Dillard’s Inc. reported first-quarter earnings rose 21.4 percent on a 2 percent comp gain. Results exceeded Wall Street’s targets.
First Quarter Results
Dillard’s reported net income for the 13 weeks ended May 5, 2018 of $80.5 million, or $2.89 per share, compared to net income of $66.3 million, or $2.12 per share, for the prior year first quarter. Wall Street’s consensus estimate had been $2.81.
Dillard’s chief executive officer, William T. Dillard, II, stated, “Our positive sales momentum continued into the first quarter. We believe this indicates our customer is more comfortable spending in this economic environment, and we hope the positive trend continues. We executed $35 million of share repurchases during the quarter, completing the amount authorized under our February 2016 program.”
Net sales for the 13 weeks ended May 5, 2018 were $1.456 billion and $1.418 billion for the 13 weeks ended April 29, 2017. Net sales includes the operations of the company’s construction business, CDI Contractors, LLC (CDI).
Total merchandise sales (which excludes CDI) for the 13-week period ended May 5, 2018 were $1.409 billion and $1.386 billion for the 13-week period ended April 29, 2017. Total merchandise sales increased 2 percent for the 13-week period ended May 5, 2018. Sales in comparable stores for the period also increased 2 percent. Sales of home and furniture, ladies’ accessories and lingerie and juniors’ and children’s apparel were above the average company sales trend during the quarter. Sales were slightly above trend in men’s apparel and accessories, on trend in ladies’ apparel, slightly below trend in cosmetics and notably below trend in shoes. Sales were strongest in the Western region followed by the Eastern and Central regions, respectively.
Gross Margin/Inventory
Gross margin from retail operations (which excludes CDI) declined 31 basis points of sales for the 13 weeks ended May 5, 2018 compared to the prior year first quarter. Consolidated gross margin for the 13 weeks ended May 5, 2018 declined 66 basis points of sales compared to the prior year first quarter. Inventory increased 4 percent at May 5, 2018 compared to April 29, 2017.
Selling, General & Administrative Expenses
Selling, general and administrative expenses (“operating expenses”) were $406.0 million (27.9 percent of sales) and $396.6 million (28.0 percent of sales) during the 13 weeks ended May 5, 2018 and April 29, 2017, respectively. The increase in operating expenses of $9.4 million is comprised primarily of increased selling payroll and services purchased.
Share Repurchase
During the 13 weeks ended May 5, 2018, the company purchased $34.8 million (approximately 0.5 million shares) of Class A Common Stock completing authorized purchases under the February 2016 $500 million program. In March, 2018, the company’s Board of Directors authorized a new $500 million share repurchase program. At May 5, 2018, $500 million authorization remained under the new program. Total shares outstanding (Class A and Class B Common Stock) at May 5, 2018 and April 29, 2017 were 27.6 million and 30.5 million, respectively.
Store Information
Dillard’s operates 267 Dillard’s locations and 25 clearance centers spanning 29 states and an internet store at www.dillards.com. Total store square footage is 49.1 million.