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Dillard’s Same-Store Sales Rise; Retailer Gets Tax Boost

3 min read

Dillard’s Inc. of Little Rock broke a streak of quarterly same-store declines, reporting fourth-quarter sales up 3 percent and profit up 177 percent from the same quarter last year.

The publicly traded department store chain (NYSE: DDS) said its most recent quarter included an estimated tax benefit of $77.4 million, or $2.73 per share. The quarter also included an extra week compared to the same quarter last year.

The growth in comparable store sales came after nine straight quarters of same-store sales declines. Dillard’s shares rose by more than 14 percent on the news.

“The positive sales trends we noted at the end of the third quarter continued through the fourth,” CEO William T. Dillard II said in a news release. “Our 3 percent comparable store sales increase combined with gross margin improvement and relative expense control led to a notable increase in pretax income for the quarter. We are working to keep this momentum into 2018.”

In all, Dillard’s reported net income of $157.6 million, or $5.55 per share, in the 14-week fourth quarter, compared to net income of $56.9 million, or $1.72 per share, for the comparable 13-week period last year.

Excluding the tax benefit, Dillard’s posted net income of $2.82 per share, well beyond analysts’ expectations of $1.82 per share.

Net sales for the period were $2.06 billion, up from $1.94 billion last year. Net sales include the operations of the company’s construction business, CDI Contractors LLC. Excluding CDI revenue, total merchandise sales were $2.03 billion, up about 7 percent from and $1.90 billion last year.

During the quarter, the company purchased $34.6 million of Class A Common Stock under its share repurchase program. For the full year, the company purchased $219.0 million in Class A shares.

Dillard’s wasn’t the only department store chain to report better-than-expected results Tuesday.

Macy’s Inc. of Cincinnati also broke out of a long-running sales funk, reporting a 1.4 percent same-store sales gain for the holiday period, benefitting from an improving economy and its own initiatives like an overhauled customer loyalty program.

Macy’s also posted sharply higher earnings for the fourth quarter, boosted by the sale of certain real estate assets. It issued an upbeat outlook, and its shares surged more than 11 percent Tuesday.

Neil Saunders, managing director of GlobalData Retail, told industry website Retail Dive that while Dillard’s had posted “good numbers,” his firm believes “this is mostly because of the upswing in consumer spending over the holiday period.”

While he credited the company’s operation and balance sheet, he said the retail faces the same challenges as its peers, including aging customers, slowing traffic and online competition.

“Dillard’s is still losing customers, and as economic conditions tighten towards the end of the year, it will likely lose more,” Saunders told the website, adding that “once benign conditions come to an end, the old weaknesses and problems at Dillard’s will resurface.”

For the 53-week fiscal year, Dillard’s reported net income of $221.3 million, or $7.51 per share, compared to net income of $169.2 million, or $4.93 per share, in the comparable 52-week period. 

Net sales were $6.26 billion, flat from last year. Total merchandise sales were $6.11 billion, up from $6.07 billion in the previous year. Same-store sales were unchanged.

As of Feb. 3, Dillard’s operated 268 stores and 24 clearance centers across 29 states.

(The Associated Press contributed to this report.)

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