Dillard’s, Inc. Reports Fourth Quarter and Fiscal Year Results

Dillard’s, Inc. (NYSE: DDS) (the “Company” or “Dillard’s”) announced operating results for the 13 and 52 weeks ended January 30, 2021. This release contains certain forward-looking statements. Please refer to the Company’s cautionary statements included below under “Forward-Looking Information.”

Dillard’s Chief Executive Officer William T. Dillard, II stated, “Our year-long efforts to control inventory and expenses and preserve liquidity have resulted in encouraging fourth quarter results. We ended the year with $360 million in cash and inventory down 26%. Retail gross margin improved 171 basis points, and operating expenses declined $123 million. Our team’s ability to adjust to the changing circumstances throughout the year made us proud. We are optimistic increased vaccinations, warmer weather and fresh fashions will motivate Americans to shop this spring.”

Highlights of the Fourth Quarter:

• Earnings per share of $3.05 per share compared to net income of $2.75 per share
• Net income of $67.0 million compared to net income of $67.7 million for the prior year fourth quarter
• Retail gross margin improved 171 basis points of sales
• Inventory decreased approximately 26%
• Operating expenses decreased $122.8 million
• Ending cash of $360 million with no outstanding borrowings under the Company's $800 million revolving credit facility
• Sequential improvement in comparable store sales which decreased approximately 17% in the 4th quarter following a 24% decrease in the third quarter

Fourth Quarter Results

Dillard’s reported net income for the 13 weeks ended January 30, 2021 of $67.0 million, or $3.05 per share, compared to net income of $67.7 million, or $2.75 per share, for the prior year fourth quarter. Included in net income for the 13 weeks ended January 30, 2021 is a non-cash pretax charge of $10.7 million ($8.4 million after tax or $0.38 per share) in asset impairment related to certain clearance locations.

The Company is in a net operating loss position for the fiscal year. The CARES Act, signed into law on March 27, 2020, allows for net operating loss carryback to years in which the federal tax rate was 35% rather than the current 21%. Included in net income for the 13 weeks ended January 30, 2021 is a net tax expense partially offsetting the net tax benefit recognized during the first 39 weeks related to this provision.

Included in net income for the prior year 13 weeks ended February 1, 2020 is a pretax gain of $8.3 million ($6.5 million after tax or $0.26 per share) primarily related to the sale of two store properties and $2.3 million ($0.09 per share) in tax benefits provided in the Taxpayer Certainty and Disaster Tax Relief Act of 2019 signed into law on December 20, 2019.

Sales

Net sales for the 13 weeks ended January 30, 2021 and the 13 weeks ended February 1, 2020 were $1.570 billion and $1.923 billion, respectively. Net sales includes the operations of the Company’s construction business, CDI Contractors, LLC ("CDI").

Total retail sales (which excludes CDI) for the 13-week period ended January 30, 2021 and the 13-week period ended February 1, 2020 were $1.521 billion and $1.879 billion, respectively. Total retail sales decreased 19% for the 13-week period ended January 30, 2021. Sales in comparable stores for the period decreased approximately 17%.

Sales in the Eastern region outperformed the Central and Western regions, respectively. Sales of home and furniture significantly outperformed the other merchandise categories followed by cosmetics and shoes. Sales of ladies' apparel were significantly below trend.

Gross Margin / Inventory

Consolidated gross margin (which includes CDI) for the 13 weeks ended January 30, 2021 improved 127 basis points of sales to 31.1% compared to 29.8% for the prior year fourth quarter.

Retail gross margin (which excludes CDI) for the 13 weeks ended January 30, 2021 improved 171 basis points of sales to 31.9% compared to 30.2% for the prior year fourth quarter primarily due to decreased markdowns.

Inventory decreased approximately 26% at January 30, 2021 compared to February 1, 2020.

Selling, General & Administrative Expenses

Consolidated selling, general and administrative expenses ("operating expenses") for the 13 weeks ended January 30, 2021 decreased $122.8 million to $335.8 million (21.4% of sales) compared to $458.6 million (23.8% of sales) for the prior year fourth quarter primarily due to decreased payroll expense. While savings were realized in most expense categories, payroll expense declined approximately 30% during the quarter partially as a result of the Company's reduced operating hours.

Retail operating expenses for the 13 weeks ended January 30, 2021 decreased $122.4 million to $334.3 million (22.0% of sales) compared to $456.7 million (24.3% of sales) for the prior year fourth quarter.

52-Week Results

Dillard’s reported a net loss for the 52 weeks ended January 30, 2021 of $71.7 million, or $3.16 per share, compared to net income of $111.1 million, or $4.38 per share, for the prior year 52-week period. Included in net loss for the 52 weeks ended January 30, 2021 is a $2.2 million pretax loss ($1.4 million after tax or $0.06 per share) primarily related to the sale of a store property and $10.7 million ($8.4 million after tax or $0.37 per share) in asset impairment related to certain clearance locations.

The Company is in a net operating loss position for the fiscal year. The CARES Act, signed into law on March 27, 2020, allows for net operating loss carryback to years in which the federal tax rate was 35% rather than the current 21%. Included in net income for the 52 weeks ended January 30, 2021 is a net tax benefit of $45.2 million related to the rate differential in the carryback year.

Included in net income for the prior year 52 weeks ended February 1, 2020 is a pretax gain of $20.3 million ($15.8 million after tax or $0.62 per share) primarily related to the sale of six store properties. Also included in net income for the 52-week period is $5.1 million ($0.20 per share) in tax benefits related to amended state tax return filings and the Taxpayer Certainty and Disaster Tax Relief Act of 2019.

Net sales for the 52 weeks ended January 30, 2021 and the 52 weeks ended February 1, 2020 were $4.301 billion and $6.204 billion, respectively.

Total retail sales for the 52-week period ended January 30, 2021 and the 52-week period ended February 1, 2020 were $4.160 billion and $6.012 billion, respectively. Total retail sales decreased 31% for the 52-week period ended January 30, 2021. The Company is reporting no comparable store sales data for the fiscal year due to COVID19-related store closures in the first and second quarters.

Consolidated gross margin for the 52 weeks ended January 30, 2021 declined 308 basis points of sales to 28.6% from 31.7% for the prior year 52-week period. Retail gross margin for the same 52-week periods declined 319 basis points of sales to 29.4% from 32.6%.

Consolidated operating expenses for the 52 weeks ended January 30, 2021 decreased $479.5 million to $1,211.5 million (28.2% of sales) compared to $1,691.0 million (27.3% of sales) for the prior year 52-week period primarily due to decreased payroll expense. Payroll expense declined approximately 33% during the 52-week period ended January 30, 2021.

Retail operating expenses for the 52 weeks ended January 30, 2021 decreased $478.9 million to $1,205.4 million (29.0% of sales) compared to $1,684.3 million (28.0% of sales) for the prior year 52-week period.

Share Repurchase

During the 52 weeks ended January 30, 2021 the Company purchased $95.6 million (approximately 2.2 million shares) of Class A Common Stock under its $500 million share repurchase program. As of January 30, 2021, authorization of $173.1 million remained under the program.

Total shares outstanding (Class A and Class B Common Stock) at January 30, 2021 and February 1, 2020 were 22.0 million and 24.2 million, respectively.

The Company operates 250 Dillard’s locations and 32 clearance centers spanning 29 states and an Internet store at www.dillards.com. Total square footage at January 30, 2021 was 48 million square feet.

Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In Millions, Except Per Share Data)
		13 Weeks Ended												52 Weeks Ended
		January 30, 2021						February 1, 2020						January 30, 2021						February 1, 2020
		Amount			% of Net Sales			Amount			% of Net Sales			Amount			% of Net Sales			Amount			% of Net Sales
Net sales		$	1,570.3		100.0	%		$	1,922.9		100.0	%		$	4,300.9		100.0	%		$	6,203.5		100.0	%
Service charges and other income		44.0			2.8			39.9			2.1			132.3			3.1			139.7			2.3
		1,614.3			102.8			1,962.8			102.1			4,433.2			103.1			6,343.2			102.3
Cost of sales		1,082.1			68.9			1,349.4			70.2			3,069.1			71.4			4,236.0			68.3
Selling, general and administrative expenses		335.8			21.4			458.6			23.8			1,211.5			28.2			1,691.0			27.3
Depreciation and amortization		58.1			3.7			59.5