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

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Comparable Store Sales Increased 3% for 13-Week Period

Dillard's, Inc. (NYSE:DDS) (the "Company" or "Dillard's") announced
operating results for the 14 and 53 weeks ended February 3, 2018. The
Company follows the retail 4-5-4 reporting calendar, which included an
extra week in the fourth quarter of fiscal 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."

Fourth Quarter Results

Dillard's reported net income for the 14 weeks ended February 3, 2018 of
$157.6 million, or $5.55 per share, compared to net income of $56.9
million, or $1.72 per share, for the 13 weeks ended January 28, 2017.
Included in net income for the fourth quarter is an estimated tax
benefit of approximately $77.4 million ($2.73 per share) related to the
Tax Cuts and Jobs Act of 2017.

Included in net income for the prior year fourth quarter ended January
28, 2017 is an after-tax asset impairment of $4.2 million ($0.13 per
share) on a cost method investment.

Dillard's Chief Executive Officer, William T. Dillard, II, stated, "The
positive sales trends we noted at the end of the third quarter continued
through the fourth. Our 3% comparable store sales increase combined with
gross margin improvement and relative expense control led to a notable
increase in pretax income for the quarter. We are working to keep this
momentum into 2018."

Net sales for the 14 weeks ended February 3, 2018 were $2.061 billion
and $1.936 billion for the 13 weeks ended January 28, 2017. Net sales
include the operations of the Company's construction business, CDI
Contractors, LLC ("CDI").

Total merchandise sales (which exclude CDI) for the 14-week period ended
February 3, 2018 were $2.025 billion and $1.896 billion for the 13-week
period ended January 28, 2017. Total merchandise sales increased 7% for
the 14-week period ended February 3, 2018 compared to the 13-week period
ended January 28, 2017. Sales in comparable stores increased 3% for
13-week period ended January 27, 2018 compared to the 13-week period
ended January 28, 2017.

Sales of ladies' apparel, juniors' and children's apparel and men's
apparel and accessories were above the average company sales trend
during the fourth quarter. Sales were slightly below trend in cosmetics
and below trend in ladies' accessories and lingerie, home and furniture
and shoes. Sales were strongest in the Western and Eastern regions
followed by the Central region.

During the quarter, the Company purchased $34.6 million of Class A
Common Stock under its share repurchase authorization.

Fiscal Year Results

Dillard's reported net income for the 53 weeks ended February 3, 2018 of
$221.3 million, or $7.51 per share, compared to net income of $169.2
million, or $4.93 per share, for the 52 weeks ended January 28, 2017.
Included in net income for the 53-week period ended February 3, 2018 is
a pretax gain on disposal of assets of $4.9 million ($3.2 million after
tax or $0.11 per share) and $0.8 million loss on extinguishment of debt
($0.5 million after tax or $0.02 per share). Also included in net income
for the fiscal year is an estimated tax benefit of approximately $77.4
million ($2.62 per share) related to the Tax Cuts and Jobs Act of 2017.

Included in net income for the prior year 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.

Net sales for the 53 weeks ended February 3, 2018 were $6.262 billion
and $6.257 billion for the 52 weeks ended January 28, 2017. Total
merchandise sales for the 53-week period ended February 3, 2018 were
$6.108 billion and $6.071 billion for the 52-week period ended
January 28, 2017. Total merchandise sales increased 1% for the 53-week
period ended February 3, 2018 compared to the 52-week period ended
January 28, 2017. Sales in comparable stores remained unchanged on a
percentage basis for the 52-week period ended January 27, 2018 compared
to the 52-week period ended January 28, 2017.

During the year, the Company purchased $219.0 million of Class A Common
Stock under its share repurchase authorization. Share repurchases were
accomplished entirely from available cash and operating cash flow.

Gross Margin/Inventory

Gross margin from retail operations (which excludes CDI) improved 48
basis points of sales for the 14 weeks ended February 3, 2018 compared
to the 13 weeks ended January 28, 2017 primarily due to increased
markups. Inventory increased 4% at February 3, 2018 compared to
January 28, 2017. Consolidated gross margin for the 14 weeks ended
February 3, 2018 improved 53 basis points of sales compared to the prior
year fourth quarter.

Gross margin from retail operations declined 65 basis points of sales
for the 53 weeks ended February 3, 2018 compared to the prior 52 weeks
ended January 28, 2017 primarily due to increased markdown activity.
Consolidated gross margin for the 53 weeks ended February 3, 2018
declined 48 basis points of sales compared to the prior 52 weeks ended
January 28, 2017.

Selling, General & Administrative Expenses

Selling, general and administrative expenses ("operating expenses") were
$480.8 million (23.3% of sales) and $451.6 million (23.3% of sales)
during the 14 weeks ended February 3, 2018 and the 13 weeks ended
January 28, 2017, respectively. The increase in operating expenses of
$29.2 million is due to the additional week of operations during the
2017 reporting period. For the 14-week period compared to the 13-week
period, the dollar increase is comprised primarily of increased payroll,
supplies and utilities.

Operating expenses increased $36.5 million to $1.692 billion (27.0% of
sales) from $1.656 billion (26.5% of sales) during the 53 weeks ended
February 3, 2018 compared to the 52 weeks ended January 28, 2017. The
increase in expenses is primarily due to the additional week of
operations during the 2017 reporting period.

Income Taxes

Net income for the fourth quarter includes an estimated tax benefit of
approximately $77.4 million ($2.73 per share) related to the Tax Cuts
and Jobs Act enacted during the fourth quarter of 2017. This benefit
is primarily due to the Company's reasonable estimate of the effect of
reduced future corporate income tax rates on its existing net deferred
tax liabilities.

Share Repurchase

During the 14 weeks ended February 3, 2018, the Company purchased $34.6
million (0.6 million shares) of Class A Common Stock under its $500
million share repurchase program. During the 53 weeks ended February 3,
2018, the Company purchased $219.0 million (4.1 million shares) of Class
A Common Stock. Total shares outstanding (Class A and Class B Common
Stock) at February 3, 2018 and January 28, 2017 were 28.1 million and
32.2 million, respectively. At February 3, 2018, authorization of $34.8
million remained under the plan.

Store Information

At February 3, 2018, the Company operated 268 Dillard's locations and 24
clearance centers spanning 29 states and an Internet store at www.dillards.com.
Total square footage at February 3, 2018 was 49.2 million.

 
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In Millions, Except Per Share Data)
 
      14 Weeks Ended     13 Weeks Ended     53 Weeks Ended     52 Weeks Ended
February 3, 2018     January 28, 2017 February 3, 2018     January 28, 2017
Amount    

% of
Net
Sales

Amount    

% of
Net
Sales

Amount    

% of
Net
Sales

Amount    

% of
Net
Sales

Net sales $ 2,061.3     100.0 % $ 1,935.6     100.0 % $ 6,261.5     100.0 % $ 6,257.0     100.0 %
Service charges and other income 47.9   2.3 48.3 2.5 161.2   2.6 161.0 2.6
2,109.2 102.3 1,983.9 102.5 6,422.7 102.6 6,418.0 102.6
 
Cost of sales 1,432.5 69.5 1,355.6 70.0 4,199.7 67.1 4,166.4 66.6
Selling, general and administrative expenses 480.8 23.3 451.6 23.3 1,692.2 27.0 1,655.6 26.5
Depreciation and amortization 54.7 2.7 61.7 3.2 231.6 3.7 243.7 3.9
Rentals 9.1 0.4 8.4 0.4 28.0 0.4 26.0 0.4
Interest and debt expense, net 16.1 0.8 15.7 0.8 62.6 1.0 63.1 1.0
Loss on early extinguishment of debt 0.0 0.0 0.8 0.0 0.0
Gain on disposal of assets 0.0 0.0 4.9 0.1 1.0 0.0
Asset impairment and store closing charges   0.0 6.5 0.3   0.0 6.5 0.1
Income before income taxes and income on and equity in losses of
joint ventures
116.0 5.6 84.4 4.4 212.7 3.4 257.7 4.1
Income taxes (benefit) (40.8 ) 27.5 (7.8 ) 88.5
Income on and equity in losses of joint ventures 0.8   0.0 0.0 0.8   0.0 0.0
Net income $ 157.6   7.6 % $ 56.9 2.9 % $ 221.3   3.5 % $ 169.2 2.7 %
 
Basic and diluted earnings per share $ 5.55 $ 1.72 $ 7.51 $ 4.93
Basic and diluted weighted average shares 28.4 33.1 29.5 34.3
 
 
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In Millions)
         

February 3,
2018

January 28,
2017

Assets
Current Assets:
Cash and cash equivalents $ 187.0 $ 347.0
Accounts receivable 39.6 48.2
Merchandise inventories 1,463.6 1,406.4
Other current assets 39.6 36.3
Total current assets 1,729.8 1,837.9
 
Property and equipment, net 1,696.3 1,790.3
Other assets 247.0 259.9
 
Total Assets $ 3,673.1 $ 3,888.1
 
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $ 835.7 $ 839.3
Current portion of long-term debt and capital leases 162.0 90.5
Federal and state income taxes 41.9 46.7
Total current liabilities 1,039.6 976.5
 
Long-term debt and capital leases 368.3 530.1

Other liabilities

240.2 238.4
Deferred income taxes 116.8 225.7
Subordinated debentures 200.0 200.0
Stockholders' equity 1,708.2 1,717.4
 
Total Liabilities and Stockholders' Equity $ 3,673.1 $ 3,888.1
 
 
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In Millions)
 
     

53 Weeks
Ended

   

52 Weeks
Ended

February
3, 2018

January
28, 2017

Operating activities:
Net income $ 221.3 $ 169.2
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of property and other deferred cost 233.7 246.0
Deferred income taxes (102.1 ) (35.7 )
Loss (gain) on disposal of assets 1.0 (1.0 )
Proceeds from insurance 3.2
Gain from insurance proceeds (5.9 ) (1.6 )
Loss on early extinguishment of debt 0.8
Asset impairment and store closing charges 6.5
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 8.6 (1.1 )
Increase in merchandise inventories (57.2 ) (33.4 )
(Increase) decrease in other current assets (2.4 ) 9.0
Decrease in other assets 2.2 5.8
(Decrease) increase in trade accounts payable and accrued expenses
and other liabilities
(19.6 ) 156.3
Decrease in income taxes payable (6.2 ) (6.2 )
Net cash provided by operating activities 274.2   517.0  
 
Investing activities:
Purchase of property and equipment (130.5 ) (104.8 )
Proceeds from disposal of assets 11.7 1.2
Proceeds from insurance 5.1 1.5
Investment in joint venture (20.0 )
Distribution from joint venture 3.5   2.5  
Net cash used in investing activities (110.2 ) (119.6 )
 
Financing activities:
Principal payments on long-term debt and capital lease obligations (90.5 ) (3.3 )
Cash dividends paid (9.4 ) (9.8 )
Purchase of treasury stock (223.0 ) (240.2 )
Issuance cost of line of credit (1.1 )  
Net cash used in financing activities (324.0 ) (253.3 )
 
(Decrease) increase in cash and cash equivalents (160.0 ) 144.1
Cash and cash equivalents, beginning of period 347.0   202.9  
Cash and cash equivalents, end of period $ 187.0   $ 347.0  
 
Non-cash transactions:
Accrued capital expenditures $ 23.1 $ 3.5
Stock awards 2.7 2.7
Accrued purchase of treasury stock 2.0 6.0
 

Estimates for 2018

The Company is providing the following estimates for certain financial
statement items for the fiscal year ending February 2, 2019 based upon
current conditions. Actual results may differ significantly from these
estimates as conditions and factors change - See "Forward-Looking
Information."

     
In Millions
2018     2017
Estimated Actual
Depreciation and amortization $ 230 $ 232
Rentals 27 28
Interest and debt expense, net 50 63
Capital expenditures 140 131
 

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," "hope," "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 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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