Dillard’s Inc. reported a net loss for the 13 weeks ended August 4 of $2.9 million, or 10 cents per share, compared to a net loss of $17.1 million, or 58 cents per share, for the prior year second quarter, beating Wall Street estimates by 35 cents.

“While we are not happy with a loss for the quarter, our 32 percent improvement in year-to-date pretax income is a positive,” said Dillard’s CEO William T. Dillard II. “We believe this reflects the continued strength of our customers and their interest in our merchandise selections, and it is encouraging as we head into the important back half of the year.”

Net sales for the 13 weeks ended August 4, 2018, and the 13 weeks ended July 29, 2017, were $1.468 billion and $1.427 billion, respectively. Q2 sales beat analysts’ estimates by $30 million.

Total merchandise sales for the 13-week period ended August 4, 2018, were $1.409 billion and $1.385 billion for the 13-week period ended July 29, 2017. Total merchandise sales increased 2 percent for the 13-week period ended August 4, 2018. Sales in comparable stores for the period increased 1 percent. In relation to the total merchandise sales performance, above trend performances were noted in men’s apparel and accessories and juniors’ and children’s apparel. Sales in home and furniture and cosmetics were consistent with trend while sales in ladies’ accessories and lingerie were slightly below trend. Below trend performances were noted in shoes and ladies’ apparel. Sales were slightly above trend in the Western region, consistent with trend in the Eastern region and slightly below trend in the Central region.

26 Week Results

Dillard’s reported net income for the 26 weeks ended August 4, 2018, of $77.7 million, or $2.80 per share, compared to net income of $49.2 million, or $1.62 per share, for the prior year 26-week period.

Net sales for the 26 weeks ended August 4, 2018, and the 26 weeks ended July 29, 2017 were $2.926 billion and $2.846 billion, respectively. Net sales include the operations of the company’s construction business, CDI Contractors, LLC (“CDI”). Total merchandise sales (which excludes CDI) for the 26-week period ended August 4, 2018, were $2.820 billion and $2.770 billion for the 26-week period ended July 29, 2017. Total merchandise sales increased 2 percent for the 26-week period ended August 4, 2018. Sales in comparable stores for the period increased 2 percent.

Gross Margin/Inventory

Gross margin from retail operations (which excludes CDI) improved 67 basis points of sales for the 26 weeks ended August 4, 2018, compared to the 26 weeks ended July 29, 2017. Consolidated gross margin for the 26 weeks ended August 4, 2018, improved 32 basis points of sales, compared to the prior year-to-date period.

Gross margin from retail operations improved 163 basis points of sales for the 13 weeks ended August 4, 2018, compared to the prior year second quarter primarily due to decreased markdowns. Consolidated gross margin for the 13 weeks ended August 4, 2018, improved 127 basis points of sales, compared to the prior year second quarter. Inventory increased 5 percent at August 4, 2018, compared to July 29, 2017.

Selling, General & Administrative Expenses

Selling, general and administrative expenses (“operating expenses”) were $814.2 million (27.8 percent of sales) and $796.5 million (28.0 percent of sales) during the 26 weeks ended August 4, 2018, and July 29, 2017, respectively. The increase in operating expenses of $17.7 million for the year-to-date period is comprised mainly of increased payroll expense, primarily selling payroll.

Operating expenses were $408.4 million (27.8 percent of sales) and $399.8 million (28.0 percent of sales) during the 13 weeks ended August 4, 2018 and July 29, 2017, respectively. The increase in operating expenses of $8.6 million for the year-to-date period is comprised mainly of increased payroll expense, primarily selling payroll.

Share Repurchase

During the 13 weeks ended August 4, 2018, the company purchased $3.1 million (39,400 shares) of Class A Common Stock under its March 2018, $500 million share repurchase program. During the year-to-date period ended August 4, 2018, the company purchased $37.9 million (518,000 shares) under its February 2016 and March 2018 programs. As of August 4, 2018, authorization of $496.9 million remained under the March 2018 program. Total shares outstanding (Class A and Class B Common Stock) at August 4, 2018 and July 29, 2017 were 27.6 million and 29.1 million, respectively.

Debt Repayment

During the 13 weeks ended August 4, 2018, the company paid the remaining $161 million principal on the 7.13 percent unsecured notes that matured on August 1, 2018.

Store Information

The company operates 267 Dillard’s locations and 25 clearance centers spanning 29 states and an Internet store at dillards.com. Total square footage at August 4, 2018, was 49.1 million square feet.