Exhibit 99
Dillard's, Inc. Reports Second Quarter Results
LITTLE ROCK, Ark.--(BUSINESS WIRE)--Aug. 20, 2003--Dillard's, Inc.
(NYSE: DDS) (the "Company" or "Dillard's") today announced operating
results for its second quarter ended August 2, 2003. The Company will
host a conference call to discuss these results today at 9:30 a.m.
Eastern. The live call is available to all interested parties on the
Internet at the Investor Relations site at www.dillards.com. Click on
'Investor Relations/Conference Calls'. A replay of the call will be
available at that same location beginning at approximately 11:30 a.m.
Eastern. An alternate website is
http://www.shareholder.com/dillards/medialist.cfm.
Sales
Sales for the 13 weeks ended August 2, 2003 were $1.7 billion
compared to sales for the 13 weeks ended August 3, 2002 of $1.8
billion, a decrease of 5%. Sales in comparable stores for the 13-week
period decreased 5%.
Sales for the 26 weeks ended August 2, 2003 were $3.5 billion
compared to sales for the 26 weeks ended August 3, 2002 of $3.7
billion, a decrease of 5%. Sales in comparable stores for the 26-week
period decreased 5%.
Income
Net loss for the 13 weeks ended August 2, 2003 was $50.4 million
($0.60 per basic and fully diluted share) compared to net income of
$6.7 million ($0.08 per basic and fully diluted share) for the 13
weeks ended August 3, 2002.
During the 13 weeks ended August 2, 2003, the Company recorded
$17.1 million ($10.9 million after-tax, or $0.13 per basic and fully
diluted share) for asset impairment and store closing charges related
to certain stores. Additionally, during the second quarter of 2003,
the Company recorded a call premium resulting in additional interest
expense of $15.6 million ($10.0 million after-tax or $0.12 per basic
and fully diluted share) associated with a $125.9 million call of
debt.
During the 13 weeks ended August 3, 2002, the Company recorded a
pre-tax net gain of $0.9 million ($0.6 million after-tax, or $.01 per
basic and fully diluted share) which consisted of asset impairment and
store closing charges related to six stores offset by forgiveness of a
lease obligation from the sale of a closed store. Additionally, during
the second quarter of 2002, the Company recorded additional interest
expense of $9.1 million ($5.8 million after-tax or $0.07 per fully
diluted share) resulting from the early retirement of debt. During the
second quarter of 2002, an investee partnership of the Company
received an unusual distribution in the settlement of a receivable. As
a result, the Company received a non-recurring distribution and
recognized a gain of $3.1 million ($2 million after-tax or $.02 per
fully diluted share). During the 13 weeks ended August 3, 2002, the
Company amortized accounts receivable securitization gains and took a
charge to its income statement of $3.2 million ($2 million after-tax
or $.02 per fully diluted share).
Dillard's senior management noted second quarter operating results
were pressured by a comparable store sales decline of 5% and
corresponding pressure on gross margin as the Company responded with
aggressive markdown activity to control inventory levels.
Gross Margin/Inventory
Gross Margin for the 13 weeks ended August 2, 2003 declined 300
basis points of sales. Management attributes the decline to continuing
sales pressure experienced during the quarter, which necessitated
Dillard's aggressive response to control inventory levels with
increased markdown activity. Having entered the second quarter of 2003
with a year over year inventory increase of 5%, and after realizing a
comparable store sales decline of 5% during the second quarter, the
Company managed inventory at August 2, 2003 to an increase of 3%
compared to inventory at August 3, 2002.
Advertising, Selling, Administrative and General Expenses
Advertising, selling, administrative and general ("SG&A") expenses
declined $23.2 million to $507.8 million for the 13 weeks ended August
2, 2003 from $531.0 million for the comparable period ended August 3,
2002. The decline was primarily driven by significant savings in
payroll and advertising partially offset by increases in utilities and
bad debt expense. Payroll and advertising expenses declined $11.7 and
$11.7 million, respectively, while utilities and bad debt expense
increased $1.3 million and $2.7 million, respectively, during the
second quarter of 2003. The Company experienced small savings in most
other expense categories during the 13-weeks ended August 2, 2003.
Debt/Interest Expense
During the 13 weeks ended August 2, 2003, interest expense
increased to $59.4 million from $55.9 million during the 13 weeks
ended August 3, 2002. During the 13 weeks ended August 2, 2003, the
Company called the remaining $125.9 million of its 6.39% notes due
August 1, 2013. These notes were subject to mandatory repricing on
August 1, 2003. A call premium of $15.6 million related to this early
retirement is included in interest expense for the 13 weeks ended
August 2, 2003.
The Company has adopted SFAS No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("SFAS No. 145"). SFAS No. 145 rescinds SFAS
No. 4 and 64, which required gains and losses from extinguishments of
debt to be classified as extraordinary items. For the 13 weeks ended
August 3, 2002, as a result of adopting SFAS No. 145, the Company has
reclassified $9.1 million (after-tax $5.8 million or $0.07 per basic
and fully diluted share) to interest and debt expense from
extraordinary loss on early extinguishment of debt. Included in the
$9.1 million reclassified loss is a call premium of $11.6 million
related to the call of $143 million 6.31% notes, partially offset by a
gain on early extinguishment of debt during the second quarter of
2002.
The Company utilizes securitizations of its credit card receivable
portfolio as a financing vehicle. The Company has historically
accounted for these transactions as off-balance-sheet financing.
However, in early May 2002, the Company amended its conduit financing
agreement in a manner that prevented future transfers of accounts
receivable from qualifying as a sale and thus receiving
off-balance-sheet treatment. As a result of this decision, the Company
records all financing through this facility on the balance sheet at
August 2, 2003 of which $400 million is classified in long-term debt.
During the 13 weeks ended August 3, 2002, the Company placed $240
million of debt and the related asset on its balance sheet and took a
charge to its income statement of $3.2 million. The charge was related
to the amortization of the beneficial interests recognized upfront on
the off-balance-sheet financing. The Company had $160 million of
off-balance-sheet financing associated with its securitizations at
August 3, 2002.
Share Repurchase
During the 13 weeks ended August 2, 2003, Dillard's repurchased
$3.8 million, or approximately 300,000 shares, of its Class A Common
Stock under the existing $200 million share repurchase program. The
program was authorized by the Company's board of directors in May of
2000. Approximately $56 million in share repurchase authorization
remained under this open-ended plan at August 2, 2003. At August 2,
2003, the Company had 83.3 million shares of its Class A Common Stock
and Class B shares outstanding.
Store Openings/Closings - 2003
In July 2003, Dillard's opened its new 126,000 square foot store
at NorthPark Mall in Davenport, Iowa. Additionally, the Company
completed and opened the 28,000 square foot expansion of its Dillard's
store at Merritt Square in Merritt Island, Florida.
During the second quarter of 2003, the Company completed the
closures of three stores under its existing plan to close
under-performing locations as conditions permit. These stores were
Westgate Shopping Center in Toledo, Ohio (a stand-alone home store),
Raleigh Springs Mall in Memphis, Tennessee (a clearance center) and
Greenville Mall in Greenville, South Carolina. Additionally, Dillard's
announced the upcoming closures of The Shops at Willow Lawn in
Richmond, Virginia and Coliseum Mall in Hampton, Virginia. During the
26 weeks ended August 2, 2003, the Company has closed or has announced
the upcoming closures of eight Dillard's locations.
Scheduled store openings for the remainder of the year ended
January 31, 2004 are as follows:
Open
Dillard's at: City Month Sq. Feet
- ----------------------------------------------------------------------
Stony Point Fashion Park Richmond, Virginia September 200,000
Short Pump Town Center Richmond, Virginia September 200,000
Memorial City Mall(a) Houston, Texas October 250,000
(a) Replacement store
At August 2, 2003, the Company operated 329 stores spanning 29
states - all operating with one name - Dillard's.
Supplemental Information
Additional information regarding sales for the quarter is
provided:
Sales by Month
Sales performance by month for the second quarter occurred as
follows:
Total Comparable
------- ------------
May -7% -7%
June -7% -6%
July -1% -1%
Quarter 2 -5% -5%
Sales by Category
Sales were strongest in the cosmetics and accessories, shoes and
lingerie during the second quarter of 2003, with those areas
performing above the Company average trend for the period. Sales in
the women's and juniors' categories were in line with the total
Company sales performance. Sales were weakest in the home, men's and
children's areas, with sales in children's trending significantly
below the average Company performance for the period.
Sales by Region
During the second quarter of 2003, sales were strongest in the
western region. Sales in the west were stronger than the average
Company sales performance for the period. Sales were in line with the
Company trend in the east and slightly below trend in the central
region.
Exclusive Brands
The Company continues to work diligently to build penetration and
recognition of its exclusive brand merchandise as a means to provide
superior price and value choices to its customers. Penetrations of
exclusive brand merchandise as a percent of sales for 26-week periods
ended August 2, 2003 and August 3, 2002 are as follows:
26 Weeks 26 Weeks
Ended Ended
August 2, August 3,
2003 2002
-------------- --------------
In merchandise categories in which
exclusive brands are presented 22.3% 19.2%
Storewide (all categories) 18.8% 16.2%
Estimates for 2003
The Company is updating the following estimates for certain income
statement items for the fiscal year ended January 31, 2004 based upon
current conditions. Actual results may differ significantly from these
estimates as conditions and factors change - See "Forward Looking
Information".
In Millions
---------------------
2003 2002
Estimated Actual
---------- ----------
Depreciation and amortization $ 295 $ 301
Rental expense 67 68
Interest and debt expense 185 190
Capital expenditures 225 233
Forward-Looking Information
The Estimates for 2003 included in this release include certain
"forward-looking statements" within the definition of federal
securities laws. The Company cautions that forward-looking statements,
as such term is defined in the Private Securities Litigation Reform
Act of 1995, contained in this report or made by management in the
conference call pertaining to this report are based on estimates,
projections, beliefs and assumptions of management at the time of such
statements and are not guarantees of future performance. The Company
disclaims any obligation to update or revise any forward-looking
statements based on the occurrence of future events, the receipt of
new information, or otherwise. Forward-looking statements of the
Company involve risks and uncertainties and are subject to change
based on various important factors. Actual future performance,
outcomes and results may differ materially from those expressed in
forward-looking statements made by the Company and its management as a
result of a number of risks, uncertainties and assumptions.
Representative examples of those factors (without limitation) include
general retail industry conditions and macro-economic conditions;
economic and weather conditions for regions in which the Company's
stores are located and the effect of these factors on the buying
patterns of the Company's customers; the impact of competitive
pressures in the department store industry and other retail channels
including specialty, off-price, discount, internet, and mail-order
retailers; trends in personal bankruptcies and charge-off trends in
the credit card receivables portfolio; changes in consumer spending
patterns and debt levels; adequate and stable availability of
materials and production facilities from which the Company sources its
merchandise; changes in operating expenses, including employee wages,
commission structures and related benefits; possible future
acquisitions of store properties from other department store operators
and the continued availability of financing in amounts and at the
terms necessary to support the Company's future business; potential
disruption from terrorist activity and the effect on ongoing consumer
confidence; potential disruption of international trade and supply
chain efficiencies; world conflict and the possible impact on consumer
spending patterns and other economic and demographic changes of
similar or dissimilar nature.
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in Millions, Except Per Share Data)
Thirteen-Week Period Ended
------------------------------------
August 2, 2003 August 3, 2002
------------------------------------
% of % of
Net Net
Amount Sales Amount Sales
----------- ------ --------- ------
(Unaudited) (Unaudited)
Net sales $1,721.5 - $1,818.0 -
Total revenues 1,780.4 103.4% 1,885.7 103.7%
Cost of sales 1,186.4 68.9 1,197.3 65.9
Advertising, selling,
administrative and general
expenses 507.8 29.5 531.0 29.2
Depreciation and amortization 74.6 4.3 76.9 4.2
Rentals 13.8 0.8 15.0 0.8
Interest and debt expense 59.4 3.5 55.9 3.1
Asset impairment and store
closing charges 17.1 1.0 (0.9) (0.1)
-------- --------
Total costs and expenses 1,859.1 1,875.2
-------- --------
(Loss) income before income
taxes (78.7) (4.6) 10.5 0.6
Income taxes (benefit) (28.3) 3.8
-------- ------ -------- ------
Net (loss) income $(50.4) (2.9)% $6.7 0.4%
======== ====== ======== ======
Basic and diluted earnings
(loss) per share: $(0.60) $0.08
Weighted average shares:
Basic 83.4 84.6
======== ========
Diluted 83.4 85.8
======== ========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in Millions, Except Per Share Data)
Twenty-Six Week Period Ended
-----------------------------------
August 2, 2003 August 3, 2002
-----------------------------------
% of % of
Net Net
Amount Sales Amount Sales
---------- ------ ------ ------
(Unaudited) (Unaudited)
Net sales $3,535.4 - $3,728.9 -
Total revenues 3,671.7 103.9% 3,860.0 103.5%
Cost of sales 2,398.4 67.8 2,423.7 65.0
Advertising, selling, administrative
and general expenses 1,017.5 28.8 1,050.7 28.2
Depreciation and amortization 148.6 4.2 154.3 4.1
Rentals 27.9 0.8 30.2 0.8
Interest and debt expense 102.8 2.9 100.8 2.7
Asset impairment and store
closing charges 17.1 0.5 (0.9) -
-------- --------
Total costs and expenses 3,712.3 3,758.8
-------- --------
(Loss) income before income taxes (40.6) (1.1) 101.2 2.7
Income taxes (benefit) (14.6) 36.4
-------- --------
(Loss) income before accounting
change (26.0) (0.7) 64.8 1.7
Cumulative effect of accounting
change - - (530.3) (14.2)
-------- ----- -------- ------
Net loss $(26.0) (0.7)% $(465.5) (12.5)%
======== ===== ======== ======
Basic earnings (loss) per share:
(Loss) income before
accounting change $(0.31) $0.77
Cumulative effect of
accounting change - (6.29)
-------- --------
Net loss $(0.31) $(5.52)
======== ========
Diluted earnings (loss) per share:
(Loss) income before accounting
change $(0.31) $0.76
Cumulative effect of accounting
change - (6.21)
-------- --------
Net loss $(0.31) $(5.45)
======== ========
Weighted average shares:
Basic 84.0 84.4
======== ========
Diluted 84.0 85.4
======== ========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in Millions, Except Per Share Data)
Fifty-Two Week Period Ended
-----------------------------------
August 2, 2003 August 3, 2002
-----------------------------------
% of % of
Net Net
Amount Sales Amount Sales
---------- ------ ------ ------
(Unaudited) (Unaudited)
Net sales $7,717.5 - $8,135.2 -
Total revenues 8,045.5 104.3% 8,390.6 103.1%
Cost of sales 5,228.8 67.8 5,440.1 66.9
Advertising, selling, administrative
and general expenses 2,130.8 27.6 2,162.6 26.6
Depreciation and amortization 295.7 3.8 311.0 3.8
Rentals 65.8 0.9 71.4 0.9
Interest and debt expense 191.8 2.5 199.0 2.4
Asset impairment and store
closing charges 70.1 0.9 0.9 -
-------- --------
Total costs and expenses 7,983.0 8,185.0
-------- --------
Income before income taxes 62.5 0.8 205.6 2.5
Income taxes 21.3 79.5
-------- --------
Income before accounting change 41.2 0.5 126.1 1.6
Cumulative effect of accounting
change - - (530.3) (6.6)
-------- ----- -------- -----
Net income (loss) $41.2 0.5% $(404.2) (5.0)%
======== ===== ======== =====
Basic earnings (loss) per share:
Income before accounting
change $0.49 $1.50
Cumulative effect of
accounting change - (6.31)
-------- --------
Net income (loss) $0.49 $(4.81)
======== ========
Diluted earnings (loss) per share:
Income before accounting change $0.49 $1.49
Cumulative effect of accounting
change - (6.26)
-------- --------
Net income (loss) $0.49 $(4.77)
======== ========
Weighted average shares:
Basic 84.3 84.0
======== ========
Diluted 84.7 84.8
======== ========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in Millions)
August 2, August 3,
2003 2002
---------- ---------
Assets (Unaudited)
Current Assets:
Cash and cash equivalents $ 150.5 $ 118.5
Trade accounts receivable 1,159.3 1,111.7
Merchandise inventories 1,742.1 1,696.0
Other current assets 40.7 18.8
--------- ---------
Total current assets 3,092.6 2,945.0
Property and equipment, net 3,248.3 3,376.4
Goodwill 39.2 39.2
Other assets 126.2 227.2
--------- ---------
Total Assets $ 6,506.3 $ 6,587.8
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $ 764.9 $ 752.6
Current portion of long-term debt and capital
leases 137.5 91.7
Federal and state income taxes 14.9 20.5
--------- ---------
Total current liabilities 917.3 864.8
Long-term debt and capital leases 2,037.1 2,212.7
Other liabilities 138.1 116.3
Deferred income taxes 669.9 660.4
Guaranteed preferred beneficial interests in the
Company's subordinated debentures 531.6 531.6
Stockholders' equity 2,212.3 2,202.0
--------- ---------
Total Liabilities and Stockholders' Equity $ 6,506.3 $ 6,587.8
========= =========
Other Financial Information
(Amounts in Millions)
(Unaudited)
August 2, August 3,
2003 2002
---------- ---------
Square footage 55.9 56.6
========== =========
Capital expenditures:
13 weeks ended $56.7 $57.4
26 weeks ended 98.2 107.5
52 weeks ended 224.0 238.0
CONTACT: Dillard's Inc., Little Rock
Julie J. Bull, 501-376-5965