Exhibit 99
Dillard's, Inc. Reports First Quarter Results
LITTLE ROCK, Ark.--(BUSINESS WIRE)--May 13, 2004--Dillard's, Inc.
(NYSE:DDS) (the "Company" or "Dillard's") today announced operating
results for its first quarter ended May 1, 2004. This release contains
certain forward-looking statements. Please refer to the Company's
cautionary statement regarding forward-looking information included
below under "Forward-Looking Information."
Net income for the 13 weeks ended May 1, 2004 was $53.8 million
($0.64 per fully diluted share) compared to net income of $24.3
million ($0.29 per fully diluted share) for the 13 weeks ended May 3,
2003.
Included in net income for the 13 weeks ended May 1, 2004 were
pretax asset impairment and store closing charges of $4.7 million
($3.0 million after tax or $0.04 per fully diluted share).
Included in net income for the 13 weeks ended May 3, 2003 is a
pretax gain of $15.6 million ($10.0 million after tax or $0.12 per
fully diluted share) pertaining to the Company's sale of its interest
in Sunrise Mall and its associated center in Brownsville, Texas and a
pretax credit of $12.3 million ($7.9 million after tax or $0.09 per
fully diluted share) recorded due to the resolution of certain
liabilities originally recorded in conjunction with the purchase of
Mercantile Stores Company, Inc.
Highlights of the quarter ended May 1, 2004 include the following:
-- A comparable store sales increase of 2%.
-- Gross margin improvement of 280 basis points of sales compared
to the thirteen weeks ended May 3, 2003.
-- Control of advertising, selling, administrative and general
expenses. After consideration of the aforementioned $12.3
million credit in the first quarter of 2003, these expenses
decreased $12.2 million.
-- Debt reduction of $385.4 million during the first quarter of
2004, including the redemption of $331.6 million Preferred
Securities on February 2, 2004.
Sales
Sales for the 13 weeks ended May 1, 2004 were $1.854 billion
compared to sales for the 13 weeks ended May 3, 2003 of $1.814
billion, an increase of 2%. Sales in comparable stores for the 13-week
period increased 2%.
Gross Margin/Merchandise Initiatives
Gross margin performance for the 13 weeks ended May 1, 2004
increased 280 basis points as a percentage of sales. Inventory
position at May 1, 2004 in comparable stores declined 3% compared to
inventory position at May 3, 2003.
Dillard's management reiterates their strong belief that
merchandise differentiation by the Company is crucial to its future
success in the marketplace. During the first quarter of 2004,
Dillard's continued its long-term strategy of refining its merchandise
mix to appeal to customers seeking merchandise in the "better" (more
upscale) categories. Additionally, the Company continued its
commitment to present merchandise with a younger focus and more
fashion-forward attitude. The Company is working to accomplish
improvement in its assortments by offering selections from promising
new upscale national brands. Additionally, the Company is enhancing
its exclusive brand program to include more selections in the better
categories. Dillard's will continue to de-emphasize or eliminate
under-performing brands from both national brand and exclusive brand
sources.
In an effort to further tune its merchandise mix, the Company will
continue to edit merchandise assortments on a location by location
basis, tailoring the merchandise mix to meet the differing demands of
each local market demographic.
Advertising, Selling, Administrative and General Expenses
Advertising, selling, administrative and general ("SG&A")
increased $0.1 million to $509.8 million for the 13 weeks ended May 1,
2004 from $509.7 million for the comparable period ended May 3, 2003.
Included in SG&A expenses for the 13 weeks ended May 3, 2003 is a
pretax credit of $12.3 million ($7.9 million after tax or $0.09 per
fully diluted share) recorded due to the resolution of certain
liabilities originally recorded in conjunction with the purchase of
Mercantile Stores Company, Inc. After consideration of this credit,
SG&A expenses for the 13 weeks ended May 1, 2004 declined $12.2
million.
During the 13 weeks ended May 1, 2004 the Company experienced
notable savings in bad debt expense. Bad debt expense declined $5.0
million as a result of the Company's improved credit card portfolio
attributable in part to improvement in credit granting operations.
Savings were noted in most other expense categories, as well, and the
Company capitalized on the leverage of positive comparable store
sales. First quarter SG&A expenses as a percentage of sales declined
130 basis points compared to the thirteen weeks ended May 3, 2003
after consideration of the aforementioned pretax credit in that
period.
Debt/Interest Expense
Interest and debt expense declined to $38.0 million during
thirteen weeks ended May 1, 2004 from $43.4 million for the thirteen
weeks ended May 3, 2003, as a result of the Company's continued debt
reduction. During the 13 weeks ended May 1, 2004, the Company retired
$2.6 million of its 6.3% notes due February of 2008.
The Company redeemed $331.6 million Preferred Securities on
February 2, 2004 as planned, with $100 million borrowed under its
amended $1 billion revolving credit facility and the balance borrowed
under the Company's accounts receivable securitization conduit
facilities. Short-term borrowings under both the credit facility and
accounts receivable securitization conduit facilities were $376.5
million at February 2, 2004. Subsequently, the Company has repayed
these borrowings utilizing cash from operations during the first
quarter of 2004.
At May 1, 2004, there were no short-term borrowings under either
the $1 billion revolving credit facility or the $400 million accounts
receivable conduit facilities. Dillard's expects to fund its cyclical
working capital needs through a combination of financing from its
accounts receivable securitization conduit facilities and its
revolving credit facility.
At May 1, 2004, letters of credit totaling $69.9 million were
outstanding under the Company's $1 billion revolving credit facility.
Store Openings/Closings - First Quarter
- ---------------------------------------
Store openings during the 13 weeks ended May 1, 2004 were:
Open
Dillard's at: City Month Sq. Feet
- ----------------------------------------------------------------------
The Shoppes at East Chase(a) Montgomery, Alabama March 155,000
Coastal Grand Myrtle Beach,
South Carolina March 155,000
Colonial University Village(a) Auburn, Alabama April 126,000
Greenbrier Mall(a) Chesapeake, Virginia April 160,000
(a) Replacement store
At May 1, 2004, the Company operated 329 stores spanning 29 states
- - all operating with one name - Dillard's.
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)
Thirteen-Week Period Ended
--------------------------------------
May 1, 2004 May 3, 2003
--------------------------------------
% of % of
Amount Net Amount Net
Sales Sales
---------- -------- --------- --------
(Unaudited) (Unaudited)
Net sales $1,854.4 - $1,813.9 -
Total revenues 1,911.9 103.1% 1,891.3 104.3%
Cost of sales 1,187.5 64.0 1,212.0 66.8
Advertising, selling,
administrative and general
expenses 509.8 27.5 509.7 28.1
Depreciation and amortization 74.2 4.0 74.0 4.1
Rentals 13.7 0.7 14.2 0.8
Interest and debt expense 38.0 2.1 43.4 2.4
Asset impairment and store
closing charges 4.7 0.3 - -
---------- ---------
Total costs and expenses 1,827.9 1,853.3
---------- ---------
Income before income taxes 84.0 4.5 38.0 2.1
Income taxes 30.2 13.7
---------- -------- --------- --------
Net Income $ 53.8 2.9% $ 24.3 1.3%
========== ======== ========= ========
Earnings per share:
Basic $ 0.64 $ 0.29
========== =========
Diluted $ 0.64 $ 0.29
========== =========
Weighted average shares:
Basic 83.5 84.5
========== =========
Diluted 83.9 84.7
========== =========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Millions)
May 1, May 3,
2004 2003
---------- ----------
Assets (Unaudited)
Current Assets:
Cash and cash equivalents $ 67.1 $ 248.2
Accounts receivable (net of allowance
for doubtful accounts of $40.9 and $50.3) 1,092.7 1,211.1
Merchandise inventories 1,969.5 2,005.5
Other current assets 26.3 37.4
---------- ----------
Total current assets 3,155.6 3,502.2
Property and equipment, net 3,161.8 3,287.0
Goodwill 36.7 39.2
Other assets 156.1 159.3
---------- ----------
Total Assets $6,510.2 $6,987.7
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $1,084.0 $1,040.7
Current portion of long-term debt and capital
leases 167.9 138.9
Federal and state income taxes 141.9 40.0
---------- ----------
Total current liabilities 1,393.8 1,219.6
Long-term debt and capital leases 1,869.2 2,164.2
Other liabilities 147.5 128.8
Deferred income taxes 611.9 673.6
Guaranteed preferred beneficial interests in the
Company's subordinated debentures 200.0 531.6
Stockholders' equity 2,287.8 2,269.9
---------- ----------
Total Liabilities and Stockholders' Equity $6,510.2 $6,987.7
========== ==========
Other Financial Information
(In Millions)
(Unaudited)
May 1, May 3,
2004 2003
---------- ----------
Square footage 56.2 56.2
========== ==========
Capital expenditures:
13 weeks ended $ 42.8 $ 41.5
Supplemental Information
- ------------------------
Sales by Month
- --------------
Sales performance by month for the first quarter occurred as follows:
Total Comparable
----------------------
February +2% +2%
March +4% +3%
April +1% +1%
Quarter 1 +2% +2%
Sales by Category
- -----------------
During the 13 weeks ended May 1, 2004, sales were strong in
accessories, shoes and lingerie where trends exceeded the Company's
average sales performance for the period. Sales in the men's areas
were slightly above trend. Sales in cosmetics and women's and juniors'
were in line with trend. Sales in the home and children's categories
were weakest during the period, performing below trend.
Sales by Region
- ---------------
During the 13 weeks ended May 1, 2004, sales in the Eastern and
Western regions were stronger than the Company average trend. Sales in
the Central region of the Company were slightly below trend.
Estimates for 2004
- ------------------
The Company is updating the following estimates for certain income
statement items for the fiscal year ended January 29, 2005 based upon
current conditions. Actual results may differ significantly from these
estimates as conditions and factors change - See "Forward-Looking
Information."
In Millions
-----------
2004 2003
Estimated Actual
--------- ------
Depreciation and amortization $295 $291
Rental expense 62 64
Interest and debt expense 155 181
Capital expenditures 260 227
Forward-Looking Information
The foregoing contains certain "forward-looking statements" within
the definition of federal securities laws. Statements made in this
release regarding the Company's merchandise strategies, funding of
cyclical working capital needs, estimates of depreciation and
amortization, rental expense, interest and debt expense and capital
expenditures for fiscal year 2004 are forward-looking statements. 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 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; fluctuations in LIBOR and other base
borrowing rates; 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.
CONTACT: Dillard's, Inc., Little Rock
Julie J. Bull, 501-376-5965