Dillard's Trims Inventory, Turns Profit
By Don Hogsett -- Home Textiles Today, 8/21/2006 12:00:00 AM
Little Rock, Ark. —
Putting behind the $6.0 million in store closing costs that dogged the bottom line a year ago, pocketing $13.5 million from the sale of its interest in a shopping mall, and another $6.5 million as its share of the Visa/MasterCard antitrust settlement, and saving cash by cutting stockpiles, Dillard's Inc. extended its recent turnaround. The retailer recorded a second-quarter profit of $15.7 million, and reversed a year-before loss of $12.3 million.
The two big one-time gains, along with an income-tax benefit of $10.3 million, more than offset a $21.7 million charge to settle litigation.
Sales were virtually flat, dipping by 0.2% to $1.69 billion. Same-store sales edged off by 0.2%.
On an operational basis, average gross margin improved by 110 basis points, or 1.1 percentage points, to 33.5% from 32.4% last year. But acting as a drag, operating costs climbed higher by 170 basis points, or 1.7 percentage points, to 30.3% of sales from 28.6% during the same period a year ago.
In a lift to the bottom line, Dillard's pared its interest costs by 9.6%, to $24.6 million from $27.2 million, generating a cash savings of $2.6 million. In another big savings, inventories were whittled down by 2.9%, to $1.9 billion, yielding a savings of $56.4 million.
Dillard's Inc.
| Qtr. 7/29 (x000) | 2006 | 2005 | % change |
| (loss) a. Second-quarter results include an income-tax benefit of $10.3 million, compared with a prior-year tax benefit of $7.1 million. The second quarter of 2005 included a $6.0 million asset impairment and store closing charge. b. Earnings in the first six months of 2005 were reduced by a $6.4 million asset impairment and store closing charge. |
|||
| Sales | $1,687,700 | $1,691,900 | -0.2 |
| Oper. income (EBIT) | 115,600 | 99,800 | 15.8 |
| Net income | 15,007a | (12,300)a | — |
| Per share (diluted) | 0.20 | (0.15) | — |
| Average gross margin | 33.5% | 32.4% | — |
| SG&A expenses | 30.3% | 28.6% | — |
| Six months | |||
| Sales | 3,525,200 | 3,494,900 | 0.9 |
| Oper. income (EBIT) | 320,700 | 270,900 | 18.4 |
| Net income | 77,100b | 25,700b | 200.0 |
| Per share (diluted) | 0.97 | 0.31 | 212.9 |
| Average gross margin | 34.7% | 33.8% | — |
| SG&A expenses | 28.5% | 28.1% | — |
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