Dillard's, Inc. has recently released its 10-Q report, providing a detailed look into the company's financial performance. The company operates retail department stores primarily 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, it engages in general contracting construction activities.
In the report's executive overview, Dillard's noted a weak performance during the three months ended August 3, 2024. Management attributed the disappointing results to a continued challenging consumer environment and increased expenses, which negatively impacted sales and profitability. Compared to the prior year's second quarter, total retail sales (excluding construction sales) declined by 5%, while retail gross margin declined from 40.4% to 39.1% of sales. Net income for the three months ended August 3, 2024, was $74.5 million ($4.59 per share), compared to $131.5 million ($7.98 per share) for the three months ended July 29, 2023.
Selling, general and administrative expenses for the three months ended August 3, 2024, increased to $433.7 million (29.1% of sales) from $412.5 million (26.3% of sales) for the prior year's second quarter. The increase of $21.2 million was primarily due to increased payroll expenses. Net cash provided by operating activities was $176.0 million for the six months ended August 3, 2024, compared to $397.9 million for the prior year's six-month period. As of August 3, 2024, the company had working capital of $1,673.2 million and $521.5 million of total debt outstanding.
Dillard's operated 273 stores, including 28 clearance centers and an internet store as of August 3, 2024. Key performance indicators for the three months ended August 3, 2024, showed a 5% decline in net sales, a 5% decline in comparable retail store sales, and a decrease in gross margin from 38.8% to 37.6% of sales.
The report also provided a breakdown of the company's net sales for the three and six months ended August 3, 2024, compared to the same periods in 2023. The retail operations segment saw a decrease of approximately 5% in net sales for the three months ended August 3, 2024, while the construction segment experienced an 8% decline. For the six months ended August 3, 2024, net sales from the retail operations segment decreased by approximately 3%, and the construction segment saw a 13% decrease.
Service charges and other income, primarily from the Wells Fargo Alliance, decreased by $5.3 million for the six months ended August 3, 2024, compared to the same period in 2023. The company entered into a new agreement with Citibank, N.A. in January 2024 to provide a credit card program for Dillard’s customers, replacing the existing Wells Fargo Alliance.
Gross margin for the three months ended August 3, 2024, decreased by 8% compared to the prior year's second quarter. The retail operations segment saw a 3.8% decrease in gross margin, while the construction segment experienced a 14.7% decline. For the six months ended August 3, 2024, the total gross margin decreased by 3.9% compared to the same period in 2023.
The 10-Q report provides a comprehensive overview of Dillard's financial performance, highlighting the challenges the company faced during the reported period. Following these announcements, the company's shares moved 0.9%, and are now trading at a price of $346.97. Check out the company's full 10-Q submission here.
