Dillard's, Inc. reported income for the 13 weeks ended Jan. 28, 2012 of
$141.5 million, or $2.77 per share. Included in net income for the 13
weeks ended January 28, 2012 is a $44.5 million pre-tax credit ($28.7
million after tax or $0.56 per share) related to the settlement of a
lawsuit with JDA Software Group. Excluding this credit, the company
would have recorded net income of $112.8 million or $2.21 per share
marking a record-setting fourth quarter earnings per share performance.

Other highlights of the 13 weeks ended January 28, 2012 included:

  • A 3 percent increase in comparable store sales
  • Control of advertising, selling, administrative and general expenses (“operating expenses”) which declined 40 basis points of sales
  • Repurchase of $98.8 million (2.1 million shares) of Class A Common Stock

Dillard's Chief Executive Officer, William T. Dillard, II, stated, “We are pleased with our progress in 2011 where we delivered a record setting performance. With strong operating cash flow, we purchased $491 million of our Class A Common Stock during the year with $99 million accomplished in the fourth quarter. In 2012, we will remain focused on creating a clearly distinctive shopping experience at Dillard's in merchandise selection as well as in customer service.”

For the prior year fourth quarter, the 13 weeks ended January 29, 2011, Dillard's reported net income of $109.6 million, or $1.75 per share. Included in net income for the prior year fourth quarter are pre-tax credits totaling $9.7 million ($12.7 million after tax or $0.20 per share) which is comprised of the following items:

  • $7.5 million proceeds received as final payment related to hurricane losses ($4.8 million after tax or $0.08 per share).
  • a $2.2 million pretax gain on disposal of assets primarily related to the sale of three closed stores ($1.4 million after tax or $0.02 per share).
  • a $6.5 million income tax benefit ($0.10 per share) primarily related to net decreases in unrecognized tax benefits, interest and penalties due to resolutions of federal and state examinations, decreases in state net operating loss valuation allowances, and a decrease in a capital loss valuation allowance.

Excluding these after-tax credits, the company would have recorded net income of $96.9 million or $1.55 per share for the prior year fourth quarter.

Fiscal Year Results

Dillard's reported net income for the 52 weeks ended January 28, 2012 of $463.9 million, or $8.52 per share. Included in net income for the 52 weeks ended January 28, 2012 is a net pre-tax credit totaling $50.9 million ($234.5 million after tax or $4.31 per share) which is comprised of the following items:

  • approximately $201.6 million ($3.70 per share) in tax benefit due to the reversal of a valuation allowance related to a deferred tax asset consisting of a capital loss carryforward
  • a $44.5 million net pretax credit ($28.7 million after tax or $0.53 per share) related to the settlement of a lawsuit with JDA Software Group, Inc. for $57.0 million
  • a $4.2 million pretax gain ($2.7 million after tax or $0.05 per share) related to a distribution from a mall joint venture
  • non-cash pretax asset impairment and store closing charges of $1.2 million ($0.8 million after-tax or $0.01 per share)
  • a $2.1 million pretax gain ($1.4 million after tax or $0.03 per share) relating to the sale of an interest in a mall joint venture
  • a $1.3 million pretax gain ($0.9 million after tax or $0.02 per share) related to the sale of two former retail store locations

Excluding this net after-tax credit, the company would have recorded net income of $229.4 million or $4.21 per share for the 52 weeks ended January 28, 2012 which is a record-setting earnings per share performance.

Other highlights of the 52 weeks ended January 28, 2012 included:

  • A 4 percent increase in comparable store sales
  • Control of advertising, selling, administrative and general expenses (“operating expenses”) which declined 60 basis points of sales
  • Cash flow from operations of $501.1 million
  • Repurchase of $491.1 million (11.4 million shares) of Class A Common Stock

For the prior fiscal year, the 52 weeks ended January 29, 2011, Dillard's reported net income of $179.6 million, or $2.67 per share. Included in net income for the prior year fiscal year are net pre-tax credits totaling $10.4 million ($16.4 million after tax or $0.24 per share) which is comprised of the following items:

  • $7.5 million proceeds received as final payment related to hurricane losses ($4.8 million after tax or $0.07 per share).
  • non-cash pretax asset impairment and store closing charges of $2.2 million ($1.4 million after tax or $0.02 per share).
  • a $5.1 million pretax gain on disposal of assets primarily related to the sale of five closed stores ($3.3 million after tax or $0.05 per share).
  • a $9.7 million income tax benefit ($0.14 per share) primarily related to net decreases in unrecognized tax benefits, interest and penalties due to resolutions of federal and state examinations, decreases in state net operating loss valuation allowances, and a decrease in a capital loss valuation allowance.

Excluding this net after-tax credit, the Company would have recorded net income of $163.2 million or $2.43 per share for the prior fiscal year.

Net Sales – 13 Weeks

Net sales for the 13 weeks ended January 28, 2012 were $1.970 billion compared to net sales for the 13 weeks ended January 29, 2011 of $1.934 billion. 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 January 28, 2012 were $1.946 billion compared to $1.912 billion for the 13-week period ended January 29, 2011. Total merchandise sales increased 2 percent during the fourth quarter. Sales in comparable stores increased 3 percent.

Net Sales – 52 Weeks

Net sales for the 52 weeks ended January 28, 2012 were $6.264 billion compared to net sales for the 52 weeks ended January 29, 2011 of $6.121 billion.

Total merchandise sales for the 52-week period ended January 28, 2012 were $6.194 billion compared to $6.020 billion for the 52-week period ended January 29, 2011. Total merchandise sales increased 3 percent during the fiscal year. Sales in comparable stores increased 4 percent.

Service Charges and Other Income

Included in service charges and other income for the 13 weeks ended January 29, 2011 is $7.5 million proceeds received as final payment related to hurricane losses ($4.8 million after tax or $0.08 per share).

Gross Margin/Inventory

Gross margin from retail operations (which excludes CDI) was 34.4 percent (of sales) for the 13 weeks ended January 28, 2012 compared to 34.5 percent for the prior year fourth quarter. Gross margin from retail operations for the 52 weeks ended January 28, 2012 improved 30 basis points (of sales) to 35.9 percent compared to 35.6 percent for the prior fiscal year.

Consolidated gross margin for the 13 weeks ended January 28, 2012 was 34.0 percent compared to 34.1 percent during the prior year fourth quarter. Consolidated gross margin for the 52 weeks ended January 28, 2012 improved 50 basis points to 35.5 percent compared to 35.0 percent for the prior year fiscal year.

Inventory in comparable stores increased 3 percent at January 28, 2012 compared to January 29, 2011.

Advertising, Selling, Administrative and General Expenses

Advertising, selling, administrative and general expenses (“operating expenses”) decreased approximately 40 basis points of sales during the 13 weeks ended January 28, 2012 compared to the 13 weeks ended January 29, 2011. Operating expenses were $440.8 million (22.4 percent of sales) and $441.6 million (22.8 percent of sales), respectively. Specific areas of operating expense savings during the fourth quarter included advertising and utilities partially offset by increased services purchased.

Operating expense decreased approximately 60 basis points of sales during the 52 weeks ended January 28, 2012 compared to the 52 weeks ended January 29, 2011. Operating expenses were $1,630.9 million (26.0 percent of sales) and $1,625.8 million (26.6 percent of sales), respectively.

Gain on Litigation Settlement

During the 13 weeks ended January 28, 2012, the Company recorded a $44.5 million pre-tax credit net of legal fees and costs ($28.7 million after tax or $0.56 per share) related to the settlement of a lawsuit with JDA Software Group for $57.0 million.

Share Repurchase

During the 13 weeks ended January 28, 2012, Dillard's repurchased approximately $98.8 million (2.1 million shares) of Class A Common Stock. The Company repurchased approximately $491.1 million (11.4 million shares) of Class A Common Stock during the 52 weeks ended January 28, 2012. At January 28, 2012, $27.5 million of authorization remained under the Company's $250 million share repurchase program.

Total shares outstanding (Class A and Class B Common Stock) at January 28, 2012 and January 29, 2011 were 49.4 million and 60.0 million, respectively.

Credit Facility

Letters of credit totaling $83.7 million were outstanding under the company's $1.0 billion revolving credit facility as of January 28, 2012.

Store Information

At January 28, 2012, the company operated 288 Dillard's locations and 16 clearance centers spanning 29 states and an Internet store at www.dillards.com. Total square footage at January 28, 2012 was 52.7 million.