1Q loss at $162M for Dillard’s

LR chain expects to operate at deficit for rest of fiscal year

Income at Dillard’s Inc. plummeted in the first quarter when most of its stores were closed because of the coronavirus pandemic.

After markets closed Thursday, the Little Rock department-store chain reported a net loss of $162 million, or $6.94 per share, for the quarter that ended May 2, compared with profit of $78.6 million, or $2.99 per share, in the same period last year.

The company said in its report that it expects to operate at a net loss for the fiscal year.

Wall Street analysts surveyed by Thomson Reuters on average had estimated earnings of 8 cents per share for the quarter.

Revenue fell 46% from last year to $787 million. Net sales include operations at the company’s construction business, CDI Contractors LLC.

Dillard’s didn’t report same-store sales data, or sales at stores open at least a year, since its stores were closed for much of the quarter. Its ecommerce sales continued to provide cash flow, even from closed stores, where it was allowed, using ship-from-store capabilities.

“Covid-19 has impacted every aspect of our business,” Dillard’s chief executive William T. Dillard II said in the report. “The mall business in general and department stores specifically have been particularly hard hit. While our balance sheet was already strong, we took decisive,

sometimes difficult, actions to preserve liquidity and ensure our long-term viability.”

“As we reopen stores, we see positive things happening,” Dillard said. “We believe people are ready to get out and shop. We are hoping this is the start of better times.”

The company began closing its stores on March 19 as states and cities went into lockdown. In its annual report filed March 31 with the Securities and Exchange Commission, the company said it was ordered “by governmental directives” to close 200 stores by March 27.

By April 9, all 285 of its stores across 29 states were temporarily closed. Eventually, 90% of its 38,000 employees were furloughed.

As of Thursday, Dillard’s had reopened 125 stores with reduced hours, as well as 24 clearance centers. The company said that it plans to reopen another 116 stores and five clearance centers next week, and will monitor its remaining markets and reopen those stores as restrictions ease.

“The vast majority of associates invited back to Dillard’s as stores reopen have returned,” the company said. About 65% of its employees remain on furlough.

Dillard chose in early April to forgo his salary, and the pay of all salaried employees was temporarily cut by 20%. The cuts are expected to stay in effect through May 30, though the company may extend them based on financial conditions.

Other cost-saving measures Dillard’s has taken include extending vendor payment terms; reducing merchandise purchases by 33%; and canceling or suspending merchandise shipments.

The company purchased about 1 million shares of Class A common stock for $61.8 million during the quarter under its $500 million share repurchase program.

Dillard’s shares closed Thursday at $23.08, down 95 cents, or 4%, on the New York Stock Exchange. Its shares have traded between $21.50 and $86.71 in the past year.