Dillard's 10-Q Report Reveals $180M Net Income

Dillard's, Inc. has recently released its 10-Q report, providing an in-depth look at its financial condition and results of operations. The company operates retail department stores in the southeastern, southwestern, and midwestern areas of the United States, offering a wide range of merchandise including fashion apparel for women, men, and children, accessories, cosmetics, home furnishings, and other consumer goods. Additionally, the company engages in general contracting construction activities.

In the three months ended May 4, 2024, Dillard's reported net income of $180.0 million ($11.09 per share) compared to net income of $201.5 million ($11.85 per share) for the prior year first quarter. The company's retail gross margin was 46.2% of sales, leading to a profitable first quarter of 2024. However, comparable retail sales declined by 2%, with net sales totaling $1.55 billion, down from $1.58 billion in the same period last year.

Selling, general and administrative expenses (SG&A) for the three months ended May 4, 2024, increased to $426.7 million (27.5% of sales) from $406.4 million (25.7% of sales) for the prior year first quarter. The increase of $20.3 million is primarily the result of increased payroll expenses. Net cash provided by operating activities was $244.4 million for the three months ended May 4, 2024, compared to $280.9 million for the prior year first quarter.

As of May 4, 2024, the company had working capital of $1,577.9 million, including cash and cash equivalents of $817.8 million and short-term investments of $347.2 million, and $521.5 million of total debt outstanding, including $321.5 million of long-term debt and $200.0 million of subordinated debentures.

Dillard's operated 274 stores, including 29 clearance centers and an internet store as of May 4, 2024. The company's retail sales per square foot remained constant at $33, and the retail store inventory trend decreased by 2%. The annualized retail merchandise inventory turnover stood at 2.5.

The company's financial report also highlighted the impact of seasonality on its business, with a significant portion of sales and income typically realized during the last quarter of its fiscal year due to the holiday season. The report also detailed the performance of the retail operations segment and the construction segment, noting a decrease in net sales from both segments.

Dillard's reported a decrease in service charges and other income, primarily attributed to a new agreement with Citibank, N.A. to provide a credit card program for its customers, replacing the existing Wells Fargo Alliance.

The company's gross margin increased to 44.6% from 43.7% during the three months ended May 4, 2024, compared to the same period in 2023. Gross margin from retail operations, as a percentage of sales, increased to 46.2% from 45.6% during the same period. The increase in gross margin was primarily driven by moderate increases in home and furniture and ladies' accessories and lingerie, and slight increases in men's apparel and accessories, ladies' apparel, and juniors' and children's apparel.

The market has reacted to these announcements by moving the company's shares 0.3% to a price of $429.44. Check out the company's full 10-Q submission here.

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