Dillard’s second quarter income falls 59%, down almost 39% in first half of fiscal year

Little Rock-based Dillard’s posted second quarter net income of $12.1 million, below the $29.9 million in the same period of 2015, but a better performance than expected by analysts who cover the retailer.

The per share earnings of 35 cents was better than the consensus estimate of 34 cents, and the $1.488 billion in quarterly revenue was in line with the consensus estimate. However, the sales were below the $1.55 billion in the same quarter of 2015.

The company said in the earnings report posted Thursday (Aug. 11) after the markets closed that total merchandise sales fell 4% in the second quarter and same-store sales were down 5%.

“Although all sales categories declined, stronger performing categories were ladies’ apparel and men’s apparel and accessories. Sales of home and furniture were significantly weaker. Sales trends were strongest in the Eastern region, followed by the Western and Central regions, respectively,” the company noted in the report.

Dillard’s CEO William Dillard III said “weakness” in fashion retail continues to hurt sales.

“The challenges facing apparel retailers continued through the second quarter, and our poor results reflect this. In spite of weak sales, we returned $57 million to shareholders through stock repurchase and dividends. While we continue to deal with weakness in the fashion retail industry, we believe we are in good financial shape for the long term,” Dillard said in the earnings statement.

For the first half of the fiscal year, Dillard’s net income was $89.5 million, well below the $139.5 million during the same period of 2015. Total revenue in the first half was $2.955 billion, down from the $3.087 billion in the same period of 2015.

First half of 2016 merchandise sales fell 4% and same-store sales fell 5%.

As it has done for many in the retail sector, inventory levels grew for Dillard’s. The inventory value at the end of the first half of the fiscal year was $1.499 billion, above the $1.477 billion at the end of the same period in 2015.

Dillard’s said it has closed its clearance centers at South Towne Center in Sandy, Utah (100,000 square feet), and Plaza Central, formerly Six Flags Mall, in Arlington, Texas (85,000 square feet). The company operates 272 Dillard’s locations and 22 clearance centers in 29 states, and an Internet store.

The retailer’s shares (NYSE: DDS) closed Thursday at $66.41, up $4.78 for the day. The share price in the past 52 weeks has ranged from a high of $103.09 to a $54.37 low.