Dillard’s third quarter earnings miss targets, net income down more than 17%

Dillard’s Inc.’s shares fell more than 10% in pre-market trading on Monday (Nov. 16) as the Little Rock department store chain missed Wall Street targets. International markets were roiled on Monday following the Paris terrorists attacks over the weekend.

Just after Monday’s opening bell, Dillard’s shares were down nearly $7.40, or nearly 9%, at $77.51. By comparison, rival J.C. Penney was down 15.36% and Macy’s fell 4.21%.

For the period ended Oct. 31, Dillard’s reported net income of $45.7 million, or $1.19 per share, compared to net income of $55.2 million, or $1.30 per share, for the prior year third quarter. Included in net income for the current year third quarter is a net after-tax credit of $6 million (16 cents per share) related to the sale of three store locations.

Included in net income for the prior year third quarter is a net after-tax credit of $3.8 million ($0.09 per share) related to the sale of one store location.

Third quarter net sales, which included the Dillard’s construction business, were $1.435 billion, compared to $1.46 billion for the 13 weeks ended Nov. 1, 2014. Wall Street expected the retail giant to report third quarter earnings of $1.20 per share on revenue of $1.49 billion, according to Thomson Reuters.

Dillard’s shares (NYSE: DDS) were trading at $72.57 in mid-morning activity, down almost 6.5% and somewhat recovering from the early morning start. During the past 52 weeks, the share price has ranged from a $144.10 high to a $68.06 low.

“We are disappointed with our third quarter sales performance and in the resulting decline in profit. Share buyback remained a high priority, and we repurchased $175 million of stock under our share repurchase program,” said Dillard’s CEO William T. Dillard II.

Following are additional third quarter highlights for Dillard’s
• Total merchandise sales for the third quarter fell from $1.382 billion, compared to $1.422 billion for the 13-week period ended Nov. 1, 2014. Total merchandise sales decreased 3% for the 13-week period ended Oct. 31, 2015. Sales in comparable stores for the period decreased 4%.

• In relation to the total company sales performance, better performing categories were shoes, juniors’ and children’s apparel, cosmetics, and ladies’ apparel. Weaker performing categories were men’s apparel and accessories and ladies’ accessories and lingerie with notable weakness in home and furniture. Sales were strongest in the Eastern region, followed by the Western and Central regions, respectively.

• During the 13 weeks ended Oct. 31, Dillard’s purchased $174.6 million (1.9 million shares) of Class A common stock under its $500 million share repurchase program. As of Oct. 31, 2015, authorization of $117.5 million remained under the program. Total shares outstanding (Class A and Class B Common Stock) at Oct. 31, 2015 and Nov. 1, 2014 were 37.5 million and 41.2 million, respectively.

• In October, Dillard’s opened its 155,000 square foot location at Liberty Center in Cincinnati, Ohio, and a 126,000 square foot location at Fremaux Town Center in Slidell, La. At the end of the quarter, Dillard’s operated 274 retail  locations and 23 clearance centers across 29 states with a total square footage of 50.1 million square feet.