DILLARD'S, INC. (DDS) SEC Filing 10-Q Quarterly report for the period ending Saturday, November 3, 2018

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Exhibit 99

Dillard’s, Inc. Reports Third Quarter Results


LITTLE ROCK, Ark.--(BUSINESS WIRE)--November 15, 2018--Dillard’s, Inc. (NYSE: DDS) (the “Company” or “Dillard’s”) announced operating results for the 13 and 39 weeks ended November 3, 2018. This release contains certain forward-looking statements. Please refer to the Company’s cautionary statements regarding forward-looking information included below under “Forward-Looking Information.”

39-Week Results

Dillard’s reported net income for the 39 weeks ended November 3, 2018 of $85.1 million, or $3.08 per share, compared to net income of $63.8 million, or $2.14 per share, for the 39-week period ended October 28, 2017. Included in net income for the 39-week period ended November 3, 2018 is $2.9 million ($0.10 per share) in tax benefits related to additional federal tax credits and an update of the provisional amounts recorded for the income tax effects of the Tax Cuts and Jobs Act of 2017.

Included in net income for the 39-week period ended October 28, 2017 is a pretax gain on disposal of assets of $4.9 million ($3.1 million after tax or $0.10 per share) and $0.8 million loss on extinguishment of debt ($0.5 million after tax or $0.02 per share).

Net sales for the 39 weeks ended November 3, 2018 and for the 39 weeks ended October 28, 2017 were $4.346 billion and $4.201 billion, respectively. Net sales includes the operations of the Company’s construction business, CDI Contractors, LLC ("CDI").

Total merchandise sales (which excludes CDI) for the 39-week period ended November 3, 2018 were $4.162 billion and $4.084 billion for the 39-week period ended October 28, 2017. Total merchandise sales increased 2% for the 39-week period ended November 3, 2018. Sales in comparable stores for the period also increased 2%.

Third Quarter Results

Dillard’s reported net income for the 13 weeks ended November 3, 2018 of $7.4 million, or $0.27 per share, compared to net income of $14.5 million, or $0.50 per share, for the prior year third quarter. Included in net income for the 13-week period ended November 3, 2018 is $2.9 million ($0.11 per share) in tax benefits related to additional federal tax credits and an update of the provisional amounts recorded for the income tax effects of the Tax Cuts and Jobs Act of 2017.

Included in net income for the prior year 13-week period ended October 28, 2017 is a pretax gain on disposal of assets of $4.8 million ($3.1 million after tax or $0.11 per share) and $0.8 million loss on extinguishment of debt ($0.5 million after tax or $0.02 per share).

Dillard’s Chief Executive Officer William T. Dillard, II, stated, "While we are encouraged by our 3% comparable sales performance, this was a disappointing quarter as markdowns weighed heavily on gross margin, particularly in the first month. However, operating performance improved as the quarter progressed and sales turned positive. We also invested $54 million in share repurchases during the quarter.”

Net sales for the 13 weeks ended November 3, 2018 and for the 13 weeks ended October 28, 2017 were $1.419 billion and $1.355 billion, respectively.
 
Total merchandise sales for the 13-week period ended November 3, 2018 were $1.342 billion and $1.313 billion for the 13-week period ended October 28, 2017. Total merchandise sales increased 2% for the 13-week period ended November 3, 2018. Sales in comparable stores for the period increased 3%. In relation to the total company sales trend, above trend performances were noted in ladies' accessories and lingerie followed by juniors' and children's apparel. Sales were slightly above trend in men's apparel and accessories and home and furniture. Sales were consistent with trend in shoes, slightly below trend in ladies' apparel and below trend in cosmetics. Sales were strongest in the Western region followed by the Eastern and Central regions, respectively.

Gross Margin/Inventory

Gross margin from retail operations (which excludes CDI) improved 18 basis points of sales for the 39 weeks ended November 3, 2018 compared to the prior year 39-week period. Consolidated gross margin for the 39 weeks ended November 3, 2018 declined 30 basis points of sales compared to the prior year 39-week period.

Gross margin from retail operations declined 87 basis points of sales for the 13 weeks ended November 3, 2018 compared to the prior year third quarter due to increased markdowns. Consolidated gross margin for the 13 weeks ended November 3, 2018 declined 160 basis points of sales compared to the prior year third quarter, considerably more than that of retail operations alone due to increased volume at CDI, a lower gross margin business.

Inventory increased 4% at November 3, 2018 compared to October 28, 2017. On a comparable calendar basis, which compares November 3, 2018 (seven weeks from the Christmas holiday) to November 4, 2017, inventory increased 2%.









The following information was filed by DILLARD'S, INC. on Thursday, November 15, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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  • 18487857_134
    Financial - Shares / Equity
    The following are or may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: (a) statements including words such as "may," "will," "could," "should," "believe," "expect," "future," "potential," "anticipate," "intend," "plan," "estimate," "continue," or the negative or other variations thereof; (b) statements regarding matters that are not historical facts; and (c) statements about the Company?s future occurrences, plans and objectives, including statements regarding management?s expectations and forecasts for the remainder of fiscal 2018 and beyond, statements concerning the opening of new stores or the closing of existing stores, statements concerning capital expenditures and sources of liquidity, statements concerning share repurchases, statements concerning pension contributions and statements concerning estimated taxes.
  • 18487857_67
    Financial - Expense
    Depreciation and amortization expense decreased $1.3 million and $8.9 million during the three and nine months ended November 3, 2018, respectively, compared to the three and nine months ended October 28, 2017, primarily due to the timing and composition of capital expenditures.
  • 18487857_1
    Revenue - Product
    Despite the increase in sales, the Company's performance in the third quarter of fiscal 2018 was disappointing as markdowns weighed heavily on gross margin.
  • 18487857_56
    Financial - Earnings
    Gross margin decreased slightly in shoes, men's apparel and accessories and cosmetics, while decreasing moderately in ladies' accessories and lingerie and juniors' and children's apparel.
  • 18487857_59
    Financial - Earnings
    Gross margin decreased slightly in cosmetics, while remaining relatively flat in ladies' apparel, ladies' accessories and lingerie, shoes and juniors' and children's apparel.
  • 18487857_48
    Revenue - Product
    Sales of shoes decreased slightly, while sales of ladies' apparel remained relatively flat.
  • 18487857_35
    Financial - Expense
    We also record costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) in other current assets and trade accounts payable and accrued expenses, respectively, on the condensed consolidated balance sheets.
  • 18487857_3
    Financial - Earnings
    Gross margin from retail operations decreased 87 basis points of net sales.
  • 18487857_55
    Financial - Earnings
    Gross margin increased slightly in ladies' apparel and home and furniture.
  • 18487857_58
    Financial - Earnings
    Gross margin increased slightly in men's apparel and accessories and home and furniture.
  • 18487857_83
    Financial - Income
    During the three months ended November 3, 2018, income taxes differed from what would be computed using the statutory federal tax rate primarily due to tax benefits recognized of approximately $1.5 million for an update to the provisional amounts previously recorded related to the Act; additional prior year federal tax credits of approximately $1.4 million; and current year federal tax credits partially offset by the effect of state and local income tax expense.
  • 18487857_87
    Financial - Income
    During the nine months ended November 3, 2018, income taxes differed from what would be computed using the statutory federal tax rate primarily due to tax benefits recognized of approximately $1.5 million for an update to the provisional amounts previously recorded related to the Act; additional prior year federal tax credits of approximately $1.4 million; and current year federal tax credits partially offset by the effect of state and local income tax expense.
  • 18487857_84
    Financial - Income
    During the three months ended October 28, 2017, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes offset by tax benefits recognized for federal tax credits.
  • 18487857_88
    Financial - Income
    During the nine months ended October 28, 2017, income tax expense differed from what would be computed using the statutory federal tax rate primarily due to the effect of state and local income taxes offset by tax benefits recognized for federal tax credits.
  • 18487857_42
    Revenue - Product
    During the three months ended November 3, 2018, net sales from the construction segment increased $35.6 million or 85.2% compared to the three months ended October 28, 2017 due to an increase in construction projects.
  • 18487857_132
    Other - Other
    For information with respect to new accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 2, Accounting Standards, in the "Notes to Condensed Consolidated Financial Statements," in Part I, Item I hereof.
  • 18487857_89
    Other - Other
    During the three and nine months ended October 28, 2017, tax benefits recognized for federal tax credits includes tax benefits related to legislation enacted on September 29, 2017 providing an employee retention credit to employers impacted by 2017 hurricanes.
  • 18487857_29
    Revenue - Product
    The effect of a contract modification on the transaction price and our measure of progress for the performance obligation for which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis.
  • 18487857_33
    Other - Other
    Construction contracts give rise to accounts receivable, contract assets and contract liabilities.
  • 18487857_21
    Revenue - Product
    The Company defers a portion of its net sales upon the sale of merchandise to its customer reward program members that is recognized in net sales when the reward is redeemed or expired at a future date.
  • 18487857_36
    Revenue - Product
    The percent change in the Company?s sales by segment and product category for the three months ended November 3, 2018 compared to the three months ended October 28, 2017 as well as the sales percentage by segment and product category to total net sales for the three months ended November 3, 2018 are as follows: Net sales from the retail operations segment increased $28.7 million during the three months ended November 3, 2018 compared to the three months ended October 28, 2017, increasing 2% in total and 3% in comparable stores.
  • 18487857_45
    Revenue - Product
    The percent change in the Company?s sales by segment and product category for the nine months ended November 3, 2018 compared to the nine months ended October 28, 2017 as well as the sales percentage by segment and product category to total net sales for the nine months ended November 3, 2018 are as follows: Net sales from the retail operations segment increased $78.3 million during the nine months ended November 3, 2018 compared to the nine months ended October 28, 2017, increasing 2% in both total and comparable stores.
  • 18487857_128
    Financial - Debt
    Depending on conditions in the capital markets and other factors, the Company may from time to time consider other possible financing transactions, the proceeds of which could be used to refinance current indebtedness or for other corporate purposes.
  • 18487857_50
    Revenue - Product
    During the nine months ended November 3, 2018, net sales from the construction segment increased $66.5 million or 56.8% compared to the nine months ended October 28, 2017 due to an increase in construction activity.
  • 18487857_52
    Financial - Income
    Income from the alliance decreased during the three and nine months ended November 3, 2018 compared to the three and nine months ended October 28, 2017 primarily due to a sales tax settlement from the former Synchrony Alliance during the three months ended October 28, 2017 and a decrease in the level of balances carried on Wells Fargo accounts by Wells Fargo customers.
  • 18487857_60
    Financial - Earnings
    Gross profit from the construction segment decreased 71 basis points and 79 basis points of construction sales for the three and nine months ended November 3, 2018, respectively.
  • 18487857_81
    Financial - Income
    The Company?s estimated federal and state effective income tax rate, inclusive of income on and equity in earnings of joint ventures, was approximately -55.5% and 31.8% for the three months ended November 3, 2018 and October 28, 2017, respectively.
  • 18487857_85
    Financial - Income
    The Company?s estimated federal and state effective income tax rate, inclusive of income on and equity in earnings of joint ventures, was approximately 18.3% and 34.1% for the nine months ended November 3, 2018 and October 28, 2017, respectively.
  • 18487857_94
    Financial - Expense
    This increase was primarily attributable to increases in accounts payable and accrued expenses partially offset by increases in accounts receivable.
  • 18487857_61
    Other - Other
    Inventory increased 4% in total as of November 3, 2018 compared to October 28, 2017.
  • 18487857_2
    Revenue - Product
    During the three months ended November 3, 2018, comparable store sales increased 3% over last year's third quarter.
  • 18487857_37
    Revenue - Product
    Sales of ladies' accessories and lingerie increased significantly over the third quarter last year.
  • 18487857_119
    Other - Other
    At November 3, 2018, the Company had $191.1 million in outstanding short-term borrowings, and letters of credit totaling $24.5 million were issued under the credit agreement leaving unutilized availability under the facility of $584.4 million.
  • 18487857_96
    Financial - Income
    Under the Wells Fargo Alliance, Wells Fargo establishes and owns private label card accounts for our customers, retains the benefits and risks associated with the ownership of the accounts, provides key customer service functions, including new account openings, transaction authorization, billing adjustments and customer inquiries, receives the finance charge income and incurs the bad debts associated with those accounts.
  • 18487857_38
    Revenue - Product
    Sales of shoes, men's apparel and accessories, juniors' and children's apparel and home and furniture increased moderately.
  • 18487857_46
    Revenue - Product
    Sales of ladies' accessories and lingerie, men's apparel and accessories, juniors' and children's apparel and home and furniture increased moderately over the prior year period.
  • 18487857_18
    Financial - Shares / Equity
    The Company's share of income earned under the Wells Fargo Alliance involving the Dillard's branded private label credit cards is included as a component of service charges and other income.
  • 18487857_53
    Financial - Earnings
    Shipping and handling Gross profit decreased by $0.6 million and 160 basis points of net sales during the three months ended November 3, 2018 compared to the three months ended October 28, 2017.
  • 18487857_47
    Revenue - Product
    Sales of cosmetics increased slightly.
  • 18487857_112
    Financial - Expense
    We remain committed to closing under-performing stores where appropriate and may incur future closing costs related to such stores when they close.
  • 18487857_127
    Financial - Cash Flow
    During fiscal 2018, the Company expects to finance its capital expenditures, working capital requirements and stock repurchases from cash on hand, cash flows generated from operations and utilization of the credit facility.

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  • Form Type: Quarterly
  • Number of times amended: 0
  • Accession Number: 0000028917-18-000521
  • Submitted to the SEC: Thursday, December 6, 2018 4:52:15 PM EST
  • Accepted by the SEC: Thursday, December 6, 2018
  • Period ending: November 2018
  • Industry: Retail Department Stores