Little Rock-based Dillard's logs upbeat quarter

Same-store sales grow by 3%; increase first since 2015

Posted: February 28, 2018 at 4:30 a.m.

Graphs showing Dillard's Inc. fourth quarter information.

Graphs showing Dillard's Inc. fourth quarter information.

Dillard's Inc. shares climbed nearly 17 percent Tuesday after the company reported $157.6 million in net income, or earnings per share of $5.55, and its first same-store sales increase since 2015.

The Little Rock retailer's fourth-quarter results were aided by an estimated tax benefit of $774 million, or $2.73 per share, as a result of the new federal tax structure. But adjusted profits of $2.82 still beat analysts' expectations of $1.77 for the quarter.

Revenue of $2.11 billion also increased 6 percent from a year ago and topped analyst expectations of $2.03 billion. The quarter included an extra week compared with last year.

A same-store sales increase of 3 percent ended the company's streak of nine consecutive quarters of declines and contributed to the stock's rapid rise Tuesday. Dillard's shares closed trading at $82.89 a share, up $11.96.

It was the highest price at closing for Dillard's shares since April 2016.

"The positive sales trends we noted at the end of the third quarter continued through the fourth," Dillard's Chief Executive Officer William T. Dillard II said in a statement. "Our 3 percent comparable store sales increase combined with gross margin improvement and relative expense control led to a notable increase in pretax income for the quarter. We are looking to keep this momentum into 2018."

The company reported total merchandise sales, which exclude the company's construction business CDI Contractors LLC, grew 7 percent to $2.06 billion in the fourth quarter.

Dillard's said apparel sales across all departments were above average fourth-quarter sales trends. Cosmetics sales were slightly below trend, while ladies' accessories and lingerie, home and furniture, and shoe sales were below trend. Sales were strongest in the west and east regions.

Ken Perkins, a retail analyst with Retail Metric LLC, said Dillard's benefited from a strong economy, which led confident consumers to spend more during the Christmas season. He said there was more full-price selling and fewer markdowns on items, which was encouraging for Dillard's and other retailers like Macy's.

On Tuesday, Macy's reported its first same-store sales increase since 2014.

"It's something we haven't necessarily seen a lot of," Perkins said. "A lot of these retailers are really trying to get off the promotional merry-go-round and get back to some more full-price selling. Obviously, a stronger economy certainly helps that. It will be interesting to see if they can sustain that."

Dillard's -- which operates 268 stores and 24 clearance centers across 29 states -- also reported full-year results Tuesday. The company's 53-week net income of $221.3 million, or $7.51 per share, was a 31 percent increase from the 52-week results of $169.2 million, or $4.93 per share, a year ago.

The company said net sales of $6.3 billion were flat compared with last year, while merchandise sales of $6.11 billion increased 1 percent from $6.07 billion a year ago. Same-store sales were unchanged.

Dillard's repurchased $34.6 million in shares during the fourth quarter with a full-year total of $219 million. Authorization for $34.8 million in repurchases remained under the plan as of Feb. 3.

Business on 02/28/2018