Dillard’s, Inc. reported earnings grew nearly five-fold in the fourth quarter ended January 29 as sales jumped 37 percent. Both earnings and sales topped Wall Street targets.

Earnings came in at $16.61, ahead of Wall Street’s consensus estimate of $11.40. Revenues of $2.113 billion bested Wall Street’s consensus estimate of $2.5 billion. 

Dillard’s Chief Executive Officer William T. Dillard, II stated, “We ended fiscal 2021 on a very strong note with a fourth consecutive record quarter. Our fiscal year net income of $41.88 per share exceeds any annual performance in our history. Importantly, during the year, we returned $866 million to our shareholders through dividends and share buyback, while still ending the year with $717 million in cash.”

Due to the significant impact of COVID-19 on prior-year figures, this release will include certain comparisons to 2019 to provide additional context.

Highlights of the Fourth Quarter
(compared to the prior-year fourth quarter unless otherwise noted)

  • Comparable retail sales increased 37 percent;
  • Comparable retail sales increased 12 percent compared to the fourth quarter of 2019;
  • Net income of $321.2 million compared to net income of $67.0 million;
  • Net income of $16.61 per share compared to net income of $3.05 per share;
  • Retail gross margin of 41.4 percent of sales compared to 31.9 percent of sales;
  • Operating expenses were $440.9 million (20.9 percent of sales) compared to $335.8 million (21.4 percent of sales);
  • Record cash flow provided by operations (52 weeks) of $1.280 billion compared to $0.253 billion;
  • Share repurchase of $150.8 million (approximately 615,000 shares); and
  • Ending cash of $716.8 million compared to $360.3 million.

Fourth Quarter Results
Dillard’s reported net income for the 13 weeks ended January 29, 2022 of $321.2 million, or $16.61 per share, compared to net income of $67.0 million, or $3.05 per share, for the prior-year fourth quarter. Included in net income for the 13 weeks ended January 29, 2022 is a net tax benefit of $18.0 million ($0.93 per share) due to the deduction related to that portion of the special dividend of $15 per share that was paid to the Dillard’s, Inc. Investment and Employee Stock Ownership Plan during the quarter.

Included in net income for the prior-year fourth quarter are pretax asset impairment and store closing charges of $10.7 million ($8.4 million after-tax or $0.38 per share). Also included in net income for the prior-year fourth quarter is a net tax expense of $19.4 million ($0.88 per share) attributable to the Coronavirus Aid, Relief and Economic Security Act (CARES Act), partially offsetting the related net tax benefit recognized during the first 39 weeks of 2020.

Sales
Net sales for the 13 weeks ended January 29, 2022 and the 13 weeks ended January 30, 2021 were $2.113 billion and $1.570 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 January 29, 2022 and the 13-week period ended January 30, 2021 were $2.078 billion and $1.521 billion, respectively. Total retail sales increased 37 percent for the 13-week period ended January 29, 2022. Sales in comparable stores for the period increased 37 percent.

Compared to the fourth quarter of 2019, comparable retail sales increased 12 percent for the fourth quarter of 2021. Also, compared to the fourth quarter of 2019, sales of cosmetics and juniors’ and children’s apparel significantly outperformed the other categories.

Gross Margin/Inventory
Consolidated gross margin for the 13 weeks ended January 29, 2022 improved significantly to 40.8 percent of sales compared to 31.1 percent of sales for the prior-year fourth quarter.

Retail gross margin (which excludes CDI) for the 13 weeks ended January 29, 2022 improved significantly to 41.4 percent of sales compared to 31.9 percent of sales for the prior-year fourth quarter.

Compared to the fourth quarter of 2019, retail gross margin for the fourth quarter of 2021 improved 1116 basis points of sales to 41.4 percent of sales from 30.2 percent of sales.

Management attributes the substantial improvement in gross margin to continued strong consumer demand and better inventory management leading to decreased markdowns in the fourth quarter of 2021.

Inventory decreased approximately 1 percent at January 29, 2022 compared to January 30, 2021.

Selling, General & Administrative Expenses
Consolidated selling, general and administrative expenses (operating expenses) for the 13 weeks ended January 29, 2022, were $440.9 million (20.9 percent of sales) compared to $335.8 million (21.4 percent of sales) for the prior-year fourth quarter.

Compared to the fourth quarter of 2019, retail operating expenses for the fourth quarter of 2021 decreased 318 basis points of sales to $439.0 million (21.1 percent of sales) from $456.7 million (24.3 percent of sales). The decrease is primarily due to decreased payroll and payroll-related expenses as the company continues to operate with reduced operating hours and fewer associates.

52-Week Results | Highlights of the Fiscal Year
(compared to the prior fiscal year unless otherwise noted)

  • Total retail sales increased 53 percent
  • Comparable retail sales increased 8 percent compared to fiscal year 2019
  • Net income of $862.5 million compared to a net loss of $71.7 million
  • Net income of $41.88 per share compared to a net loss of $3.16 per share
  • Retail gross margin of 42.9 percent of sales compared to 29.4 percent of sales
  • Operating expenses were $1,536.5 million (23.7 percent of sales) compared $1,211.5 million (28.2 percent of sales)
  • Share repurchase of $561.1 million (approximately 3.2 million shares)

Dillard’s reported net income for the 52 weeks ended January 29, 2022 of $862.5 million, or $41.88 per share, compared to a net loss of $71.7 million, or $3.16 per share, for the prior year 52-week period. Included in net income for the 52 weeks ended January 29, 2022 is a pretax gain of $24.7 million ($19.5 million after-tax or $0.95 per share) primarily related to the sale of three store properties. Also included in net income for the 52 weeks ended January 29, 2022, is a net tax benefit of $18.0 million ($0.88 per share) due to the deduction related to that portion of the special dividend of $15 per share that was paid to the Dillard’s, Inc. Investment and Employee Stock Ownership Plan during the year.

Included in the net loss for the prior year is a pretax loss of $2.2 million ($1.4 million after-tax or $0.06 per share) primarily related to the sale of a store property and $10.7 million ($8.4 million after-tax or $0.37 per share) in asset impairment charges. Also included in the net loss for fiscal year 2020 is a net tax benefit of $45.2 million ($1.99 per share) related to the CARES Act.

Net sales for the 52 weeks ended January 29, 2022 and the 52 weeks ended January 30, 2021 were $6.493 billion and $4.301 billion, respectively.

Total retail sales for the 52-week period ended January 29, 2022 and the 52-week period ended January 30, 2021 were $6.375 billion and $4.160 billion, respectively. Total retail sales increased 53 percent for the 52-week period ended January 29, 2022. The company is reporting no comparable store sales data for the fiscal year due to COVID19-related store closures in the first and second quarters of 2020.

Compared to the fiscal year 2019, total retail sales for the 52-week periods ended January 29, 2022 and February 1, 2020 were $6.375 billion and $6.012 billion, respectively, an increase of 6 percent. Comparable store retail sales for the 2021 fiscal year compared to the 2019 fiscal year increased 8 percent.

Consolidated gross margin for the 52 weeks ended January 29, 2022 improved significantly to 42.3 percent of sales from 28.6 percent of sales for the prior year 52-week period.

Retail gross margin for the 52 weeks ended January 29, 2022 improved significantly to 42.9 percent of sales from 29.4 percent of sales for the prior year 52-week period.

Compared to fiscal year 2019, retail gross margin improved 1033 basis points of sales to 42.9 percent of sales from 32.6 percent of sales.

Consolidated operating expenses for the 52 weeks ended January 29, 2022 increased $325.0 million to $1,536.5 million (23.7 percent of sales) compared to $1,211.5 million (28.2 percent of sales) for the prior year 52-week period.

Compared to fiscal year 2019, retail operating expenses decreased 401 basis points of sales to $1,529.8 million (24.0 percent of sales) from $1,684.3 million (28.0 percent of sales). The decrease is primarily due to decreased payroll and payroll-related expenses.

Share Repurchase
During the 52 weeks ended January 29, 2022 the company purchased $561.1 million (approximately 3.2 million shares) of Class A Common Stock under its share repurchase programs. As of January 29, 2022, authorization of $112.0 million remained under the May 2021 Plan.

Total shares outstanding (Class A and Class B Common Stock) at January 29, 2022 and January 30, 2021 were 18.8 million and 22.0 million, respectively.

Store Information
Dillard’s will open a new 160,000 square foot location at University Place in Orem, UT in mid-March 2022, replacing Provo Towne Centre in the same market (200,000 square feet). The company will replace a leased building at Westgate Mall in Amarillo, Texas with a newly remodeled owned facility in the fall of 2022.

The company operates 250 Dillard’s locations and 30 clearance centers spanning 29 states and an Internet store at dillards.com. The total square footage at January 29, 2022 was 47.7 million square feet.