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Dillard's, Inc. Reports Fourth Quarter and Fiscal Year Results

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Dillard's, Inc. (NYSE: DDS) (the "Company" or "Dillard's") announced
operating results for the 13 and 52 weeks ended January 28, 2017. This
release contains certain forward-looking statements. Please refer to the
Company's cautionary statements regarding forward-looking information
included below under "Forward-Looking Information."

Fiscal Year Results

Dillard's reported net income for the 52 weeks ended January 28, 2017 of
$169.2 million, or $4.93 per share, compared to net income of $269.4
million, or $6.91 per share, for the prior year 52-week period. Included
in net income for the 52-week period ended January 28, 2017 is an
after-tax asset impairment of $4.2 million ($0.12 per share) on a cost
method investment.

Included in net income for the prior year 52-week period ended January
30, 2016 is a net after-tax credit of $8.1 million ($0.21 per share)
related to the sale of four store locations.

Net sales for the 52 weeks ended January 28, 2017 were $6.257 billion
and $6.596 billion for the 52 weeks ended January 30, 2016. Total
merchandise sales for the 52-week period ended January 28, 2017 were
$6.071 billion and $6.389 billion for the 52-week period ended
January 30, 2016. Net sales include the operations of the Company's
construction business, CDI Contractors, LLC ("CDI"). Total merchandise
sales (which exclude CDI) decreased 5% for the 52-week period ended
January 28, 2017. Sales in comparable stores for the period also
decreased 5%.

During the year, the Company purchased $246.2 million of Class A Common
Stock under its share repurchase authorization. Share repurchases were
accomplished entirely from available cash and operating cash flow.

Fourth Quarter Results

Dillard's reported net income for the 13 weeks ended January 28, 2017 of
$56.9 million, or $1.72 per share, compared to net income of $84.0
million, or $2.31 per share, for the prior year fourth quarter. Included
in net income for the 13-week period ended January 28, 2017 is an
after-tax asset impairment of $4.2 million ($0.13 per share) on a cost
method investment.

Included in net income for the prior year fourth quarter ended January
30, 2016 is an after-tax gain of $2.0 million ($0.06 per share) related
to the sale of a store location.

Dillard's Chief Executive Officer, William T. Dillard, II, stated, "Our
operating results reflect another quarter of mall traffic declines from
continued retail industry challenges. In response, we are ramping up our
efforts to bring more distinctive brand and service experiences to
Dillard's, both in-store and online. Our strong balance sheet provides
us support in these challenging times, and during the year we returned
$256 million to shareholders."

Net sales for the 13 weeks ended January 28, 2017 were $1.936 billion
and $2.074 billion for the 13 weeks ended January 30, 2016.

Total merchandise sales (which exclude CDI) for the 13-week period ended
January 28, 2017 were $1.896 billion and $2.021 billion for the 13-week
period ended January 30, 2016. Total merchandise sales decreased 6% for
the 13-week period ended January 28, 2017. Sales in comparable stores
for the period also decreased 6%. Although all sales categories declined
during the quarter, better performing categories relative to the total
trend were ladies' apparel and men's apparel and accessories. Weakest
performing categories were home and furniture and shoes. Sales were
strongest in the Eastern region followed by the Western and Central
regions, respectively.

During the quarter, the Company purchased $80.6 million of Class A
Common Stock under its share repurchase authorization.

Gross Margin/Inventory

Gross margin from retail operations (which excludes CDI) improved 8
basis points of sales for the 13 weeks ended January 28, 2017 compared
to the prior year fourth quarter. Inventory increased 2% at January 28,
2017 compared to January 30, 2016. Consolidated gross margin for the 13
weeks ended January 28, 2017 improved 24 basis points of sales compared
to the prior year fourth quarter.

Gross margin from retail operations declined 73 basis points of sales
for the 52 weeks ended January 28, 2017 compared to the prior 52 weeks
ended January 30, 2016. Consolidated gross margin for the 52 weeks ended
January 28, 2017 declined 62 basis points of sales compared to the prior
52 weeks ended January 30, 2016.

Selling, General & Administrative Expenses

Selling, general and administrative expenses ("operating expenses") were
$451.6 million (23.3% of sales) and $449.4 million (21.7% of sales)
during the 13 weeks ended January 28, 2017 and January 30, 2016,
respectively. Increased selling payroll and services purchased expense
was partially offset by savings in several expense categories.

Operating expenses declined $14.3 million to $1.656 billion (26.5% of
sales) from $1.670 billion (25.3% of sales) during the 52 weeks ended
January 28, 2017 compared to January 30, 2016. During the fiscal year,
savings in several expense categories, notably advertising, utilities
and supplies, were partially offset by increased payroll and
employee-related insurance expense.

Share Repurchase

During the 13 weeks ended January 28, 2017, the Company purchased $80.6
million (1.3 million shares) of Class A Common Stock under its $500
million share repurchase program. During the 52 weeks ended January 28,
2017, the Company purchased $246.2 million (3.8 million shares) of Class
A Common Stock. Total shares outstanding (Class A and Class B Common
Stock) at January 28, 2017 and January 30, 2016 were 32.2 million and
35.9 million, respectively. At January 28, 2017, authorization of $253.8
million remained under the plan.

Store Information

At January 28, 2017, the Company operated 268 Dillard's locations and 25
clearance centers spanning 29 states and an Internet store at www.dillards.com.
Total square footage at January 28, 2017 was 49.2 million.

 
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In Millions, Except Per Share Data)
               
13 Weeks Ended 52 Weeks Ended
January 28, 2017 January 30, 2016 January 28, 2017 January 30, 2016
% of % of % of % of
Net Net Net Net
Amount   Sales Amount   Sales Amount   Sales Amount   Sales
Net sales $ 1,935.6 100.0 % $ 2,073.7 100.0 % $ 6,257.0 100.0 % $ 6,595.6 100.0 %
Service charges and other income 48.3   2.5 43.7   2.1 161.0   2.6 158.9   2.4
1,983.9 102.5 2,117.4 102.1 6,418.0 102.6 6,754.5 102.4
 
Cost of sales 1,355.6 70.0 1,457.1 70.3 4,166.4 66.6 4,350.8 66.0
Selling, general and administrative expenses 451.6 23.3 449.4 21.7 1,655.6 26.5 1,669.9 25.3
Depreciation and amortization 61.7 3.2 62.8 3.0 243.7 3.9 250.0 3.8
Rentals 8.4 0.4 9.4 0.5 26.0 0.4 26.7 0.4
Interest and debt expense, net 15.7 0.8 16.1 0.8 63.1 1.0 60.9 0.9
Gain on disposal of assets 0.0 3.1 0.2 1.0 0.0 12.6 0.2
Asset impairment and store closing charges 6.5   0.3   0.0 6.5   0.1   0.0
Income before income taxes and income on and equity in losses of
joint ventures
84.4 4.4 125.7 6.1 257.7 4.1 408.8 6.2
Income taxes 27.5 42.1 88.5 140.8
Income on and equity in losses of joint ventures   0.0 0.4   0.0   0.0 1.4   0.0
Net income $ 56.9   2.9 % $ 84.0   4.1 % $ 169.2   2.7 % $ 269.4   4.1 %
 
Basic and diluted earnings per share $ 1.72 $ 2.31 $ 4.93 $ 6.91
Basic and diluted weighted average shares 33.1 36.4 34.3 39.0
 
 
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In Millions)
   
January 28, January 30,
2017 2016
Assets
Current Assets:
Cash and cash equivalents $ 347.0 $ 202.9
Accounts receivable 48.2 47.1
Merchandise inventories 1,406.4 1,374.5
Other current assets 36.3   44.4
Total current assets 1,837.9 1,668.9
 
Property and equipment, net 1,790.3 1,939.8
Other assets 259.9   255.2
 
Total Assets $ 3,888.1   $ 3,863.9
 
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $ 839.3 $ 691.3
Current portion of long-term debt and capital leases 90.5 3.3
Federal and state income taxes 46.7   56.6
Total current liabilities 976.5 751.2
 
Long-term debt and capital leases 530.1 620.4
Other liabilities 238.4 238.9
Deferred income taxes 225.7 258.1
Subordinated debentures 200.0 200.0
Stockholders' equity 1,717.4   1,795.3
 
Total Liabilities and Stockholders' Equity $ 3,888.1   $ 3,863.9
 
 
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In Millions)
   
52 Weeks Ended
January 28, January 30,
2017 2016
Operating activities:
Net income $ 169.2 $ 269.4
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of property and other deferred cost 246.0 252.1
Deferred income taxes (35.7 ) (36.0 )
Gain on disposal of assets (1.0 ) (12.6 )
Proceeds from insurance 3.2
Gain from insurance proceeds (1.6 )
Asset impairment and store closing charges 6.5
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (1.1 ) 9.4
Increase in merchandise inventories (33.4 )
Decrease in other current assets 9.0 2.9
Decrease in other assets 6.0 2.9
Increase (decrease) in trade accounts payable and accrued expenses
and other liabilities
156.3 (33.7 )
Decrease in income taxes payable (6.2 ) (4.2 )
Net cash provided by operating activities 517.2   450.2  
 
Investing activities:
Purchase of property and equipment (105.0 ) (165.7 )
Proceeds from disposal of assets 1.2 25.5
Proceeds from insurance 1.5
Investment in joint venture (20.0 )
Decrease in restricted cash 7.3
Distribution from joint venture 2.5    
Net cash used in investing activities (119.8 ) (132.9 )
 
Financing activities:
Principal payments on long-term debt and capital lease obligations (3.3 ) (5.3 )
Cash dividends paid (9.8 ) (10.0 )
Purchase of treasury stock (240.2 ) (500.0 )
Issuance cost of line of credit   (2.9 )
Net cash used in financing activities (253.3 ) (518.2 )
 
Increase (decrease) in cash and cash equivalents 144.1 (200.9 )
Cash and cash equivalents, beginning of period 202.9   403.8  
Cash and cash equivalents, end of period $ 347.0   $ 202.9  
 
Non-cash transactions:
Accrued capital expenditures $ 3.5 $ 10.9
Capital lease 9.1
Stock awards 2.7 2.8
Accrued purchase of treasury stock 6.0
 

Estimates for 2017

The Company is providing the following estimates for certain financial
statement items for the fiscal year ending February 3, 2018 based upon
current conditions. Actual results may differ significantly from these
estimates as conditions and factors change - See "Forward-Looking
Information."

 
In Millions
2017   2016
Estimated Actual
Depreciation and amortization $ 240 $ 244
Rentals 25 26
Interest and debt expense, net 63 63
Capital expenditures 125 105
 

Forward-Looking Information

The foregoing contains certain "forward-looking statements" within the
definition of federal securities laws. The following are or may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995: statements including (a) words
such as "may," "will," "could," "believe," "expect," "future,"
"potential," "anticipate," "intend," "plan," "estimate," "continue," or
the negative or other variations thereof, and (b) statements regarding
matters that are not historical facts. The Company cautions that
forward-looking statements contained in this report are based on
estimates, projections, beliefs and assumptions of management and
information available to management at the time of such statements and
are not guarantees of future performance. The Company disclaims any
obligation to update or revise any forward-looking statements based on
the occurrence of future events, the receipt of new information, or
otherwise. Forward-looking statements of the Company involve risks and
uncertainties and are subject to change based on various important
factors. Actual future performance, outcomes and results may differ
materially from those expressed in forward-looking statements made by
the Company and its management as a result of a number of risks,
uncertainties and assumptions. Representative examples of those factors
include (without limitation) general retail industry conditions and
macro-economic conditions; economic and weather conditions for regions
in which the Company's stores are located and the effect of these
factors on the buying patterns of the Company's customers, including the
effect of changes in prices and availability of oil and natural gas; the
availability of consumer credit; the impact of competitive pressures in
the department store industry and other retail channels including
specialty, off-price, discount and Internet retailers; changes in
consumer spending patterns, debt levels and their ability to meet credit
obligations; changes in legislation, affecting such matters as the cost
of employee benefits or credit card income; adequate and stable
availability and pricing of materials, production facilities and labor
from which the Company sources its merchandise; changes in operating
expenses, including employee wages, commission structures and related
benefits; system failures or data security breaches; possible future
acquisitions of store properties from other department store operators;
the continued availability of financing in amounts and at the terms
necessary to support the Company's future business; fluctuations in
LIBOR and other base borrowing rates; potential disruption from
terrorist activity and the effect on ongoing consumer confidence;
epidemic, pandemic or other public health issues; potential disruption
of international trade and supply chain efficiencies; world conflict and
the possible impact on consumer spending patterns and other economic and
demographic changes of similar or dissimilar nature. The Company's
filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the fiscal year ended January 30, 2016,
contain other information on factors that may affect financial results
or cause actual results to differ materially from forward-looking
statements.

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