Dillard’s Inc. (DDS), the leading fashion apparel, cosmetics and home furnishings retailer, posted fourth-quarter earnings of $1.55 per share, outpacing the Zacks Consensus Estimate of $1.25 per share and prior-year quarter earnings of $1.04 per share.
On a reported basis, including one-time items, Dillard’s reported earnings of $1.75 per share compared with the prior-year quarter’s earnings of $1.08 per share.
Dillard’s top-line (including CDI Contractors, LLC or CDI) grew 5.5% to $1,934.3 million for the fourth quarter of fiscal 2010 from $1,834.0 million in the year-ago quarter. Sales excluding CDI came in at $1,912.0 million compared with $1,794.0 million in the year-ago quarter. Comparable same store sales growth was 7.0%. Total revenue outpaced the Zacks Consensus Estimate of $1,914.0 million.
Gross margin from retail operations (which excludes CDI) expanded 90 basis points for the fourth quarter of fiscal 2010. The increase was primarily attributable to strong topline growth. Inventory in comparable stores decreased 2%. Consolidated gross margin (which includes CDI) picked up 110 basis points in the quarter under review.
Dillard’s advertising, selling, administrative and general expenses increased $10.6 million to $441.6 million. The expenses increased mostly due to higher payroll services purchased and steeper insurance payment partially offset by savings in advertising and property taxes.
Other Financial Details
The company ended the year with cash and cash equivalents of $343.3 million compared with $341.7 million in the year-ago period. Long-term debt was $708.6 million and shareholders’ equity was $2,086.7 million versus $770 million and 2,304.1 million, respectively, in the prior-year period. In fiscal 2010, net cash provided by operating activities came in at $503.9 million.
During the quarter, the company bought back approximately $160 million (4.6 million shares) of Class A shares under its $250 million share repurchase program. In fiscal 2010, the company had repurchased $413.9 million (14.6 million shares) of Class A Common Stock.
In a move to improve shareholders’ wealth, the board of directors of the company has approved for an additional share repurchase program. Through this program the company will be authorized to repurchase up to $250.0 million of its Class ‘A’ Common Stock. Management notified that as of January 29, 2011, the company still has $18.7 million remaining under its $250 million share repurchase authorization announced in August 2010.
In an additional declaration made by the board of directors of the company, the holders of Class ‘A’ and Class ‘B’ Common Stock will get a cash dividend of 4 cents a share to be paid on May 02, 2011 to stockholders of record as on March 31, 2011.
Store Update
In the quarter, Dillard’s closed operations at its Coral Square Mall in Coral Springs, Florida (98,000 square feet) along with Miami International Mall in Miami, Florida (98,000 square feet). Dillard’s declared the imminent shutting down of its Decatur Mall location in Decatur, Alabama. The store is expected to close by mid-year 2011.
Based in Little Rock, Arkansas, Dillard’s Inc. is a large departmental store chain, featuring fashion apparel and home furnishings in the United States. Macy’s Inc. (M), which competes with Dillard’s, reported fourth quarter earnings of $1.59 per share.
Dillard’s shares maintain a Zacks #2 Rank, which translates into a short-term ‘Buy’ rating. Our long-term recommendation on the stock remains ‘Outperform’.
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