Dillard’s, Inc. reported a slight decline in earnings in the third quarter as a gross margin decline offset 3 percent same-store sales growth.
Dillard’s CEO William T. Dillard, II said, “While we were up against an unprecedented third quarter, we achieved a 3 percent comparable store sales increase and reported our seventh consecutive quarter of gross margin over 40 percent. Inventory control remains a priority as we have seen its powerful effects on our business. To date this year, our net income is up 11 percent over last year’s strong performance and earnings per share are up 32 percent.”
Highlights Of The 39 Weeks
(compared to the prior year 39 weeks)
- Total retail sales increased 8 percent;
- Comparable store sales increased 8 percent;
- Net income of $602.5 million compared to $541.2 million;
- Earnings per share of $34.05 compared to $25.76;
- Retail gross margin of 44.9 percent of sales compared to 43.7 percent of sales;
- Operating expenses were $1.216 billion (25.6 percent of sales) compared to $1.096 billion (25.0 percent of sales); and
- Share repurchase of $436.6 million (approximately 1,709,000 shares)..
Results 39 Weeks
Dillard’s reported net income for the 39 weeks ended October 29, 2022 of $602.5 million, or $34.05 per share, compared to $541.2 million, or $25.76 per share, for the prior year 39-week period. Included in net income for the 39 weeks ended October 29, 2022 is a pretax gain of $7.2 million ($5.6 million after-tax or $0.32 per share) primarily related to the sale of store property.
Included in net income for the prior year 39-week period 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.
Sales 39 Weeks
Net sales for the 39 weeks ended October 29, 2022 and October 30, 2021 were $4.744 billion and $4.380 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 39-week periods ended October 29, 2022 and October 30, 2021 were $4.633 billion and $4.296 billion, respectively. Total retail sales increased 8 percent for the 39-week period ended October 29, 2022. Sales in comparable stores increased 8 percent.
Gross Margin 39 Weeks
The consolidated gross margin for the 39 weeks ended October 29, 2022 was 44.0 percent of sales compared to 43.0 percent of sales for the prior year 39-week period.
Retail gross margin (which excludes CDI) for the 39 weeks ended October 29, 2022 improved approximately 120 basis points of sales to 44.9 percent compared to 43.7 percent for the prior year 39-week period.
Inventory increased 8 percent at October 29, 2022 compared to October 30, 2021.
SG&A 39 Weeks
Consolidated selling, general and administrative expenses (“SG&A”) for the 39 weeks ended October 29, 2022 were $1.216 billion (25.6 percent of sales) compared to $1.096 billion (25.0 percent of sales) for the prior year 39-week period. The increase of approximately $120 million is primarily due to continued increases in payroll and payroll-related expenses.
Highlights of the Third Quarter
(compared to the prior year’s third quarter)
- Comparable store sales increased 3 percent;
- Net income of $187.9 million compared to net income of $197.3 million;
- Earnings per share of $10.96 compared to $9.81;
- Retail gross margin of 45.7 percent of sales compared to 46.7 percent of sales;
- Operating expenses were $413.8 million (26.8 percent of sales) compared to $393.2 million (26.5 percent of sales); and
- Share repurchase of $24.3 million (approximately 99,000 shares).
Third Quarter Results
Dillard’s reported net income for the 13 weeks ended October 29, 2022 of $187.9 million, or $10.96 per share, compared to net income of $197.3 million, or $9.81 per share, for the 13 weeks ended October 30, 2021.
Sales | Third Quarter
Net sales for the 13 weeks ended October 29, 2022 and October 30, 2021 were $1.544 billion and $1.481 billion, respectively.
Total retail sales for the 13-week periods ended October 29, 2022 and October 30, 2021 were $1.499 billion and $1.460 billion, respectively. Total retail sales increased 3 percent for the 13-week period ended October 29, 2022. Sales in comparable stores increased 3 percent. Stronger performing categories included cosmetics, men’s apparel and accessories, home and furniture and shoes. Juniors’ and children’s apparel was the weakest performing category.
Gross Margin | Third Quarter
Consolidated gross margin for the 13 weeks ended October 29, 2022 was 44.6 percent of sales compared to 46.2 percent of sales for the prior year third quarter.
Retail gross margin was 45.7 percent compared to 46.7 percent for the prior year third quarter. The company achieved gross margin exceeding 40 percent for the seventh consecutive quarter.
SG&A Expenses | Third Quarter
Consolidated operating expenses for the 13 weeks ended October 29, 2022 were $413.8 million (26.8 percent of sales) compared to $393.2 million (26.5 percent of sales) for the prior year third quarter.
Retail operating expenses were $411.9 million (27.5 percent of sales) compared to $391.5 million (26.8 percent of sales). The increase in operating expenses is primarily due to increased payroll and payroll-related expenses in the current highly competitive and inflationary wage environment.
Share Repurchase
During the third quarter, the company purchased $24.3 million (approximately 99,000 shares) of Class A Common Stock at an average price of $245.60 per share under its share repurchase program.
During the 39 weeks ended October 29, 2022, the company purchased $436.6 million (approximately 1,709,000 shares) of Class A Common Stock at an average price of $255.49 per share.
As of October 29, 2022, authorization of $175.4 million remained under the February 2022 program.
Total shares outstanding (Class A and Class B Common Stock) at October 29, 2022 and October 30, 2021 were 17.1 million and 19.4 million, respectively.
Store Information
During the third quarter, the company closed store in Sikes Senter in Wichita Falls, TX and East Hills Mall in St. Joseph, MO. Today, the company will open its remodeled, replacement building at Westgate Mall in Amarillo, TX. The building replaces a leased location at that center where the retailer operates a dual-anchor format.
The company operates 249 Dillard stores and 28 clearance centers in 29 states, including dillards.com. Total square footage at October 29, 2022 is 47.3 million square feet.
Photo courtesy Dillard’s