Dillard's Q3 Profit Tops View, But Revenues Miss

(RTTNews) - Apparel retailer Dillard's, Inc. (DDS) reported Thursday a profit for the third quarter that increased from last year, reflecting lower expenses and higher comparable store sales. Earnings per share for the quarter topped analysts' expectations, while quarterly revenues missed their estimates.

"Another positive comparable store sales increase and expense control highlighted our third quarter at Dillard's, as did our aggressive execution of $187 million of share buyback. In spite of a somewhat disappointing 30 basis point decline in merchandise gross margin, we were pleased to deliver increased net income," CEO William Dillard, II said in a statement.

The Little Rock, Arkansas-based company reported net income of $50.9 million or $1.13 per share for the third quarter, higher than $48.5 million or $1.01 per share in the prior-year quarter, which included net after-tax credit totaling $2.4 million or $0.05 per share.

On average, four analysts polled by Thomson Reuters expected the company to report earnings of $1.05 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew to $1.47 billion from $1.45 billion in the same quarter last year, but missed four Wall Street analysts' consensus estimate of $1.50 billion.

Net sales include the operations of the company's construction business, CDI Contractors, LLC.

Total merchandise sales, which exclude CDI, increased to $1.44 billion from $1.43 billion a year ago. Comparable store sales for the quarter grew 1 percent.

The company noted that sales trends were notably strong in ladies' accessories and lingerie followed by shoes and ladies' apparel. 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.

Consolidated gross margin, including CDI, contracted 40 basis points from a year ago. Gross margin from retail operations, which excludes CDI, also decreased 30 basis points. Meanwhile, operating expense leverage was of 40 basis points of sales.

At the end of the third quarter, the company operated 282 Dillard's locations and 17 clearance centers spanning 29 states.

Dillard's noted that it will be closed on Thanksgiving Day, and will open its doors at 8:00 a.m. on Black Friday.

"As we enter our 75th anniversary holiday season, we are looking forward to serving our customers nationwide at an exceptional level," Dillard II added.

DDS closed Wednesday's regular trading session at $89.55, up $4.29 on a volume of 1.32 million shares.