WALL STREET CHEERS MOVES AT DILLARD’S
Byline: Jennifer L. Brady
NEW YORK — Although profits at Dillard Department Stores grew a modest 3.3 percent in the fourth quarter and same-store sales were flat, the Little Rock, Ark.-based chain is beginning to show its aggressive side — and Wall Street likes it.
“The quarter was fairly unexceptional, but it looks like they got their act together,” said Kimberly Walin, analyst at Furman Selz, referring to a fourth quarter that was markedly better than the third.
The company, she said, was a little below plan for the holiday, but was able to lower comparable inventories by 1 percent.
“It is very positive that they are back on the acquisition trail,” said Robert Buchanan at NatWest Securities, referring to the company’s plans to acquire 10 Mervyn’s units from Dayton Hudson in south Florida and seven Proffitt’s stores in Virginia. He noted that with these acquisitions, in addition to 11 of their own planned store openings, Dillard’s will add 9 percent to its square footage in 1997.
“All in all, people are starting to get excited about the situation, which has been a real laggard,” Buchanan said.
In addition, Smith Barney Inc. upgraded Dillard’s to “outperform high risk” from “neutral high risk.”
Earnings per share in the latest quarter were slightly ahead of Wall Street estimates of 97 cents. Dillard’s stock gained 1 5/8 to 29 3/4 on the New York Stock Exchange Tuesday.
Dillard’s profits in the quarter ended Feb. 1 hit $111.1 million, or 98 cents a share, from $107.6 million, or 95 cents a share, before a $78.5 million accounting charge a year ago. She noted that operating income was flat in the quarter and net income, excluding the year-ago charge, rose 3 percent. In the year-ago quarter, the accounting charge reduced net income to $29.1 million, or 26 cents.
Sales in the quarter were up 0.83 percent to $1.94 billion from $1.92 billion. The company noted that on a comparable 13-week basis, sales rose 5 percent from a year ago. Same-store sales were flat.
Analysts noted that women’s sportswear sales rose 5 percent. The home area, however, dropped 3 percent, while men’s wear rose 9 percent.
Gross margins were down slightly, analysts said, to 33.3 percent of sales from 33.8 percent, while selling, general and administrative expenses declined to 21.5 percent of sales from 21.8 percent.
In the full year, profits slid 2.9 percent to $238.6 million, or $2.09 a share, from $245.7 million, or $2.17, before the charge a year ago.
After the $78.5 million charge, net income in 1995 totaled $167.2 million, or $1.48.
Sales in the year increased 5.2 percent to $6.2 billion from $5.9 billion. Same-store sales inched up 2 percent.
The retailer also announced that its board authorized the repurchase of as much as $300 million in class A common stock.
At current prices, the company will purchase about 10 million shares under the repurchase program. Dillard’s plans to buy shares from time to time in open market transactions.