Dillard's Q3 Profit Rises, Beats View

(RTTNews) - Apparel retailer Dillard's, Inc. (DDS) on Thursday reported an 8 percent increase in profit for the third quarter from last year, as higher margins and a gain on sale of a store location helped offset a slight decline in sales.

William Dillard, II, Chief Executive Officer of Dillard's said, "Although comparable sales declined 1%, we were pleased with a 69 basis point merchandise gross margin improvement, with our inventory control and with our strong operating cash flow. We believe we are positioned very well for the holiday season, and we look forward to providing premium Dillard's service to our customers."

For the third quarter, the company's net income was $55.2 million or $1.30 per share, up from $50.9 million or $1.13 per share in the year-ago period. The latest quarter's results include a net after-tax credit of $3.8 million or $0.09 per share related to the sale of a store location.

On average, five analysts polled by Thomson Reuters expected the company to report earnings of $1.25 per share for the quarter. Analysts' estimates typically exclude special items.

However, net sales for the quarter edged down to $1.46 billion from $1.47 billion in the same period last year. Analysts had a consensus revenue estimate of $1.51 billion for the quarter.

Net sales included the operations of the company's construction business, CDI Contractors, LLC or CDI. Comparable stores sales declined 1 percent for the quarter.

Total merchandise sales, which excluded CDI, for the 13-week period ended November 1, 2014 were $1.42 billion, down from $1.44 billion for the year-ago period. Total merchandise sales declined 1 percent for the quarter.

Dillard's noted that sales trends in the quarter were strongest in juniors' and children's apparel followed by men's apparel and accessories. Sales were weakest in the home and furniture category. Sales trends were strongest in the Central region, followed by the Eastern and Western regions, respectively

Dillard's consolidated gross margin for the quarter improved 50 basis points of sales compared to the prior-year quarter. Gross margin from retail operations, which excludes CDI, improved 69 basis points of sales for quarter, primarily from increased markups combined with decreased markdowns.

As at November 1, 2014, the company operated 280 Dillard's locations and 18 clearance centers spanning 29 states and an Internet store.

For fiscal 2014, the company continues to expect capital expenditures of $150 million, compared to $95 million in 2013.

DDS is currently trading at $108.74, down $0.67 or 0.61 percent on a volume of 103,890 shares.