Dillard's earnings down $50 million
By Staff -- Home Textiles Today, 8/25/2003 12:00:00 AM
LITTLE ROCK, AR —
LITTLE ROCK, AR — Hobbled by falling sales, narrowed margins and $17.1 million in store closing costs, department store retailer Dillard's Inc., never fully recovered from its ill-fated buyout of Mercantile Stores, recorded a second-quarter loss of $50.4 million canceling out a year-before profit of $6.7 million.
Dillard's sales slacked off by 5.3 percent to $1.7 billion from $1.8 billion last year. Same-stores declined by 5.0 percent.
Taking a bite out of the bottom line, the retailer recorded a $17.1 million charge to cover the cost of shutting six stores. Putting further pressure on the bottom line the company incurred additional interest expense of $15.6 million in the form of a call premium when $125.9 million worth of its debt was called by lenders.
Acting as a further drag, average gross margin declined by 300 basis points, or 3.0 percentage points, as the retailer aggressively slashed is prices to clear goods off its shelves and pare down its stockpiles. Caught between the falling sales and weaker margins, gross margin dollars fell by 13.8 percent, to $535.1 million from $620.7 million a year ago.
In a prop to the bottom line, the retailer hacked away at expenses, reducing its operating costs by 4.4 percent, to $507.8 million from $531.0 million last year, generating a cash savings of $23.2 million.
Squeezed between the falling sales and narrowing margins, operating costs tumbled by 69.6 percent, to $27.3 million from $89.7 million.
|Qtr. 8/2 (x000)||2003||2002||% change|
a-Second-quarter results include a $17.1 million asset impairment and store closing charge, compared with a $900,000 reversal of an earlier charge in the year-ago period; and an income-tax benefit of $28.3 million vs. a prior-year tax provision of $6.7 million.
b-Six-month results include a $17.1 million asset impairment and store closing charge vs. a $900,000 reversal of an earlier charge In the same quarter a year ago; an income-tax benefit of $14.6 million vs. a year-before tax provision of $64.8 million; the 2002 six-month period included a $530.3 million non-cash charge stemming from a change in accounting.
|Oper. income (EBIT)||27,300||89,700||-69.6|
|Per share (diluted)||(0.60)||0.08||—|
|Average gross margin||31.1%||34.1%||—|
|Oper. income (EBIT)||119,500||254,500||-53.0|
|Per share (diluted)||(0.31)||(5.45)||—|
|Average gross margin||32.2%||35.0%||—|
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