Dillard’s Inc. reported a sharp recovery in earnings in the third quarter ended October 30 as same-store sales ran up 48 percent.

Dillard’s Chief Executive Officer William T. Dillard, II stated, “We are pleased to report another record quarter. Continued strong sales combined with record gross margin and expense control produced $197 million of net income. We ended the quarter in another strong cash position of $620 million after repurchasing $239 million of stock.”

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

Selected Financial Metrics Of The Third Quarter
(compared to the prior year third quarter)

  • Comparable retail sales increased 48 percent;
  • Net income of $197.3 million compared to net income of $31.9 million;
  • Net income of $9.81 per share compared to net income of $1.43 per share;
  • Retail gross margin of 46.7 percent compared to 36.6 percent;
  • Operating expenses were $393.2 million (26.5 percent of sales) compared to $318.2 million (31.0 percent of sales);
  • Share repurchases of $239.2 million (approximately 1.2 million shares);
  • Cash flow provided by operations of $728.0 million compared to $62.9 million of cash used in operations (39 weeks); and
  • Ending cash of $619.7 million compared to $61.1 million with no short-term borrowings compared to $15.0 million.

Third Quarter Results
Dillard’s reported net income for the 13 weeks ended October 30, 2021 of $197.3 million, or $9.81 per share, compared to net income of $31.9 million, or $1.43 per share, for the prior-year third quarter. Included in net income for the prior year’s third quarter is a net tax benefit of $32.4 million ($1.46 per share) related to the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). Also included in net income for the prior year’s third quarter is a pretax loss of $2.2 million ($1.4 million after-tax or $0.06 per share) primarily related to the sale of store property.

Sales In Third Quarter

  • Net sales for the 13 weeks ended October 30, 2021, and the 13 weeks ended October 31, 2020, were $1,481.0 million and $1,024.9 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 October 30, 2021, and October 31, 2020, were $1,460.2 million and $994.6 million, respectively. Total retail sales increased 47 percent for the 13-week period ended October 30, 2021. Comparable store retail sales for the third quarter of 2021 compared to the third quarter of 2020 increased 48 percent.
  • Compared to the third quarter of 2019, total retail sales for the 13-week periods ended October 30, 2021, and November 2, 2019, were $1,460.2 million and $1,334.2 million, respectively, an increase of 9 percent. Comparable store retail sales for the third quarter of 2021 compared to the third quarter of 2019 increased 12 percent. Also, compared to the third quarter of 2019, sales of junior’s and children’s apparel and men’s apparel and accessories significantly outperformed the other categories.

Gross Margin/Inventory In Third Quarter

  • Consolidated gross margin (which includes CDI) for the 13 weeks ended October 30, 2021 improved significantly to 46.2 percent compared to 35.7 percent for the prior year’s third quarter.
  • Retail gross margin (which excludes CDI) for the 13 weeks ended October 30, 2021 improved significantly to 46.7 percent compared to 36.6 percent for the prior year’s third quarter.
  • Compared to the third quarter of 2019, the retail gross margin for the third quarter of 2021 improved 1,221 basis points of sales to 46.7 percent from 34.5 percent.
  • Management attributes the substantial improvement in gross margin to continued strong consumer demand and better inventory management leading to decreased markdowns in the third quarter of 2021.
  • Inventory decreased approximately 1 percent at October 30, 2021 compared to October 31, 2020.
  • Management is monitoring the continuing supply chain issues, particularly with regard to shipping delays and disruptions in the global transportation network.

Selling, General & Administrative Expenses In Third Quarter

  • Consolidated selling, general and administrative expenses (“operating expenses”) for the 13 weeks ended October 30, 2021 were $393.2 million (26.5 percent of sales) compared to $318.2 million (31.0 percent of sales) for the prior year third quarter.
  • Compared to the third quarter of 2019, retail operating expenses for the third quarter of 2021 decreased 442 basis points of sales to $391.5 million (26.8 percent of sales) from $416.7 million (31.2 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. With regard to operational staffing, management is particularly focused on the existing tight labor market, seeking to hire permanent and seasonal talent across multiple functions.

39-Week Results

  • Dillard’s reported net income for the 39 weeks ended October 30, 2021 of $541.2 million, or $25.76 per share, compared to a net loss of $138.7 million, or $6.05 per share, for the prior year 39-week period. Included in net income for the 39 weeks ended October 30, 2021 is a pretax gain of $24.7 million ($19.2 million after-tax or $0.91 per share) primarily related to the sale of three-store properties.
  • Included in net income for the prior year 39 weeks is a net tax benefit of $64.6 million ($2.82 per share) related to the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). Also included in net income for the prior year 39 weeks is a pretax loss of $2.2 million ($1.4 million after-tax or $0.06 per share) primarily related to the sale of store property.
  • Net sales for the 39 weeks ended October 30, 2021 and the 39 weeks ended October 31, 2020 were $4,379.9 million and $2,730.6 million, respectively.
  • Total retail sales for the 39-week periods ended October 30, 2021 and October 31, 2020 were $4,296.3 million and $2,638.8 million, respectively. Total retail sales increased 63 percent for the 39-week period ended October 30, 2021.
  • Compared to the first 39 weeks of 2019, total retail sales for the 39-week periods ended October 30, 2021 and November 2, 2019 were $4,296.3 million and $4,132.9 million, respectively, an increase of 4 percent. Comparable store retail sales for the first 39 weeks of 2021 compared to the first 39 weeks of 2019 increased 7 percent.
  • Consolidated gross margin for the 39 weeks ended October 30, 2021 improved significantly to 43.0 percent compared to 27.2 percent for the prior year 39-week period.
  • Retail gross margin for the 39 weeks ended October 30, 2021 improved significantly to 43.7 percent compared to 28.0 percent for the prior year 39-week period.
  • Compared to the first 39 weeks of 2019, the retail gross margin for the first 39 weeks of 2021 improved 1,000 basis points of sales to 43.7 percent from 33.7 percent.
  • Consolidated operating expenses for the 39 weeks ended October 30, 2021 were $1,095.7 million (25.0 percent of sales) compared to $875.7 million (32.1 percent of sales) for the prior year 39-week period.
  • Compared to the first 39 weeks of 2019, retail operating expenses for the first 39 weeks of 2021 ended decreased 431 basis points of sales to $1,090.8 million (25.4 percent of sales) from $1,227.6 million (29.7 percent of sales).

Share Repurchase

  • During the 13 weeks ended October 30, 2021, the company purchased $239.2 million (approximately 1.2 million shares) of Class A Common Stock under its March 2018 and May 2021 share repurchase programs.
  • During the 39 weeks ended October 30, 2021, the company purchased $410.3 million (approximately 2.6 million shares) of Class A Common Stock under its March 2018 and May 2021 share repurchase programs.
  • The company completed all authorized purchases under the March 2018 program during the third quarter. As of October 30, 2021, authorization of $262.9 million remained under the May 2021 program. Total shares outstanding (Class A and Class B Common Stock) at October 30, 2021 and October 31, 2020 were 19.4 million and 22.0 million, respectively.

Store Information

  • During the third quarter, Dillard’s opened its new location at Mesa Mall in Grand Junction, CO (100,000 square feet). Also, during the quarter, the company closed its leased clearance center in Harlingen, TX (100,000 square feet).
  • 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 October 30, 2021 was 47.7 million square feet.

Photo courtesy Dillard’s