Dillard’s lowers inventory, improves margin

Little Rock, Ark. – Dillard’s is moving forward with modest store expansion in the coming months.

As it reported its third quarter results yesterday, the department store retail said it will open an expansion at Killeen Mall in Killeen, Texas by the end of the fiscal year, replacing a 70,000-sq.-ft. facility with a 75,000-sq.-ft. owned facility at the dual anchor location.

During the first quarter of 2020, Dillard’s will open an 85,000-sq.-ft. expansion at Columbia Mall in Columbia, Mo. Also in early 2020, Dillard’s will replace a 100,000-sq.-ft. leased facility at Richland Fashion Mall in Waco, Texas with a 125,000-sq.ft. owned facility.

Dillard’s also plans to close its Fiesta Mall Clearance Center in Mesa, Ariz. in January. The company operates 259 Dillard’s locations and 30 clearance centers spanning 29 states.

Merchandise sales for the third quarter ended Nov. 2 fell 1.0% to $1.33 billion. The company did not provide category performance information in announcing its results. Comps were flat.

Including Dillard’s DCI Contractors construction business, total sales declined 2.2% to $1.334 billion.

The retailer’s inventory level decreased 4.0% while retail gross margin improved 13 basis points of sales.

Net income dropped 25.7% to $5.5 million, or $0.22 per diluted share. Net income includes a pretax loss of $0.3 million and $2.8 million in tax benefits related to amended state tax return filings.

Dillard’s CEO William T. Dillard II stated, “While we were not satisfied with the third quarter, it was a substantial improvement over the second quarter. We were pleased with our retail gross margin improvement (13 basis points) following a second quarter decline of 319 basis points.”

Year-to-date, merchandise sales were down 1.0% to $4.1 billion, with comps flat. Including Dillard’s DCI Contractors construction business, total company sales declined 1.5%.

Net income tumbled 49.0% to $43.4 million, or $1.60 per diluted share. Included in net income for the period is a pretax gain of $12.0 million primarily related to the sale of four store properties as well as a $2.8 million in tax benefits related to amended state tax return filings.

The year-ago net income included $2.9 million in tax benefits related to additional federal tax credits and an update of the provisional amounts recorded for the income tax effects of the Tax Cuts and Jobs Act of 2017.