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Dillard's, Inc. Reports Second Quarter Results

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Dillard's, Inc. (NYSE:DDS) (the "Company" or "Dillard's") announced
operating results for the 13 and 26 weeks ended July 29, 2017. This
release contains certain forward-looking statements. Please refer to the
Company's cautionary statements included below under "Forward-Looking
Information."

26 Week Results

Dillard's reported net income for the 26 weeks ended July 29, 2017 of
$49.2 million, or $1.62 per share, compared to net income of $89.5
million, or $2.55 per share, for the prior year 26-week period.

Net sales for the 26 weeks ended July 29, 2017 and the 26 weeks ended
July 30, 2016 were $2.845 billion and $2.956 billion, respectively. Net
sales includes the operations of the Company's construction business,
CDI Contractors, LLC ("CDI"). Total merchandise sales (which excludes
CDI) for the 26-week period ended July 29, 2017 were $2.770 billion and
$2.853 billion for the 26-week period ended July 30, 2016. Total
merchandise sales decreased 3% for the 26-week period ended July 29,
2017. Sales in comparable stores for the period decreased 2%.

Second Quarter Results

Dillard's reported a net loss for the 13 weeks ended July 29, 2017 of
$17.1 million, or $0.58 per share, compared to net income of $12.1
million, or $0.35 per share, for the prior year second quarter.

Net sales for the 13 weeks ended July 29, 2017 and the 13 weeks ended
July 30, 2016 were $1.427 billion and $1.452 billion, respectively.

Total merchandise sales for the 13-week period ended July 29, 2017 were
$1.385 billion and $1.403 billion for the 13-week period ended July 30,
2016. Total merchandise sales decreased 1% for the 13-week period ended
July 29, 2017. Sales in comparable stores for the period decreased 1%.
Sales increased slightly in ladies' apparel. Sales were consistent with
the company trend in juniors' and children's apparel, ladies'
accessories and lingerie and men's apparel and accessories. Sales in
shoes were slightly below trend. Below trend performances were noted in
cosmetics and home and furniture. Sales were slightly above trend in the
Eastern region, consistent with trend in the Western region and below
trend in the Central region.

Dillard's Chief Executive Officer, William T. Dillard, commented on the
quarter, "Significant markdowns led to a disappointing loss as we dealt
with inventory, which was up 2% at quarter end."

Gross Margin/Inventory

Gross margin from retail operations (which excludes CDI) declined 235
basis points of sales for the 13 weeks ended July 29, 2017 compared to
the prior year second quarter primarily due to increased markdowns.
Consolidated gross margin for the 13 weeks ended July 29, 2017 declined
217 basis points of sales compared to the prior year second quarter.
Inventory increased 2% at July 29, 2017 compared to July 30, 2016.

Selling, General & Administrative Expenses

Selling, general and administrative expenses ("operating expenses") were
$401.6 million (28.2% of sales) and $395.0 million (27.2% of sales)
during the 13 weeks ended July 29, 2017 and July 30, 2016, respectively.
The increase in operating expenses is primarily due to increased selling
payroll and services purchased.

Share Repurchase

During the 13 weeks ended July 29, 2017, the Company purchased $69.5
million (1.4 million shares) of Class A Common Stock under its $500
million share repurchase program. During the year-to-date period ended
July 29, 2017, the Company purchased $160.6 million (3.1 million shares)
under the program. As of July 29, 2017, authorization of $93.2 million
remained under the program. Total shares outstanding (Class A and Class
B Common Stock) at July 29, 2017 and July 30, 2016 were 29.1 million and
34.3 million, respectively.

Credit Facility

The Company announced that it has amended and extended into a new $800
million senior unsecured revolving credit facility consistent with the
Company's liquidity needs. A $200 million expansion option remains in
place and pricing is unchanged. The new maturity date is August 9, 2022.

Store Information

The Company operates 268 Dillard's locations and 25 clearance centers
spanning 29 states and an Internet store at www.dillards.com.
Total square footage at July 29, 2017 was 49.1 million square feet.

 
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In Millions, Except Per Share Data)
       
13 Weeks Ended 26 Weeks Ended
July 29, 2017 July 30, 2016 July 29, 2017 July 30, 2016
Amount

% of
Net
Sales

Amount

% of
Net
Sales

Amount

% of
Net
Sales

Amount

% of
Net
Sales

Net sales $ 1,427.2 100.0 % $ 1,452.4 100.0 % $ 2,845.3 100.0 % $ 2,955.7 100.0 %
Service charges and other income 36.6   2.6 36.3   2.5 71.4   2.5 71.8   2.4
1,463.8 102.6 1,488.7 102.5 2,916.7 102.5 3,027.5 102.4
 
Cost of sales 1,007.1 70.6 993.4 68.4 1,877.1 66.0 1,931.9 65.4
Selling, general and administrative expenses 401.6 28.2 395.0 27.2 800.1 28.1 793.5 26.8
Depreciation and amortization 59.9 4.2 60.6 4.2 119.9 4.2 121.2 4.1
Rentals 6.5 0.5 5.9 0.4 12.7 0.4 11.9 0.4
Interest and debt expense, net 15.8 1.1 16.0 1.1 31.5 1.1 31.7 1.1
Gain on disposal of assets   0.0 0.8   0.1   0.0 0.9   0.0
(Loss) income before income taxes (27.1 ) (1.9 ) 18.6 1.3 75.4 2.7 138.2 4.7
Income taxes (benefit) (10.0 ) 6.5   26.2   48.7  
Net (loss) income $ (17.1 ) (1.2 )% $ 12.1 0.8 % $ 49.2 1.7 % $ 89.5 3.0 %
 
Basic and diluted (loss) earnings per share $ (0.58 ) $ 0.35 $ 1.62 $ 2.55
Basic and diluted weighted average shares 29.4 34.5 30.3 35.1
 
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In Millions)
   
July 29, 2017 July 30, 2016
Assets
Current Assets:
Cash and cash equivalents $ 135.1 $ 128.3
Accounts receivable 39.2 41.2
Merchandise inventories 1,527.4 1,499.3
Federal and state income taxes 20.3 22.0
Other current assets 37.9   45.9
Total current assets 1,759.9 1,736.7
 
Property and equipment, net 1,733.5 1,851.8
Other assets 255.9   254.5
 
Total Assets $ 3,749.3   $ 3,843.0
 
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $ 873.6 $ 760.6
Current portion of long-term debt and capital leases 249.1   3.2
Total current liabilities 1,122.7 763.8
 
Long-term debt and capital leases 368.8 617.7
Other liabilities 238.9 242.1
Deferred income taxes 216.2 250.7
Subordinated debentures 200.0 200.0
Stockholders' equity 1,602.7   1,768.7
 
Total Liabilities and Stockholders' Equity $ 3,749.3   $ 3,843.0
 
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In Millions)
   
26 Weeks Ended
July 29, 2017 July 30, 2016
Operating activities:
Net income $ 49.2 $ 89.5
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of property and other deferred cost 121.0 122.4
Gain on disposal of assets (0.9 )
Changes in operating assets and liabilities:
Decrease in accounts receivable 9.0 5.9
Increase in merchandise inventories (121.0 ) (124.8 )
Increase in other current assets (0.7 ) (0.7 )
Decrease in other assets 2.4 1.0
Increase in trade accounts payable and accrued expenses and other
liabilities
35.8 77.1
Decrease in income taxes (73.6 ) (82.8 )
Net cash provided by operating activities 22.1   86.7  
 
Investing activities:
Purchase of property and equipment (63.0 ) (42.0 )
Proceeds from disposal of assets 0.1 1.0
Proceeds from insurance 1.9
Distribution from joint venture 0.9    
Net cash used in investing activities (60.1 ) (41.0 )
 
Financing activities:
Principal payments on long-term debt and capital lease obligations (2.8 ) (2.8 )
Cash dividends paid (4.5 ) (5.0 )
Purchase of treasury stock (166.6 ) (112.5 )
Net cash used in financing activities (173.9 ) (120.3 )
 
Decrease in cash and cash equivalents (211.9 ) (74.6 )
Cash and cash equivalents, beginning of period 347.0   202.9  
Cash and cash equivalents, end of period $ 135.1   $ 128.3  
 
Non-cash transactions:
Accrued capital expenditures $ 3.9 $ 3.6
Stock awards 0.9 0.9

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 28 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 tax legislation; 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 28, 2017, 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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