« Previous | Next » | All Messages |  DDS Message Board Home | recommend post |  Ignore Poster

DDS News Dillard's, Inc. Reports Third Quarter Earnings

LITTLE ROCK, Ark.--(BUSINESS WIRE)--Dillard’s, Inc. (NYSE:DDS):

Third Quarter 2006 Highlights

• Net income of $13.6 million compared to a net loss of $2.7 million
• Gross margin improvement of 140 basis points of sales
• Comparable store inventory decline of 3%
• Launch of “Dillard’s – The Style of Your Life” – a comprehensive national branding campaign

Dillard’s, Inc. (the “Company” or “Dillard’s”) announced operating results for the 13 weeks ended October 28, 2006. This release contains certain forward-looking statements. Please refer to the Company’s cautionary statement regarding forward-looking information included below under “Forward-Looking Information”.

Income

Net income for the 13 weeks ended October 28, 2006 was $13.6 million ($0.17 per basic and diluted share) compared to a net loss of $2.7 million ($0.03 per basic and diluted share) for the 13 weeks ended October 29, 2005. Third quarter net income improvement was primarily driven by Dillard’s improved gross margin performance of 140 basis points of sales.

Revenues

Net sales for the 13 weeks ended October 28, 2006 were $1.722 billion compared to sales for the 13 weeks ended October 29, 2005 of $1.727 billion. Total net sales for the period were unchanged on a percentage basis. Sales in comparable store for the period declined 2%.

During the 13 weeks ended October 28, 2006, the net sales performance in Dillard’s Eastern and Central regions was consistent with the Company’s performance for the period. The net sales performance was slightly below trend in the Western region.

During the 13 weeks ended October 28, 2006, net sales of lingerie and accessories significantly exceeded Company’s performance for the period. Sales of juniors’ and children’s apparel and decorative home merchandise were significantly below trend for the period.

Gross Margin

Dillard’s achieved gross margin improvement of 140 basis points of sales for the 13 weeks ended October 28, 2006 compared to the 13 weeks ended October 29, 2005. The Company primarily attributes its improved gross margin performance to lower levels of markdowns and decreased purchases resulting in lower inventory levels as it executed a disciplined approach to merchandising and inventory control during the period.

Total inventory declined 1% as of October 28, 2006 compared to October 29, 2005. Inventory in comparable stores declined 3%.

Dillard’s remains committed to providing a differentiated shopping experience to position its merchandise mix toward a more upscale and contemporary tone to continue to attract customers who are seeking exciting statements in fashion.

Advertising, Selling, Administrative and General Expenses

Advertising, selling, administrative and general (“S G & A”) expenses were $513.2 million and $507.0 million for the 13 weeks ended October 28, 2006 and October 29, 2005, respectively. Increases in payroll, utilities, supplies, services purchased and insurance were partially offset by savings in advertising and store pre-opening expenses.

In August of 2006, the Company launched its comprehensive national branding campaign, “Dillard’s – The Style of Your Life”. The campaign features Dillard’s fashion merchandise in a variety of lifestyle vignettes distributed through multiple media channels including national fashion magazines, broadcast and Internet. The branding campaign supports Dillard’s upscale and contemporary approach to the marketplace in a series of customized, sophisticated portfolios. The current campaign will continue through the holiday season.

The Company continues to evaluate its advertising strategy to position advertising spending toward the most appropriate media sources to reach its targeted customers. During the third quarter, advertising spending formerly dedicated to more traditional sources, such as newspaper and other print media, was redirected to the new branding campaign.

Interest and Debt Expense

Interest and debt expense declined $2.3 million to $23.4 million for the 13 weeks ended October 28, 2006 compared to the 13 weeks ended October 29, 2005 as a result of lower debt levels.

As of October 28, 2006, letters of credit totaling $75.4 million were outstanding under the Company’s $1.2 billion revolving credit facility.

Store Information

Two stores in the Gulf Coast area which were damaged by Hurricane Katrina remained closed as of October 28, 2006. Details regarding these stores, which are located in New Orleans, Louisiana and Biloxi, Mississippi, are still being determined.

During the 13 weeks ended October 28, 2006, Dillard’s opened the following new locations:

During the 13 weeks ended October 28, 2006, the Company closed its Jamestown Mall location in Florissant, Missouri (170,000 square feet) and its Rolling Acres clearance center in Akron, Ohio (127,000 square feet).

Earlier this month, Dillard’s opened its new location at Coconut Point in Bonita Springs, Florida (180,000 square feet) and new store at Southwest Plaza in Littleton, Colorado (180,000 square feet replacing 132,000 square feet).

As of October 28, 2006, the Company operated 327 Dillard’s locations spanning 29 states, net of the two locations closed at the time due to hurricane damage.