A leaner Dillard’s Inc. came out of the second quarter with fewer stores, less debt and inventory, and ultimately a smaller loss.
In the three months ended Aug. 1, the Little Rock, Ark.-based regional department store group registered a net loss of $26.7 million, or 36 cents a diluted share, versus a year-ago loss of $38.3 million, or 51 cents. The year-ago figure included a 7 cent benefit from a $17.9 million pretax gain on the disposal of assets, including a company plane, offset by $9.8 million in pretax asset impairment and store closing charges.
Net sales fell 11.2 percent to $1.43 billion from $1.61 billion in the 2008 quarter. Sales for the more recent quarter include those of CDI Contractors LLC, which is now owned by Dillard’s versus its previous status as a joint venture investment. Same-store sales declined 13 percent in the quarter.
“Although we are clearly disappointed with a net loss for the second quarter, we were pleased to realize continued significant benefits from our aggressive actions pertaining to inventory management, expense reduction and cash conservation,” said William Dillard 2nd, chief executive officer of the company.
Merchandise inventories dropped 19.2 percent to $1.41 billion from $1.75 billion a year ago and were down 18 percent in comparable stores. Long-term debt and capital leases dropped to $775.1 million from $807.4 million at the end of the 2008 quarter. The company noted its $1.2 billion revolving credit facility with J.P. Morgan Chase expires on Dec. 12, 2012, and there are no financial covenants attached to the facility providing availability exceeds $100 million. At the end of the quarter, short-term borrowings under the revolver were $67 million and letters of credit totaled $92.7 million.
Dillard’s closed a 64,000-square-foot store in Tullahoma, Tenn., during the quarter, has identified another five for closure during the second half of the fiscal year and “remains committed to closing underperforming stores where appropriate,” the company said.
The firm’s store count stood at 304 department stores and 10 clearance centers as of Aug. 1. Square footage totaled 54.2 million at the end of the quarter, down from 56.6 million a year ago. Capital expenditures have been slashed by more than three-quarters so far this year, to $28.6 million from $119.7 million in the first half of 2008.
For the half, the net loss was reduced to $19 million, or 26 cents a share, from a loss of $35.6 million, or 47 cents. Sales fell 11.6 percent to $2.9 billion.
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