Dillard’s, Inc. reported a strong improvement in earnings in the first quarter ended April 30 as same-store sales improved 23 percent and gross margins rose 470 basis points.
Chief Executive Officer William T. Dillard, II stated, “Our customer responded well to our merchandise in the first quarter producing a 23 percent increase in same-store sales. From this strong sell-through, we reported a record high retail gross margin of 47.3 percent leading to net income of $251 million or $13.68 per share. We ended the quarter with $862 million in cash after share repurchases totaling $187 million.”
Highlights of the First Quarter
(compared to the prior year’s first quarter)
- Comparable retail sales increased 23 percent;t
- Net income of $251.1 million compared to net income of $158.2 million;
- Net income of $13.68 per share compared to net income of $7.25 per share;
- Retail gross margin of 47.3 percent of sales compared to 42.6 percent of sales;
- Operating expenses were $400.8 million (24.9 percent of sales) compared to $336.6 million (25.3 percent of sales);
- Cash flow provided by operations of $365.2 million compared to $302.4 million;
- Share repurchase of $186.5 million (approximately 735,000 shares); and
- Ending cash of $862.2 million compared to $615.9 million.
First Quarter Results
Dillard’s reported net income for the 13 weeks ended April 30, 2022 of $251.1 million, or $13.68 per share, compared to net income of $158.2 million, or $7.25 per share, for the 13 weeks ended May 1, 2021. Included in net income for the 13 weeks ended April 30, 2022 is a pretax gain of $7.2 million ($5.6 million after tax or $0.31 per share) primarily related to the sale of store property. Included in net income for the prior year’s first quarter is a pretax gain of $24.6 million ($19.2 million after tax or $0.88 per share) primarily related to the sale of three store properties.
Net sales for the 13 weeks ended April 30, 2022 and the 13 weeks ended May 1, 2021 were $1.612 billion and $1.329 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-week period ended April 30, 2022 and the 13-week period ended May 1, 2021 were $1.581 billion and $1.297 billion, respectively. Total retail sales increased 22 percent for the 13-week period ended April 30, 2022. Sales in comparable stores for the period increased 23 percent. Stronger performing categories included men’s apparel and accessories, ladies’ apparel, and juniors’ and children’s apparel.
Consolidated gross margin for the 13 weeks ended April 30, 2022 improved significantly to 46.5 percent of sales compared to 41.7 percent of sales for the prior year’s first quarter.
Retail gross margin (which excludes CDI) for the 13 weeks ended April 30, 2022 improved significantly to 47.3 percent of sales compared to 42.6 percent of sales for the prior year’s first quarter.
Management attributes the substantial improvement in gross margin to positive customer response to the company’s merchandise assortment combined with continued inventory management leading to decreased markdowns in the first quarter of 2022.
Inventory increased 4 percent at April 30, 2022 compared to May 1, 2021 following a 17 percent decrease in the prior year’s first quarter.
Selling, General & Administrative Expenses
Consolidated selling, general and administrative expenses (operating expenses) for the 13 weeks ended April 30, 2022 were $400.8 million (24.9 percent of sales) compared to $336.6 million (25.3 percent of sales) for the prior year’s first quarter.
Retail operating expenses improved 60 basis points of sales for the 13 weeks ended April 30, 2022 compared to the prior year’s first quarter. Retail operating expenses were $398.9 million (25.2 percent of sales) compared to $335.1 million (25.8 percent of sales). The dollar increase in operating expenses is primarily due to increased payroll and payroll-related expenses in the current nationwide highly competitive wage environment. The company remains focused on hiring, developing and retaining talented associates.
During the 13 weeks ended April 30, 2022, the company purchased $186.5 million (735,117 shares) of Class A Common Stock at an average price of $253.72 per share under its share repurchase programs. As of April 30, 2022, authorization of $425.5 million remained under the February 2022 program.
Total shares outstanding (Class A and Class B Common Stock) at April 30, 2022 and May 1, 2021 were 18.1 million and 21.4 million, respectively.
Dillard’s opened a 160,000-square-foot location at University Place in Orem, UT during the first quarter. This new store replaces Provo Towne Centre in the same market (200,000 square feet) which is expected to close later this month. The company will replace a leased building at Westgate Mall in Amarillo, Tx with a newly remodeled, owned facility in the fall of 2022. During the first quarter, the company closed a clearance center located at University Mall in Tampa, FL (80,000 square feet).
The company operates 251 Dillard’s locations and 29 clearance centers spanning 29 states.
Photo courtesy Dillard’s