of this important milestone. The new tag line will be featured in all Dillard's holiday advertising efforts throughout the holiday season including prominent in-store placement. Continuing its longstanding tradition of honoring our customers' and associates' time with family, Dillard's will be closed on Thanksgiving Day. Dillard's will open its doors at 8:00 a.m. on Black Friday.
During the third quarter of 2013, the Company closed its Euclid Square Mall clearance location in Euclid, Ohio (100,000 square feet). Dillard's announced the upcoming closure of its University Mall location in Chapel Hill, North Carolina (64,000 square feet) and its Collin Creek location in Plano, Texas (195,000 square feet). Both locations are expected to close by the end of the fourth quarter.
At November 2, 2013, the Company operated 282 Dillard's locations and 17 clearance centers spanning 29 states and an Internet store at www.dillards.com. Total square footage at November 2, 2013 was 50.8 million.
The foregoing contains certain "forward-looking statements" within the definition of federal securities laws. The following are or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: statements including (a) words such as "may," "will," "could," "believe," "expect," "future," "potential," "anticipate," "intend," "plan," "estimate," "continue," or the negative or other variations thereof, and (b) statements regarding matters that are not historical facts. 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; 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 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 consumer spending patterns, debt levels and their ability to meet credit obligations; changes in legislation, affecting such matters as the cost of employee benefits or credit card income; 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; potential disruption from terrorist activity and the effect on ongoing consumer confidence; epidemic, pandemic or other public health issues; potential disruption of international trade and supply chain efficiencies; world conflict and the possible impact on consumer spending patterns and other economic and demographic changes of similar or dissimilar nature. The Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended February 2, 2013, contain other information on factors that may affect financial results or cause actual results to differ materially from forward-looking statements.
Contact: Julie Johnson Bull