Dillard’s, Inc. Reports Fourth Quarter and Fiscal Year Results
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) |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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13 Weeks Ended |
|
52 Weeks Ended |
|
|
January 28, 2017 |
|
January 30, 2016 |
|
January 28, 2017 |
|
January 30, 2016 |
|
|
|
|
% of |
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|
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% 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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Dillard’s, Inc.
Julie Johnson Bull, 501-376-5965
julie.bull@dillards.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170221005543/en/