At Dillard’s, Inc., profits declined 17.3 percent in the third quarter ended October 28 as same-store sales fell 6 percent on weakness in juniors’ and children’s apparel.

Dillard’s CEO 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 percent and inventory down 1 percent 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 percent;
  • Comparable store sales decreased 6 percent;
  • 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 percent of sales compared to 45.7 percent of sales;
  • Operating expenses were $421.8 million (28.6 percent of sales) compared to $413.8 million (26.8 percent of sales);
  • Share repurchase of $48.0 million (approximately 151,000 shares); and
  • Ending inventory decreased 1 percent year-over-year.

Results Third Quarter
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 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 include 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 percent for the 13-week period ended October 28, 2023, compared to the prior year third quarter. Sales in comparable stores decreased 6 percent. 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 Margins Third Quarter
Consolidated gross margin for the 13 weeks ended October 28, 2023, was 43.5 percent of sales compared to 44.6 percent of sales for the prior year third quarter.

Retail gross margin, which excludes CDIm for the 13 weeks ended October 28, 2023, was 45.3 percent of sales compared to 45.7 percent 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 percent for the 13 weeks ended October 28, 2023, compared to the 13 weeks ended October 29, 2022.

SG&A Third Quarter
Consolidated selling, general and administrative expenses (operating expenses) for the 13 weeks ended October 28, 2023, were $421.8 million, 28.6 percent of sales, compared to $413.8 million, 26.8 percent 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 percent;
  • Comparable store sales decreased 4 percent;
  • 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 percent of sales compared to 44.9 percent of sales;
  • Operating expenses were $1,240.7 million, 26.8 percent of sales, compared to $1,215.9 million, 25.6 percent of sales; and
  • Share repurchase of $265.2 million, approximately 866,000 shares.

Results | 39 Weeks
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 percent for the 39-week period ended October 28, 2023, compared to the prior year 39-week period. Sales in comparable stores decreased 4 percent.

Gross Margin | 39 Weeks
The consolidated gross margin for the 39 weeks ended October 28, 2023, was 42.0 percent of sales compared to 44.0 percent of sales for the prior year 39-week period.

Retail gross margin for the 39 weeks ended October 28, 2023, was 43.7 percent of sales compared to 44.9 percent of sales for the prior year 39-week period.

SG&A | 39 Weeks
Operating expenses for the 39 weeks ended October 28, 2023, were $1,240.7 million (26.8 percent of sales) compared to $1,215.9 million (25.6 percent 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.

Photo courtesy Dillard’s