), leading fashion apparel, cosmetics and home furnishings
retailer, reported strong third-quarter earnings that benefited
from positive comparable store sales combined with prudent cost
control measures and increased share buybacks.
Third-quarter adjusted earnings per share of $1.13 grew 17.7%
from 96 cents reported in the prior-year quarter and surpassed
the Zacks Consensus Estimate of $1.00.
Sales & Comps
Dillard's net sales (including CDI Contractors LLC or CDI)
increased 1.3% to $1,468.6 million in the quarter compared to the
year-ago quarter. Merchandise sales, excluding CDI, came in at
$1,437 million compared with $1,425 million in the year-ago
The company's total revenue (including service charges and
other income) of $1,506.9 million reflected a marginal increase
of 1.4% from $1,486.3 million reported in the year-ago quarter
and was above the Zacks Consensus Estimate of $1,497 million.
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Merchandise comparable store sales (comps) for the quarter were
up 1% compared to the third quarter of 2012.
During the quarter, ladies' accessories and lingerie as well as
shoes and ladies' apparel were the outperforming categories,
offset by lowest sales at the home and furniture categories. The
best performing region was Central, followed by the East and
In the first quarter, gross margin from retail operations
(excluding CDI) contracted 30 basis points to 36.8%, while
consolidated gross margin (including CDI) declined 40 basis
points to 36.2%.
Dillard's operating expenses for the quarter marginally waned to
$404.4 million from $404.6 million in the prior-year quarter,
driven by a decline in advertising expenses and taxes partially
offset by an increase in selling payroll expenses. Operating
expenses as a percentage of sales contracted 40 basis points to
27.5% in the quarter.
Other Financial Details
Dillard's ended the quarter with cash and cash equivalents of
$111.0 million compared with $124.8 million last year. Other
short-term borrowings were $170.0 million as of the quarter-end
compared with $27.0 million at the end of the prior year
comparable quarter. As of Nov 2, 2013, the company's long-term
debt and capital leases improved marginally to $621.7 million
from $622.5 million as of Oct 27, 2012.
In the third quarter, the company's net cash flow from operations
dipped 21.3% to $173.0 million from $219.9 million in the
During the quarter, Dillard's bought back 2.4 million shares
worth about $186.9 million, at a price of $77.80 per share.
Currently, the company has about $40.4 million remaining under
its ongoing share repurchase authorization.
In the third quarter, Dillard's shut down its 10,000 square feet
clearance store at Euclid Square Mall in Euclid, Ohio. Further,
the company announced plans to close its 64,000 square feet store
at University Mall in Chapel Hill, N. C. and its 195,000 square
feet store at Collin Creek in Plano, Texas. These closures are
expected to be completed by the end of the fourth quarter of
As of Nov 2, 2013, Dillard's had about 282 namesake outlets and
17 clearance centers operating in 29 states and an Internet store
at www.dillards.com. Total square footage as of Nov 2, 2013 was
Fiscal 2013 Outlook
Dillard's expects fiscal 2013 depreciation and amortization
expenses to be about $261 million, while rentals are projected at
approximately $27 million. Net interest and debt expenses are
expected to be nearly $65 million.
Moreover, the company expects to spend about $100 million toward
capital expenditure in fiscal 2013, compared with $137 million
spent in fiscal 2012. The company anticipates having no short
term borrowings at fiscal year-end 2013.
Our forward outlook on Dillard's remains positive based on its
strong performance over the last several quarters. We expect it
to continue posting earnings and revenue growth in the upcoming
quarters. The company currently holds a Zacks Rank #3 (Hold).
Other retailers currently performing well include
Best Buy Co. Inc.
Finish Line Inc.
). Of these, Best Buy has a Zacks Rank #1 (Strong Buy) and DSW
and Finish Line carry a Zacks Rank #2 (Buy).