Dillard's Narrows Loss in 2Q Amid 35% Drop in Sales

Dillard's Narrows Loss in 2Q Amid 35% Drop in Sales
Dillard's headquarters

Dillard’s Inc. of Little Rock on Thursday reported a second-quarter net loss of $8.6 million, or $0.37 per share, but that was improved from a net loss of $40.7 million, or $1.59 per share, in the same quarter a year before.

The publicly traded department store chain, citing COVID-19 as the cause for the loss, reported that total merchandise sales fell 35% from the second quarter of 2019, to $893.2 million. Merchandise sales don’t include revenue generated by the company’s construction business, CDI Contractors LLC. Total net sales, which include CDI revenue, came in at $919 million, down 36% from the same quarter last year.

"We thank our dedicated associates for their outstanding service to our customers as we continue to navigate the pandemic,” CEO William T. Dillard II said in a news release. “During the quarter, we worked hard to control inventory and expenses. These measures allowed us to improve gross margin and substantially narrow the loss from the prior year second quarter. We will maintain this conservative financial approach as we move forward."

Inventory decreased 20% year-over-year.

Same-store sales, a closely watched metric in retail, were not reported. The company said it had “no comparable store sales data for the quarter due to the temporary closure of its brick-and-mortar stores as well as the interdependence between in-store and online sales.”

However, all of Dillard's stores were re-opened by June 2 and all but one are still open, with reduced hours. Its El Centro, California, location has temporarily closed again under a local government mandate.

In-store sales from re-opening through Aug. 1 were approximately 72% of prior year sales on corresponding days, the company said.

During the second quarter, Dillard’s permanently closed three stores, in Waterloo, Iowa; Clovis, New Mexico; and Lawton, Oklahoma.

The company bought back 600,000 shares for $14.3 million during the quarter and saw a pretax gain of $4.9 million from selling stores.

Dillard’s also saw a net tax benefit because it expects to report a net operating loss for the year and the federal Coronavirus Aid, Relief, and Economic Security Act allows for net operating loss carryback to years in which the federal tax rate was 35%.

In all, Dillard's has 251 stores and 31 clearance centers in 29 states. Its total square footage on Aug. 1 was 48 million.