Dillard's Swings Back to Profit in Q2

Dillard's Swings Back to Profit in Q2
Dillard's headquarters

Dillard's Inc. of Little Rock on Thursday again reported improvement in quarterly profit and sales, compared to the second quarter of 2020, when stores closed or cut hours in response to the COVID-19 pandemic.

The department store chain (NYSE: DDS) reported $185.7 million in profit, or $8.81 per share, compared to a loss of $8.6 million, or 37 cents per share, for the same period last year. 

"The strong consumer demand we saw in the first quarter continued throughout the second quarter. This momentum, combined with our continuing focus on inventory and expense control, produced a sequential record performance,” CEO William Dillard II said in a news release. “We ended the quarter with $670 million in cash even after repurchasing $112 million of stock."

Dillard’s repurchased about 700,000 shares for $112 million during the second quarter. 

Total retail sales, which exclude revenue generated by Dillard’s construction company, CDI Contractors LLC, hit $1.5 billion, up 72% from $893.2 million in the same quarter last year. The company said its strongest performing categories were ladies' apparel and shoes.

Quarterly earnings per share beat Wall Street expectations of $2.45 per share. Total revenue of $1.57 billion also beat expectations, according to Zacks Investment Research. Analysts surveyed by Zacks expected $1.26 billion.

Dillard's shares have nearly tripled since the beginning of the year. The stock has increased sixfold in the last 12 months.

As Arkansas Business reported on July 26, the soaring stock price hasn’t surprised retail watchers. Analysts predicted Dillard’s would have strong earnings and revenue increases in its second and third fiscal quarters as consumers returned to stores. But they also warned that a COVID resurgence could make those gains short-lived.

“The delta variant is of concern,” NRF’s chief economist, Jack Kleinhenz, told Arkansas Business. “We know that that can be a real detriment. And then if you impose restrictions on people or reduce people’s mobility, that could certainly be a speed bump.”

During the second quarter, the company closed its Paradise Valley Mall location in Phoenix. It said it plans to close its clearance center at Valle Vista Mall in Harlingen, Texas, and open a new store at Mesa Mall in Grand Junction, Colorado, during the third quarter. 

Vs. ‘Normal’

In its earnings release, the department store chain provided comparisons between the second quarter of 2021 and the second quarter of 2019.

Compared to that pre-COVID period, total retail sales were up 12% from $1.4 billion, and same-store sales were up 14%. 

Second quarter 2021 operating expenses decreased to $364.2 million from $407.6 in the second quarter of 2019, mostly due to decreased payroll and related expenses that were the result of reduced store hours.

The company reported a second-quarter 2019 loss of $40.7 million, so second-quarter 2021 profit was up significantly.

Net sales that include the construction company’s revenue totaled $1.57 billion, up from $919 million reported for the second quarter of 2020 and up from $1.43 billion reported for the second quarter of 2019.

The company operates 249 Dillard’s locations and 31 clearance centers in 29 states as well as dillards.com.

(The Associated Press contributed to this report.)

More On This Story