Dillard’s Inc. went from a “reasonably normal company” at the start of February to “total chaos” by the end of April, resulting in the worst quarterly loss in the Little Rock department store chain’s 81-year history, CEO William Dillard II said Saturday during the company’s annual meeting.
The company attributed the $162 million loss during the quarter that ended May 2 to the COVID-19 pandemic.
“Store closures and reduced traffic in the stores that remained open resulted in dramatic sales decreases,” Alex Dillard, president of the company, said over a speakerphone in the one of the conference rooms at the company’s headquarters. The pandemic forced a departure from the usual meeting format, where about 25 attendees would sit in a room and listen to William Dillard II.
Despite bad first-quarter results, Alex Dillard cited some good news: the company is starting to see some recovery as it begins reopening stores that were temporarily closed because of the pandemic.
Sales Declines, Criticism
The first signs of trouble surfaced on Friday, March 13. That weekend sales were down about 50%, Alex Dillard said.
By the middle of the next week, March 19, Dillard’s first store was ordered to temporarily close as required by state and local governments. While most of its 285 locations remained open, other retailers had already announced they were temporarily closing stores to help stop the spread of the virus.
Alex Dillard said the company received “many” emails criticizing its decision to keep stores open, accusing it of trying to profit at the expense of its employees.
“There’s nothing that could be further from the truth,” Alex Dillard said. “We were clearly not maximizing profits, given our loss.”
He said the company was trying to get enough cash to pay its employees and “to meet other mandatory payments” because at that time no one knew if government relief programs were coming.
“Fortunately we were able to pay our associates who were furloughed until they could apply for additional benefits,” he said.
By April 9, all of Dillard’s stores had closed. But its online store, Dillards.com, stayed opened and, according to Alex Dillard, orders doubled. The company does not disclose ecommerce sales.
To move inventory, Dillard’s promoted marked-down items on its website. Between March 24 and April 1, that merchandise was discounted an additional 40%. Starting in April, it was reduced another 50%.
For the quarter, total retail sales were $751 million, down 47% from $1.42 billion in the same period last year.
Earlier this month, Dillard’s began reopening stores. On May 5 and 6, it opened 45 regular stores and 15 clearance stores. On May 12 and 13, it opened another 80 stores and nine clearance stores.
Next week it plans to open 115 regular stores and five clearance stores.
“It’s not all the way back, but this is a start on the road to recovery,” Alex Dillard said.