Dillard’s Reports Improved Profits, But Holiday Remains a Mystery

Dillard’s Inc. is clawing its way back but is not ready to make any predictions about the holiday season.

The Little Rock, Ark.-based department store chain said Thursday that net income for the 13 weeks ended Oct. 31 increased to $31.9 million, or $1.43 a share, compared to $5.5 million, or 22 cents a share, for the prior year third quarter. Included in this year’s results is a $2.2 million pretax loss — $1.4 million after tax, or 6 cents a share — primarily related to the sale of a store property.

Dillard’s said that despite the seemingly improved figures, it still expects to be in a net operating loss position for the fiscal year. The CARES Act, signed into law in March, allows for net operating loss carryback to years in which the federal tax rate was 35 percent. Included in net income for the 13-week period is a net tax benefit related to this provision, the retailer said.

Total sales were $994.6 million in the 13 weeks, down about 25 percent from the $1.3 billion in the year-ago period. Comparable-store sales decreased 24 percent.

In terms of categories, sales of home and furniture were the top performers, followed by women’s accessories, lingerie and cosmetics. Sales of women’s apparel were significantly below trend in the period, the company said. By geographical area, sales in the Eastern region moderately outperformed the Central and Western regions, respectively, Dillard’s said.

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Included in net income for the prior year, 13 weeks ended Nov. 2, 2019, is a pretax loss of $300,000 primarily related to the sale of a store property, and $2.8 million in tax benefits related to amended state tax return filings.

William T. Dillard 2nd, chief executive officer, said: “We have worked hard on inventory and expense control in unpredictable conditions throughout the pandemic. We achieved a 249 basis point gross margin improvement for the third quarter with ending inventory down 22 percent. Additionally, we cut expenses $100 million. As we enter this holiday season, one thing we can predict is the dedication of our associates and their exceptional service to our customers.”

The company further cautioned that these results “include certain effects of the COVID-19 pandemic, which has had, and is continuing to have, a significant negative impact on the company’s business, results of operations and financial position. Given the uncertainty surrounding the COVID-19 pandemic and its economic effects, the related financial impact to fiscal 2020 cannot be reasonably estimated at this time.”

For the 39 weeks, Dillard’s reported a net loss of $138.7 million, or $6.05 a share, compared to net income of $43.4 million, or $1.69 a share, for the prior year 39-week period. Net sales for the 39 weeks were $2.6 billion, compared with $4.1 billion in the prior-year period.

Dillard’s said it will close its Paradise Valley Mall location in Phoenix, Ariz., by the end of the fiscal year. Overall, the retailer operates 250 full-price stores and 32 clearance centers in 29 states.

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