Dillard's doubles 3Q losses with $40M hit

LITTLE ROCK, AR — The bad climate for retailing socked the third quarter financials for Dillard's Inc. The department-store retailer reported a net loss for the quarter of $40 million, more than double the loss it posted in the third quarter of 2000.

The company also saw its operating profits decline 33 percent between the two periods, finishing the 2001 third quarter at $77 million. This happened despite Dillard's ability to keep expenses in check; the fact that its selling, general and administrative outgo was virtually flat with last year failed to compensate for a more than 5 percent drop in net sales. The latter finished the quarter at less than $1.9 billion.

As part of the bleak sales picture, same-store sales fell 6 percent for the quarter. The decline in checkouts included an 8 percent falloff in sales of home-related merchandise (9 percent on a comp-store basis).

Dillard's cited the "immediate decline in consumer confidence" as a result of the Sept. 11 terrorist attacks. Clearly, the sales shortfall hurt every other number in the company's third-quarter statement.

The company was able to trim $1 million off its SG&A dollars, which came to $540 million in the third quarter. As a percentage of revenues, however, SG&A rose 160 basis points in this year's quarter, to 28 percent.

Dillard's also noted that it was able to initiate specific merchandising and inventory policies, which decreased its inventories by 4 percent on a same-store basis during the quarter. Yet gross margin as a percentage of total revenues was flat with last year, at 32 percent.

Thus far in 2001, Dillard's has closed — or has announced that it will close — eight stores as part of its plan to dispose of underperforming assets. During the third quarter, the company shuttered its clearance center in the Great Mall of the Great Plains in Olathe, KS, and its St. Louis Centre location. By the end of its fiscal year, Dillard's will have also closed its stores in Tulsa, OK, Cleveland and Miami.