Dillard’s isn’t giving up the brick-and-mortar mantle, with upgrades in the works and a substantial improvement in gross margin in the quarter.
In a Nutshell: Dillard’s Inc. reported flat comparable store sales for the third quarter against a 3 percent increase in the prior-year period, as sales and income declined.
Dillard’s said it plans to open an expansion unit at Killeen Mall in Killeen, Tex., by the end of the fiscal year, replacing a 70,000-square-foot leased facility with a 75,000-square-foot company-owned store at a dual anchor location totaling 110,000 square feet. During the first quarter of 2020, the company will open an 85,000-square-foot expansion at Columbia Mall in Columbia, Mo., and by early 2020 will replace a 100,000-square-foot leased facility at Richland Fashion Mall in Waco, Tex., with a 125,000-square-foot company-owned unit.
Dillard’s has announced the upcoming closure of its Fiesta Mall Clearance Center in Mesa, Ariz. This would leave the company operating 259 Dillard’s locations and 30 clearance centers spanning 29 states and an internet store at dillards.com.
Sales: Net sales for the third quarter ended Nov. 2 declined 2.1 percent to $1.39 billion from $1.42 billion in the year-ago period. Total merchandise sales for the quarter, excluding the company’s construction business, CDI Contractors, dipped 0.75 percent to $1.33 billion.
Earnings: Net income for the quarter fell 25.68 percent to $5.5 million compared to $7.4 million for the prior-year period. This included 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 and $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.
CEO’s Take: William T. Dillard II, CEO of Dillard’s, said: “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. We managed inventory to a 4 percent decrease from flat at the end of the second quarter. Our flat comparable sales performance improved from the 2 percent second quarter sales decline.”