After Dillard’s Inc. reported flat first-quarter sales and earnings last week, Chairman and CEO William Dillard II told shareholders over the weekend that the Arkansas department store will emerge stronger through a difficult period for traditional brick-and-mortar retailers.
“Mall-based retailing is going through a difficult time,” Dillard said at the company’s annual meeting Saturday (May 18) in Little Rock. “Our job is to be open next year. We’re going to be one of the leaders and still get to play tomorrow.”
According to an 8K filing with the federal Securities and Exchange Commission detailing Mr. Dillard’s remarks, the Arkansas department store chain’s annual meeting was highlighted by the company’s celebration of 50 years as a publicly-traded concern. During the event, the namesake CEO of the Arkansas retailer touted the company’s financial strength by citing the paydown of $248 million of long-term debt since January 2018 and the repurchase of 1.7 million shares over the past year.
Dillard also pointed to the company’s strong balance sheet, noting the company owns 90% of its store square footage. Entering the second quarter, the Arkansas department store operator now operates 261 Dillard’s retail locations and 28 clearance centers across 29 states with a total square footage of 48.7 million square feet.
Like many corporations that lease or own property, including Walmart, Windstream and Little Rock-based real estate investment trusts Uniti Corp. and BSR REIT, Dillard’s has begun implementing new accounting standards for leases, revenue and loan losses under the Financial Accounting Standard’s Board (FASB) Update 2016-12 that became effective for fiscal years beginning after Dec. 15, 2019.
However, Dillard said because of the company’s high store ownership percentage the impact of the accounting change on the Arkansas retailer’s balance sheet has been notably small in comparison to peer companies. Through the first quarter, Dillard’s said the accounting change only posted $52 in operating lease assets.
Over the next year, Dillard’s also stated that the Arkansas department store operator plans to have no short-term borrowings on its balance sheet by Feb. 2020. For the reporting period ended May 4, Dillard’s posted net income of $78.6 million, or $2.99 per share, compared to net income of $80.5 million, or $2.89 per share in the same period a year ago.
Net sales, which included the operations of Dillard’s construction subsidiary, CDI Contractors LLC, rose slightly to $1.47 billion, compared to $1.46 billion in the same period a year ago.