Dillard’s Inc. posted a 13.3 percent earnings decline on slightly higher merchandise sales for the second quarter as gross margins shed 54 basis points for its retail business and 119 basis points for the company’s total operations.
Same-store sales for the quarter showed a gain of 1 percent.
For the quarter ended Aug. 1, net income fell to $29.9 million, or 75 cents per share, from $34.5 million, or 80 cents per share, in the same period last year as total sales rose 2.6 percent to $1.51 billion from $1.48 billion. Sales include results from the company’s construction business, CDI Contractors LLC. The company said total merchandise sales excluding results from CDI rose slightly to $1.47 billion from $1.46 billion last year.
“Sales trends were notably strong in shoes followed by juniors’ and children’s apparel,” the retailer said in its report. “Sales were notably weak in the home and furniture category. Sales trends were strongest in the Central region, followed by the Eastern and Western regions, respectively.”
Regarding the higher gross-margin basis-point erosion for its total operations, the company said the “disparity between retail and consolidated gross-margin performance is attributable to increased revenue at CDI, which is a substantially lower-margin business.” On the balance sheet, the retailer said its inventory increased 3 percent on a year-over-year basis.
In the first quarter, the retailer reported lower earnings on flat merchandise sales with quarterly same-store sales declining 1 percent. Dillard said at the time that the company was “disappointed” with its first-quarter performance, adding, “Although inventory is higher than we would like, we believe the levels are manageable.”
William T. Dillard 2nd, chief executive officer, said in a statement that while “we achieved positive comparable-store sales, we were disappointed with our overall performance compared to the prior year. However, from our strong cash position, we returned $208 million to shareholders under our share repurchase program.” The company has $292.1 million remaining in its share repurchase program.
After rising more than 4 percent at the market’s open this morning, shares of the retailer later closed up 2.4 percent to $97.03. Trading was on greater-than-average volume. The stock’s high is $144.21, and the low is $93.72.
Last week, J.P. Morgan analysts downgraded the stock to an “underweight” rating from a “neutral” one. The firm’s analysts cited declining foot traffic at the retailer along with a underinvestment in omnichannel retailing. The analyst lowered the price target to $89 from $114.