Little Rock-based Dillard’s surprised most retail equity analysts with first fiscal quarter net income of $158.2 million, a wide swing from the $162 million loss in the same quarter of 2020. The company’s share price surged almost 23% Friday (May 14) on the earnings gain.
The upscale regional retailer posted total revenue of $1.357 billion, up 65.2% compared with the $821.6 million in the same quarter of 2020. Included in the first quarter report was a pretax gain of $24.6 million on the sale of three stores.
Per share net income of $7.25 blew past the consensus estimate of $1.54.
“There are a lot of good things to say about this quarter. As vaccinations increased, stimulus money was released and warmer weather arrived, we saw sales increase over 2019 levels, with momentum continuing throughout the quarter. We are pleased to report record performances in gross margin and earnings per share. With strong cash flow, we accomplished $59 million in share repurchase while still ending the quarter with $616 million in cash,” Dillard’s CEO Chief William Dillard, II, said in the earnings report.
The company was able to reduce inventory 17%, and improved customer demand helped reduce the discounts needed to sell products. The gross margin from sales was 42.7% in the quarter, well ahead of the 37.8% in the same quarter of 2020.
“Management attributes the substantial improvement in gross margin to better inventory management and customer demand leading to decreased markdowns in the first quarter of 2021,” the company noted in the earnings report.
The company was also able to generate significant cash flow in the quarter of $302.4 million, also a wide improvement from the $111.1 million cash flow reduction in the same quarter of 2020. Dillard’s ended the quarter with cash and cash equivalents of $615.9 million, much better than the $70 million in the same quarter of 2020.
First quarter results follow a dismal fiscal 2020. Dillard’s reported in 2020 a net loss of $71.7 million compared with $111.1 million a year ago. Annual revenue was $4.443 billion versus $6.343 billion in the prior year. Loss per share was $3.16 compared to earnings per share of $4.38 in 2019.
Dillard’s operates 250 stores and 31 clearance centers in 29 states and an Internet store at dillards.com. Dillard’s sold its Cortana Mall location in Baton Rouge, La., (120,000 square feet). Total square footage at May 1, 2021 was 47.9 million square feet.
Dillard’s stock price (NYSE: DDS) closed Friday (May 14) at $125.35, up $23.23, or 22.75%. During the past 52 weeks the share price has ranged between $129.50 and $22.38.