Profit dip hits Dillard's stock

Shares drop 8.2%; LR retailer cites quarter’s markdowns

Graphs showing the second quarter revenue earning and net income for Dillard's Inc.

Graphs showing the second quarter revenue earning and net income for Dillard's Inc.

Saturday, August 16, 2014

Dillard's Inc. stock tumbled 8.2 percent Friday after the retailer reported a drop in profit and greater discounts during its second quarter.

The retailer reported net income of $34.5 million for the quarter, or 80 cents per share, compared with a profit of $36.5 million, or 79 cents per share, during the same period a year ago.

Dillard's shares dropped $9.49 to close Friday at $106.11 in more than triple the average trading volume on the New York Stock Exchange. The company released its quarterly report before the markets opened.

Dillard's second-quarter earnings were hit by weaker profit margins and more merchandise markdowns, said Bob Williams, senior vice president and managing director of Delta Trust Investments Inc. in Little Rock.

"While [Dillard's] did have greater discounts, they were effective and they moved out that inventory," he said.

Dillard's said gross margins from its retail operations fell for the quarter, compared with last year because of an increase in the number of discounts.

"Although our 1 [percent] comparable store sales increase led to a profitable quarter, we are somewhat disappointed in the bottom line performance," said Chief Executive Officer William Dillard II in a statement. "We are pleased with our inventory management during the quarter and with our ending inventory position."

Merchandise sales for Dillard's during the period that ended Aug. 2 were $1.46 billion, up slightly from the same quarter in 2013.

The department store said sales were strongest in juniors' and children's apparel. Sales were weakest in the home and furniture department.

Dillard's had just under $1.48 billion in net sales, which includes operations from CDI Contractors its construction business, during the period. Total revenue for the quarter was $1.51 billion.

Dillard's has 278 locations and 18 clearance centers in 29 states.

The company said earlier this month that it will build a 100,000-square-foot store at the a multiuse development planned in Conway.

The store, which will anchor the Shoppes at Central Landing, will be Dillard's first built in Arkansas since it opened a store in Rogers in 2006.

Other retailers also released their quarterly financial reports this week.

On Wednesday, Macy's Inc. reported a second-quarter net income of $292 million, or 80 cents per share, compared with $281 million, or 72 cents per share, in 2013.

J.C. Penney Co. on Thursday reported a loss of $172 million, or 56 cents, for the second quarter, compared with a loss of $586 million, or $2.66, during the same period last year.

Business on 08/16/2014