Dillard's Q4 Profit Down 26%, Results Miss View

(RTTNews) - Apparel retailer Dillard's, Inc. (DDS) on Monday reported a 26 percent decline in profit for the fourth quarter from last year, reflecting lower sales and margins. However, comparable store sales for the quarter grew 2 percent.

Both revenue and adjusted earnings per share for the quarter missed analysts' expectations. Shares of the company are down almost 6 percent in pre-market trades.

The Little Rock, Arkansas-based company reported net income for the fourth quarter of $119.1 million or $2.71 per share, down from $161.4 million or $3.36 per share in the prior-year quarter.

The latest quarter's results include an after-tax credit of $0.8 million or $0.02 per share, representing the reversal of asset impairment charges on a store held for sale. The prior-year quarter's results included net after-tax credit totaling $23.9 million or $0.50 per share.

Excluding these items, adjusted net income for the latest quarter was $118.3 million or $2.69 per share, compared to $137.6 million or $2.87 per share in the year-ago period. On average, six analysts polled by Thomson Reuters expected the company to report earnings of $3.00 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined 4 percent to $2.03 billion from $2.11 billion in the same quarter last year and missed analysts' consensus revenue estimate of $2.09 billion.

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

Total merchandise sales for the quarter also declined 4 percent to $2.01 billion from $2.09 billion in the year-ago period.

Comparable store sales for the quarter grew 2 percent. The company follows the retail 4-5-4 reporting calendar which included an extra week of operations in the prior-year quarter.

Based upon comparable 13-week periods for both the quarters, total merchandise sales for the latest quarter increased 1 percent.

Consolidated gross margin for the quarter, including CDI, contracted 180 basis points from a year ago to 32.6 percent.

Gross margin from retail operations, which excludes CDI, decreased 180 basis points to 32.8 percent. Meanwhile, the company recorded operating expense improvement of 90 basis points of sales.

At the end of the fourth quarter, the company operated 278 Dillard's locations and 18 clearance centers spanning 29 states.

For fiscal 2013, Dillard's net income was $323.7 million or $7.10 per share, compared to net income of $336 million or $6.87 per share in the prior year. Adjusted net income for the year was $318.6 million or $6.99 per share, compared to $309.8 million or $6.33 per share in the previous year.

Net sales for the year, including CDI, edged down to $6.53 billion from $6.59 billion last year.

Street expected the company to earn $7.28 per share for the year on revenues of $6.70 billion.

Total merchandise sales for the year declined to $6.44 billion from $6.49 billion in the prior year. Sales in comparable stores increased 1 percent for the year.

Dillard's plans to open two new stores in October of 2014. The new stores will be open at Shops at Summerlin in Las Vegas, Nevada, and the Mall at University Town Center in Sarasota, Florida.

DDS closed Friday's trading at $89.33. In Monday's pre-market trades, the stock is down $5.30 or 5.94 percent to $84.00.