Dillard’s, Inc. reported a profit against a loss in the first quarter ended May 1 as sales surged 73 percent against the pandemic-depressed year-ago quarter.
Dillard’s Chief Executive Officer William T. Dillard, II stated, “There are a lot of good things to say about this quarter. As vaccinations increased, stimulus money was released and warmer weather arrived, we saw sales increase over 2019 levels, with momentum continuing throughout the quarter. We are pleased to report record performances in gross margin and earnings per share. With strong cash flow, we accomplished $59 million in share repurchase while still ending the quarter with $616 million in cash.”
First Quarter Results
Dillard’s reported net income for the 13 weeks ended May 1, 2021 of $158.2 million, or $7.25 per share, compared to a net loss of $162.0 million, or $6.94 per share, for the prior-year first quarter. Included in net income for the 13 weeks ended May 1, 2021 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 May 1, 2021 and the 13 weeks ended May 2, 2020 were $1,328.5 million and $786.7 million, 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 periods ended May 1, 2021 and May 2, 2020 were $1,296.7 million and $751.0 million, respectively. Total retail sales increased 73 percent for the 13-week period ended May 1, 2021. Stronger performing categories were juniors’ and children’s apparel, men’s apparel and accessories, and ladies’ accessories and lingerie.
- Comparing to the first quarter of 2019, total retail sales for the 13-week periods ended May 1, 2021 and May 4, 2019 were $1,296.7 million and $1,420.5 million, respectively, a decrease of 9 percent. Retail sales for the first quarter of 2021 compared to the first quarter of 2019 in comparable stores declined 6 percent.
- Consolidated gross margin (which includes CDI) for the 13 weeks ended May 1, 2021 improved significantly to 41.7 percent compared to 12.5 percent for the prior year’s first quarter.
- Retail gross margin (which excludes CDI) for the 13 weeks ended May 1, 2021 improved significantly to 42.7 percent compared to 12.8 percent for the prior year’s first quarter.
- Compared to the first quarter of 2019, retail gross margin improved 489 basis points of sales to 42.7 percent from 37.8 percent.
- Management attributes the substantial improvement in gross margin to better inventory management and customer demand leading to decreased markdowns in the first quarter of 2021.
- Inventory decreased approximately 17 percent at May 1, 2021 compared to May 2, 2020.
Selling, General & Administrative Expenses
- Consolidated selling, general and administrative expenses (“operating expenses”) for the 13 weeks ended May 1, 2021 were $336.6 million (25.3 percent of sales) compared to $290.4 million (36.9 percent of sales) for the prior year first quarter.
- Comparing to the first quarter of 2019, retail operating expenses for the 13 weeks ended May 1, 2021 and May 4, 2019 were $335.1 million (25.9 percent of sales) and $403.3 million (28.4 percent of sales), respectively.
- The decrease is primarily due to decreased payroll and payroll-related expenses.
During the 13 weeks ended May 1, 2021, the company purchased $58.8 million (approximately 625,000 shares) of Class A Common Stock under its $500 million share repurchase program. As of May 1, 2021, authorization of $114.3 million remained under the program. Total shares outstanding (Class A and Class B Common Stock) at May 1, 2021 and May 2, 2020 were 21.4 million and 23.2 million, respectively.
The company operates 250 Dillard’s locations and 31 clearance centers spanning 29 states and an Internet store at dillards.com. Dillard’s has closed and sold its Cortana Mall location in Baton Rouge, Louisiana (120,000 square feet). Total square footage at May 1, 2021 was 47.9 million square feet.
Photo courtesy Dillard’s