Dillard’s 1Q profits fall 29% as sales fall flat, stock hits 52-week low in Thursday’s session

As many traditional retailers struggle with poor sales and changing shopper habits, Dillard’s Inc. on Thursday reported that its first quarter earnings were down 29% from a year ago as sales of furniture and home fixtures, ladies’ accessories and lingerie fell flat.

For the 13-week period ended April 30, Dillard’s reported net income of $77.4 million, or $2.17 per share, compared to net income of $109.6 million, or $2.66 per share, from the same period a year ago. Net sales, which includes the operations of the department store chain’s CDI Contractors construction business, fell slightly to $1.5 billion, from $1.57 billion a year earlier.

Wall Street had expected the Arkansas retailer to report first quarter earnings of $2.52 per share on sales of $1.56 billion, according to a survey of retail analysts by Thomson Reuters.

Dillard’s results are emblematic of the struggling retail sector as rival’s Macy’s, Nordstrom and Kohl’s also have reported weak sales in the first quarter. News of the quarterly reports in the retail sector pushed the company’s stock to a 52-week low of $59.85 in early trading Thursday on the New York Stock Exchange.

“Our disappointing sales pressured our gross margin and net income performance, although inventory was relatively flat at quarter end,” said Dillard’s CEO William Dillard. “While we controlled expenses, sales leverage was difficult to achieve. We continued to return value to shareholders by purchasing $58.4 million of our Class A Common Stock during the quarter.”

Overall, Dillard’s reported that gross margin from retail operations declined 145 basis points in the first quarter compared to the first 13 weeks of 2015. The decline in gross margin was attributed primarily to higher markdowns during the period, company officials said.

Selling, general and administrative expenses were $398.4 million, or about 26.5% of total sales, compared to $403.6 million and 25.6% of sales in the same period of 2015, respectively. Operating expenses from retail operations also increased 89 basis points of sales to $396.8 million, or 27.4%, during the 13 weeks ended April 30, compared to $402.3 million, or 26.5%, during the 13 weeks ended May 2, 2015. The expense decline was attributable to decreased advertising, services purchased, utilities and supplies partially offset by increased insurance expenses, officials said.

Dillard’s said it recently closed its 105,000 square feet Aiken Mall location in Aiken, S.C. The upscale Arkansas retailer now operates 272 Dillard’s locations, 24 clearance centers spanning 29 states, and an Internet store at www.dillards.com. Total store square footage for the department store chain is now 49.8 million.

Before Dillard’s released its first quarter financial statements after the close of market on Thursday, the department store chain’s stock had closed down 2.96%, or $1.85 at $60.64, as more than 1.4 million shares traded hands. The Arkansas retailer’s stock is nearly 50% off its yearly high of $120 per share touched almost a year ago on May 15, 2015.