Dillard’s ’19 profit dips 34.8%
LR chain joins other department stores in sales drought
Dillard’s Inc. reported Tuesday that net income dropped 20% in the fourth quarter to $67.7 million, while profit for the fiscal year fell 34.8% to $111.1 million.
The department-store chain posted per-share earnings of $2.75 for the quarter that ended Feb. 1 and includes the Christmas shopping season. That’s down 14.6% from $3.22 per share in the same period a year ago.
The results missed the $3.01 per-share earnings estimate of analysts polled by Thomson Reuters on anticipated net sales of $2.03 billion.
Fourth-quarter net sales fell 5% to $1.9 billion. Net sales for Dillard’s, which is based in Little Rock, includes operations of the company’s construction business, CDI Contractors LLC, as well as merchandise sales.
Dillard’s said in the earnings report that its net income included a gain after taxes of $6.5 million, or 26 cents per share, related to the sale of two store properties. The figure also included $2.3 million, or 9 cents per share, in tax benefits under the Taxpayer Certainty and Disaster Tax Relief Act of 2019.
Same-store sales, or sales at stores open at least one year, declined 3% compared with a 2% increase in the same quarter last year. Same-store sales are considered a key indicator of a retailer’s health.
The company said sales
were strongest in its eastern and western regions, and weakest in the central region. Its women’s apparel and cosmetics categories were the best performers, while sales were weaker in the women’s accessories and lingerie categories and in home and furniture.
Ken Perkins, a retail analyst with Retail Metric LLC, said in a recent note that departmentstore sales in general have shrunk every month going back to August 2018, “with no end in sight.” According to Business Insider, Macy’s plans to close 30 stores early this year; J.C. Penney is closing six stores by April 24; and Sears has said it will close 96 stores this month. Many smaller, niche stores also are closing stores or cutting staff.
For the fiscal year, Dillard’s reported earnings of $4.38 per share, compared with $6.23 per share the previous year. Net sales for fiscal 2019 slipped 2.5% to $6.2 billion.
“A weak top line weighed heavily on the bottom line in the fourth quarter,” Dillard’s chief executive William T. Dillard II said in the earnings report.
“However, we achieved a consecutive 4% decline in inventory while maintaining a flat gross margin rate.
“As U.S. department store retailing continues to right-size, our conservative financial approach supports our long-term view,” Dillard said. “We continue to focus on improving our results and on shareholder return.”
Dillard’s released the results before the markets opened Tuesday. The company’s shares closed at $57.02 on the New York Stock Exchange, down 76 cents, or 1.3%. Its shares have traded between $47.95 and $86.71 in the past year.
During the fiscal year, Dillard’s bought about 2.2 million shares of its own stock, for $138.3 million, under its $500 million share repurchase program. As of Monday, the company still had $215.9 million available to buy shares under the program.
The chain currently operates 257 department stores and 28 clearance centers across 29 states, as well as its e-commerce business. Dillard’s said in the report that it plans to open a 105,000-square-foot store in Grand Junction, Colo., in the third quarter of 2020, and a 160,000-square-foot store in Orem, Utah, in spring 2021.