At Annual Meeting, Dillard's Mulls What to Do With Cash

by Mark Friedman  on Saturday, May. 18, 2013 11:04 am  

For its fiscal year that ended Feb. 2, Dillard's generated a record $523 million in cash flow from operations in its fiscal 2012.

Dillard's Inc. CEO William Dillard II said Saturday that the Little Rock department store chain will have to decide this year what to do with the cash it's generating.

"We're going to face a decision, at least in the foreseeable future, … of having more cash generated than we need to employ in the business," Dillard said during the five-minute annual shareholders' meeting at the company's Little Rock headquarters. "So we probably will have the same sort of decisions this year about, do we buy back more stock or do we pay out cash dividends?"

For its fiscal year that ended Feb. 2, Dillard's generated a record $523 million in cash flow from operations. During the fiscal year, Dillard's returned $438 million to shareholders in the form of dividends, including a special one-time cash dividend of $5 per share it paid at the end of the 2012.

Dillard said he thinks returning the money to shareholders is one of the reasons why the stock price has been climbing. On Friday, Dillard's shares (NYSE: DDS) closed at a record $92.01. He said he thinks shareholders can do better with the money than Dillard's can with it parked on the balance sheet.

"The good thing we're doing at Dillard's is generating a lot of cash," he said.

Dillard also touted fiscal 2012 highlights, which included earnings per share of $6.32 compared to $4.40 a year ago. It also garnered sales of $6.59 billion compared to $6.23 billion in fiscal 2011.

The company has continued its success into the first quarter of 2013. On Wednesday, it reported first-quarter profit of $112.8 million, a 19 percent increase from the same time last year. And its earnings per share reached $2.40, up 27 percent from the $1.89 it reported during the first quarter of 2012.

"Right now our numbers are good," Dillard said.

During the meeting, shareholders elected Reynie Rutledge, 63, chairman of First Security Bancorp of Searcy, to the board of directors. Rutledge replaces R. Brad Martin, who said in April that he would not seek re-election. Rutledge will represent shareholders of publicly traded Class A shares.

Dillard's board is controlled by Dillard family members under a dual-class stock arrangement. Class A stock is traded on the New York Stock Exchange, but holders of the Class B shares, owned almost exclusively by CEO Dillard and his family members, have the right to choose eight of the 12 corporate directors.

Shareholders also approved the accounting firm KPMG LLP for fiscal 2013.



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