Dillard's Inc. narrows loss

By Don Hogsett -- Home Textiles Today, 8/30/2004 12:00:00 AM

LITTLE ROCK, ARK. —

With sales falling 2.9 percent after Hurricane Charley shuttered 14 stores for at least one day, Dillard's Inc. recorded a $26 million second quarter loss, improving on a year-ago loss of $50.4 million, despite stronger margins, lower costs and lower interest expense.

Hampered by the closings, the department store chain reported a sales decline of 2.9 percent, to $1.67 billion from $1.72 billion a year ago. Same-store sales declined 3 percent.

Despite the storm-based interruption, Dillard's managed to improve a number of key performance metrics. Average gross margin widened 30 basis points, or three-tenths of a percentage point, to 31.4 percent from 31.1 percent.

Margins, the retailer said, were assisted by "improved levels of markups partially offset by higher levels of markdowns, as the company worked to maintain control over inventory levels in a period of declining sales."

Operating costs were whittled 1.5 percent, to $500.1 million from $507.8 million last year, generating a cash savings of $7.7 million. But measured as a percentage of eroding sales, costs inched up 40 basis points, or four-tenths of a percentage point, to 29.9 percent from 29.5 percent a year ago.

Interest expense was cut 36.9 percent, to $37.5 million from $59.4 million, yielding a savings of $21.9 million, and taking some of the pressure off the bottom line. Last year's interest expense included a $15.6 million call premium as the retailer paid down $125.9 million in debt.

Dillard's Inc.