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Press release from Business Wire

Dillard's, Inc. Reports Record First Quarter Performance

Thursday, May 10, 2012

Dillard's, Inc. Reports Record First Quarter Performance16:25 EDT Thursday, May 10, 2012 LITTLE ROCK, Ark. (Business Wire) -- Dillard's, Inc. (NYSE:DDS) (the “Company” or “Dillard's”) announced operating results for the 13 weeks ended April 28, 2012. This release contains certain forward-looking statements. Please refer to the Company's cautionary statements regarding forward-looking information included below under “Forward-Looking Information.” First Quarter Results Dillard's reported net income for the 13 weeks ended April 28, 2012 of $95.0 million, or $1.89 per share compared to net income of $76.7 million or $1.31 per share for the 13 weeks ended April 30, 2011. Highlights of the 13 weeks ended April 28, 2012 included: A 5% increase in comparable store sales Control of advertising, selling, administrative and general expenses (“operating expenses”) which declined 110 basis points of sales Repurchase of $27.5 million (0.4 million shares) of Class A Common Stock Dillard's Chief Executive Officer, William T. Dillard, II, stated, “We are happy to report a very strong start to 2012 with our seventh consecutive quarter of increased same store sales as well as record setting earnings and earnings per share performances.” Included in net income for the prior year first quarter is a $3.0 million net pretax gain ($1.9 million after tax or $0.04 per diluted share) consisting of a distribution from a mall joint venture and asset impairment and store closing charges. Net Sales – 13 Weeks Net sales for the 13 weeks ended April 28, 2012 were $1.549 billion compared to net sales for the 13 weeks ended April 30, 2011 of $1.469 billion. Net sales include the operations of the Company's construction business, CDI Contractors, LLC (“CDI”). Total merchandise sales (which exclude CDI) for the 13-week period ended April 28, 2012 were $1.522 billion compared to $1.456 billion for the 13-week period ended April 30, 2011. Total merchandise sales increased 5% during the first quarter. Sales in comparable stores increased 5%. Sales performances were strong in all merchandise categories with the exception of the home and furniture and juniors' and children's apparel categories, which were below trend for the quarter. Sales trends were strongest in ladies' accessories and lingerie, followed by shoes, men's apparel and accessories, and cosmetics. Sales trends were strongest in the Central region, followed by the Eastern and Western regions. Gross Margin/Inventory Gross margin from retail operations (which excludes CDI) was 39.0% (of sales) for the 13 weeks ended April 28, 2012 compared to 39.1% for the prior year first quarter. Consolidated gross margin for the 13 weeks ended April 28, 2012 was 38.4% compared to 38.8% during the prior year first quarter. Inventory in comparable stores increased 1% at April 28, 2012 compared to April 30, 2011. Advertising, Selling, Administrative and General Expenses Advertising, selling, administrative and general expenses (“operating expenses”) decreased approximately 110 basis points of sales during the 13 weeks ended April 28, 2012 compared to the 13 weeks ended April 30, 2011. Operating expenses were $393.2 million (25.4% of sales) and $389.3 million (26.5% of sales), respectively. During the first quarter, increases in payroll, services purchased and insurance were partially offset by cost savings in advertising and utilities. Share Repurchase During the 13 weeks ended April 28, 2012, Dillard's repurchased approximately $27.5 million of Class A Common Stock (0.4 million shares). At April 28, 2012, $250.0 million of authorization remained under the Company's share repurchase program. Total shares outstanding (Class A and Class B Common Stock) at April 28, 2012 and April 30, 2011 were 49.1 million and 53.9 million, respectively. Store Information During the first quarter of 2012, the Company announced the upcoming closure of its Hutchinson Mall location in Hutchinson, Kansas (70,000 square feet). The store is expected to close during the second quarter of 2012. At April 28, 2012, the Company operated 287 Dillard's locations and 17 clearance centers spanning 29 states and an Internet store at www.dillards.com. Total square footage at April 28, 2012 was 52.5 million.           Dillard's, Inc. and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (In Millions, Except Per Share Data)       13-Week Period Ended   April 28, 2012   April 30, 2011       % of % of Amount Net Sales Amount Net Sales   Net sales $ 1,549.3 100.0 % $ 1,469.2 100.0 % Service charges and other income   33.9 2.2   29.6 2.0 1,583.2 102.2 1,498.8 102.0   Cost of sales 954.1 61.6 898.9 61.2 Advertising, selling, administrative and general expenses 393.2 25.4 389.3 26.5 Depreciation and amortization 64.0 4.1 64.0 4.4 Rentals 8.3 0.5 11.4 0.8 Interest and debt expense, net 17.5 1.1 18.3 1.2 Gain on disposal of assets 1.0 0.0 - - Asset impairment and store closing charges   - 0.0   1.2 0.1 Income before income taxes and income on and equity in losses of joint ventures 147.1 9.5 115.7 7.8 Income taxes 52.9 42.7 Income on and equity in losses joint ventures   0.8 0.0     3.7 0.3   Net income $ 95.0 6.1 % $ 76.7 5.2 %   Basic earnings per share $ 1.92 $ 1.33 Diluted earnings per share $ 1.89 $ 1.31 Basic weighted average shares   49.4   57.5 Diluted weighted average shares   50.3   58.8             Dillard's, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (In Millions)       April 28, April 30, 2012 2011 Assets Current Assets: Cash and cash equivalents $ 250.7 $ 147.3 Accounts receivable 30.8 21.5 Merchandise inventories 1,499.6 1,504.0 Other current assets   45.8   43.2 Total current assets 1,826.9 1,716.0   Property and equipment, net 2,411.4 2,547.9 Other assets   277.7   73.0   Total Assets $ 4,516.0 $ 4,336.9   Liabilities and Stockholders' Equity Current Liabilities: Trade accounts payable and accrued expenses   $ 813.9 $ 835.7 Current portion of long-term debt and capital leases 78.7 51.4 Federal and state income taxes including current deferred taxes   129.0   101.6 Total current liabilities 1,021.6 988.7   Long-term debt and capital leases 623.4 707.6 Other liabilities 245.6 206.8 Deferred income taxes 301.7 328.9 Subordinated debentures 200.0 200.0 Stockholders' equity   2,123.7   1,904.9   Total Liabilities and Stockholders' Equity $ 4,516.0 $ 4,336.9             Dillard's, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (In Millions)       13-week Period Ended       April 28, 2012     April 30, 2011 Operating activities:     Net income $ 95.0 $ 76.7 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and deferred financing cost 64.5 64.5 Gain on disposal of assets (1.0 ) - Asset impairment and store closing charges - 1.2 Excess tax benefits from share-based compensation (1.3 ) (2.4 ) Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (2.1 ) 4.4 Increase in merchandise inventories (195.4 ) (213.9 ) Increase in other current assets (11.2 ) (0.6 ) Decrease in other assets 1.2 0.8 Increase in trade accounts payable and accrued expenses and other liabilities 167.0 127.9 (Decrease) increase in income taxes payable       (18.2 )       0.6   Net cash provided by operating activities       98.5         59.2   Investing activities: Purchase of property and equipment (47.5 ) (17.0 ) Distribution from joint venture - 2.5 Proceeds from disposal of property and equipment       7.8         -   Net cash used in investing activities       (39.7 )       (14.5 ) Financing activities: Principal payments on long-term debt and capital lease obligations (1.0 ) (0.9 ) Issuance cost of line of credit (5.3 ) - Cash dividends paid (2.5 ) (2.4 ) Purchase of treasury stock (27.5 ) (247.1 ) Excess tax benefits from share-based compensation 1.3 2.4 Proceeds from stock issuance       2.6         7.3   Net cash used in financing activities       (32.4 )       (240.7 ) Increase (decrease) in cash and cash equivalents 26.4 (196.0 ) Cash and cash equivalents, beginning of period       224.3         343.3   Cash and cash equivalents, end of period     $ 250.7       $ 147.3   Non-cash transactions: Accrued capital expenditures $ 1.7 $ 2.4 Stock awards 1.9 2.2       Estimates for 2012 The Company is updating the following estimates for certain financial statement items for the fiscal year ending February 2, 2013 based upon current conditions. Actual results may differ significantly from these estimates as conditions and factors change – See “Forward-Looking Information.”     In millions 2012 Estimated     2011 Actual Depreciation and amortization $ 257     $ 258 Rentals 34 48 Interest and debt expense, net 70 72 Capital expenditures 175 116     Forward-Looking Information The foregoing contains certain “forward-looking statements” within the definition of federal securities laws. The following are or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: statements including (a) words such as “may,” “will,” “could,” “believe,” “expect,” “future,” “potential,” “anticipate,” “intend,” “plan,” “estimate,” “continue,” or the negative or other variations thereof, and (b) statements regarding matters that are not historical facts. The Company cautions that forward-looking statements contained in this report are based on estimates, projections, beliefs and assumptions of management and information available to management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise. Forward-looking statements of the Company involve risks and uncertainties and are subject to change based on various important factors. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and assumptions. Representative examples of those factors include (without limitation) general retail industry conditions and macro-economic conditions; economic and weather conditions for regions in which the Company's stores are located and the effect of these factors on the buying patterns of the Company's customers, including the effect of changes in prices and availability of oil and natural gas; the availability of consumer credit; the impact of competitive pressures in the department store industry and other retail channels including specialty, off-price, discount and Internet retailers; changes in consumer spending patterns, debt levels and their ability to meet credit obligations; changes in legislation, affecting such matters as the cost of employee benefits or credit card income; adequate and stable availability and pricing of materials, production facilities and labor from which the Company sources its merchandise; changes in operating expenses, including employee wages, commission structures and related benefits; system failures or data security breaches; possible future acquisitions of store properties from other department store operators; the continued availability of financing in amounts and at the terms necessary to support the Company's future business; fluctuations in LIBOR and other base borrowing rates; potential disruption from terrorist activity and the effect on ongoing consumer confidence; epidemic, pandemic or other public health issues; potential disruption of international trade and supply chain efficiencies; world conflict and the possible impact on consumer spending patterns and other economic and demographic changes of similar or dissimilar nature. The Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended January 28, 2012, contain other information on factors that may affect financial results or cause actual results to differ materially from forward-looking statements. Dillard's, Inc.Julie Johnson Bull, 501-376-5965