Dillard’s earnings up 76% for quarter; stock near year high

Little Rock-based Dillard’s Inc. turned a profit of $31 million for the quarter ending July 28 — a 76 percent increase from last year’s $17.6 million net income, the company said Wednesday after the stock markets closed.

The department store’s earnings per share almost doubled, increasing from 32 cents in last year’s corresponding quarter to 63 cents.

Targeting higher income consumers helped boost Dillard’s profits, said Patty Edwards, principal and chief investment officer for Trutina Financial, a financial firm in Bellevue, Wash.

“Looking at numbers, it looks like they have a nice revenue without having to spend a lot on advertising, which helped their cost control,” she said. “Dillard’s is running more efficiently then Macy’s

in terms of their SGAs.”

SGAs is an industry term for store operations, general and administrative functions, Edwards said.

Macy’s Inc., a competitor, on Wednesday reported earnings of 67 cents per share for the second quarter. Macy’s sales totaled $12.26 billion.

Net sales for Dillard’s during the quarter were $1.49 billion compared with last year’s $1.44 billion. Total merchandise sales rose 2 percent this quarter to $1.46 billion.

Trends were strongest in ladies’ accessories and lingerie, followed by shoes and cosmetics, the company stated in a news release.

The weakest performing categories were home and furniture, and juniors’ and children’s apparel.

Dillard’s operating expenses were $398.8 million, or about 26.8 percent of sales. Payroll increases, services purchased and insurance were partly offset by cost savings in advertising and utilities, according to the release.

Dillard’s bought back $134.6 million, or 2.1 million shares, in common stock during the quarter. The company began buying back shares during the past few years, spokesman Julie Bull said.

“During the second quarter we felt that was the best use of our cash,” she said.

Before the earnings report was released, shares of Dillard’s stock rose 1.3 percent Wednesday to $70.31 on the New York Stock Exchange, close to its 52week high of $72.46.

“Continuing on the mo- mentum of a successful first quarter, we are proud to report a 97 percent increase in second quarter earnings per share,” Chief Executive Officer William Dillard II said in the release. “Our 3 percent sales increase combined with gross margin improvement and control of our expenses enabled us to report a notable improvement in operating results today.”

The gross margin from retail operations was 34.3 percent of sales, a slight increase from 33.6 percent in 2011.

Dillard’s operates 285 locations and 18 clearance centers in 29 states.

During the quarter, Dillard’s closed a store in Hutchinson, Kan., and announced it was closing its store at Southpark Mall in Colonial Heights, Va. The latter store is expected to close next quarter.