Dillard’s Inc. saved the best for the last quarter of its fiscal year as it registered a nearly double-digit increase in earnings and boosts in both net and same-store sales.
While missing analysts’ consensus estimates for profits by 1 cent, the Little Rock, Ark.-based department store group saw its shares add 2.4 percent in after-hours trading following disclosure of the results, lifting the stock to $126.40, just 43 cents shy of the 52-week high of $126.83 reached on Dec. 30.
In the three months ended Jan. 31, net income expanded 9.6 percent to $130.5 million, or $3.17 a diluted share, from $119.1 million, or $2.71, in the final quarter of fiscal 2013. The year-ago figure included a 2-cent gain on the reversal of asset impairment charges on a store held for sale.
Net sales rose 5 percent to $2.14 billion from $2.03 billion in the fourth quarter of the prior year as comparable-store sales advanced 3 percent, lifting the company’s full-year comp to 1 percent. Total merchandise sales, excluding Dillard’s CDI Contractors business, rose 5.5 percent to $2.07 billion. Unlike many retailers, Dillard’s neither includes e-commerce in its comparable-sales calculations nor breaks out e-commerce sales separately.
“We finished 2014 with our best sales performance of the year in the most important quarter,” said William Dillard 2nd, chief executive officer of the 297-store chain. “Our 3 percent sales increase was supported by a strong 103 basis point retail gross margin improvement as customers responded well to our improved mix and service throughout the holiday season.”
The improvement in margin was due principally to reduced markdowns, the company said.
Dillard’s identified women’s apparel and shoes as the strongest sales categories during the holiday period, followed by juniors’ and children’s apparel. Sales were weakest in the home and furniture category. Geographically, sales were best in the company’s Central region, followed by its Eastern and Western regions, respectively.
Cash and cash equivalents grew 70.3 percent from their 2013 endpoint, to $403.8 million from $237.1 million, while inventories rose 2.2 percent, to $1.37 billion from $1.35 billion over that span. In the quarter, cost of goods sold was up 4.4 percent to $1.43 billion while selling, general and administrative expenses added 4.2 percent to hit $457.5 million. The company purchased $300.8 million of its stock over the course of the year, exhausting its previous stock authorization, and so far hasn’t touched a new $500 million allocation approved in November.
For the full year, net income rose 2.5 percent to $331.9 million, or $7.79 a diluted share, from $323.7 million, or $7.10, in 2013. The prior-year figures include 19 cents a share in gains from the sale of an investment and an adjustment in pensions and 8 cents in charges from asset impairment and store closings. Net sales rose 1.4 percent to $6.62 billion from $6.53 billion in the prior year.