Exhibit 99.1
Dillard's, Inc. Reports Fourth Quarter and Fiscal Year Results
LITTLE ROCK, Ark.--(BUSINESS WIRE)--March 10, 2005--Dillard's,
Inc. (NYSE:DDS) (the "Company" or "Dillard's") today announced
operating results for its fourth quarter and fiscal year ended January
29, 2005. 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 January 29, 2005 was $108.6
million ($1.30 per diluted share) compared to net income of $51.2
million ($0.61 per diluted share) for the 13 weeks ended January 31,
2004. Included in net income for the 13 weeks ended January 29, 2005
is a pretax gain of $83.9 million ($53.7 million after-tax or $0.64
per diluted share) related to the Company's sale of the assets of its
credit card subsidiary to GE Consumer Finance. Also, included in net
income for the 13 weeks ended January 29, 2005 is a pretax impairment
charge of $14.7 million ($8.6 million after-tax or $0.10 per diluted
share). Included in net income for the 13 weeks ended January 31, 2004
were pretax charges of $16.5 million ($11.3 million after-tax or $0.13
per diluted share) comprised of $25.0 million pretax asset impairment
charges partially offset by $8.5 million of pretax gains on the sale
of three store properties.
Net income for the 52 weeks ended January 29, 2005 was $117.6
million ($1.41 per diluted share) compared to $9.3 million ($0.11 per
diluted share) for the 52 weeks ended January 31, 2004. Included in
net income for the 52 weeks ended January 29, 2005 is a pretax gain of
$83.9 million ($53.7 million after-tax or $0.64 per diluted share)
related to the Company's sale of the assets of its credit card
subsidiary to GE Consumer Finance and pretax impairment charges of
$19.4 million ($11.6 million after-tax or $0.14 per diluted share).
Included in net income for the 52 weeks ended January 31, 2004 were
after-tax net charges of $12.9 million ($0.15 per diluted share)
resulting from after-tax charges totaling $38.9 million ($0.46 per
diluted share) partially offset by after-tax gains totaling $26.0
million ($0.31 per diluted share). The charges for the year consisted
of asset impairment and store closing charges and call premiums
related to early debt reduction. The gains for the year consisted of
gains on sale of certain properties, a credit recorded due to
resolution of certain liabilities and a credit received from the
Internal Revenue Service.
-- Highlights of the 13 weeks ended January 29, 2005 include an
improvement in gross margin performance of 140 basis points of
sales and a decline in interest and debt expense of $12.6
million.
-- Accomplishments during the 52 weeks ended January 29, 2005
include reduction of debt to $1.64 billion from $2.62 billion
(including Guaranteed Preferred Beneficial Interests in the
Company's Subordinated Debentures), with cash and cash
equivalents at January 29, 2005 of $498.2 million compared to
$160.9 million at January 31, 2004.
Revenues
Sales for the 13 weeks ended January 29, 2005 were $2.304 billion
compared to sales for the 13 weeks ended January 31, 2004 of $2.299
billion. Sales were unchanged (on a percentage basis) for the 13-week
period in both total and comparable stores.
Sales for the 52 weeks ended January 29, 2005 were $7.529 billion
compared to sales for the 52 weeks ended January 31, 2004 of $7.599
billion. Sales declined 1% for the 52-week period on both a total and
comparable store basis.
On November 1, 2004, Dillard's completed the sale of substantially
all of the assets of Dillard National Bank, the Company's private
label credit card business, to GE Consumer Finance. GE Consumer
Finance purchased substantially all of the assets of Dillard National
Bank for approximately $1.1 billion, which included the assumption of
$400 million of securitization liabilities, the purchase of owned
accounts receivable and an undisclosed premium. As a result of the
transaction, the Company recorded a pretax gain of $83.9 million
($53.7 million after-tax or $0.64 per diluted share) that is included
in total revenues.
As part of the transaction, Dillard's and GE Consumer Finance
entered into a long-term marketing and servicing alliance with an
initial term of 10 years. GE Consumer Finance will own the accounts
and balances generated during the term of the alliance and will
provide all key customer service functions supported by ongoing credit
marketing efforts.
Gross Margin/Merchandise Initiatives
Gross margin performance for the 13 weeks ended January 29, 2005
improved 140 basis points as a percentage of sales as a result of the
Company's successful efforts to improve its merchandise mix. Gross
margin improvement was driven by higher levels of markups combined
with lower levels of markdowns.
Dillard's continues to focus on improvement in its merchandise mix
as it reiterates management's strong belief that merchandise
differentiation with special emphasis on becoming a more upscale
retailer is crucial to its future success in the marketplace. The
Company seeks to build and maintain customer loyalty by presenting
more exciting fashion choices reflective of a younger-focused and more
upscale attitude. The Company will continue to provide such
merchandise from both national and exclusive brand sources.
Under-performing lines of product from both national and exclusive
sources will continue to be eliminated and replaced with more
promising brands in the Company's ongoing efforts to improve its
merchandise mix. Furthermore, utilizing the Company's existing
information technology capabilities, Dillard's will continue to tailor
these assortments to the local demographics, reflecting not only each
specific market's culture and fashion attitude but also each store's
specific sizing and style needs.
Penetration of exclusive brand merchandise as a percentage of
sales for the 52 weeks ended January 29, 2005 and January 31, 2004 was
23.1% and 20.9%, respectively.
Advertising, Selling, Administrative and General Expenses
Advertising, selling, administrative and general ("SG&A") expenses
were $567.9 million for the 13 weeks ended January 29, 2005 compared
to $563.3 million for the prior year fourth quarter. Savings in bad
debts (as a result of the sale of the Company's credit card
subsidiary), services purchased and property taxes were offset by
increases in incentive payroll, insurance and advertising. As a result
of the Company's improved performance, incentive compensation to store
managers, merchants and management significantly increased during the
13 weeks ended January 29, 2005. Also during the fourth quarter,
Dillard's increased its provision for workers' compensation
self-insurance to reflect an expected increase in future medical
costs. Dillard's increased its advertising expenditures during the
quarter as it continued to evaluate new media outlets better suited to
meet its customers' lifestyles than those outlets traditionally
employed.
Debt/Interest Expense
Interest and debt expense declined to $28.4 million during the 13
weeks ended January 29, 2005 from $41.0 million for the 13 weeks ended
January 31, 2004 primarily as a result of lower debt levels.
On November 1, 2004, the Company called the remaining $26.1
million of its publicly outstanding 8.2% notes of Mercantile Stores
Company, Inc. On November 3, 2004, the Company purchased $1.5 million
of its 7.0% notes due December 1, 2028.
At January 29, 2005, the Company had $1.64 billion total debt
outstanding compared with $2.62 billion at January 31, 2004 (including
Guaranteed Preferred Beneficial Interests in the Company's
Subordinated Debentures). At January 29, 2005, letters of credit
totaling $69.7 million were outstanding under the Company's $1 billion
revolving credit facility.
Approximately $16 million in share repurchase authorization
remained at January 29, 2005 under the Company's $200 million share
repurchase program. At January 29, 2005, the Company had 83.2 million
shares of its Class A and Class B Common Stock outstanding.
Store Openings/Closings
During the 13 weeks ended January 29, 2005, the Company completed
the closure of its 44,000 square foot store in Yuma, Arizona. This
closure followed the October opening of a new 98,000 square foot store
at Yuma Palms. Dillard's closed its 178,000 square foot location in
Metrocenter Mall in Jackson, Mississippi in November.
At January 29, 2005, the Company operated 329 Dillard's locations
spanning 29 states.
Dillard's has announced plans to close its Harding Mall location
in Nashville, Tennessee and its Westgate Shopping Center location in
Cleveland in the spring of 2005. The Company will continue to focus on
closing under-performing locations as appropriate.
The Company plans to open these new Dillard's locations during
2005:
Square
Center City Feet Month
- ------------------------------ ------------------- --------- ---------
St. Johns Town Center Jacksonville, FL 240,000 March
Imperial Valley Mall El Centro, CA 140,000 March
Crestview Hills Town Center(a) Crestview Hills, KY 200,000 March
Perimeter Mall Atlanta, GA 260,000 March
Northlake Mall North Charlotte, NC 180,000 September
The Shops at La Cantera San Antonio, TX 200,000 September
Firewheel Town Center Garland, TX 155,000 October
Atlantic Station Atlanta, GA 227,000 October
The Avenue Carriage Crossing Collierville, TN 200,000 October
(a) Replacement store.
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)
13-Week Period Ended
----------------------------------------
January 29, 2005 January 31, 2004
----------------------------------------
% of % of
Amount Net Sales Amount Net Sales
--------- --------- --------- ---------
Net sales $2,303.9 - $2,299.1 -
Total revenues 2,419.2 105.0 % 2,371.6 103.2 %
Cost of sales 1,543.5 67.0 1,571.7 68.4
Advertising, selling,
administrative and general
expenses 567.9 24.6 563.3 24.5
Depreciation and amortization 78.9 3.4 67.9 3.0
Rentals 15.4 0.7 21.4 0.9
Interest and debt expense 28.4 1.2 41.0 1.8
Asset impairment and store
closing charges 14.7 0.7 24.9 1.1
--------- ---------
Total costs and expenses 2,248.8 2,290.2
--------- ---------
Income before income taxes 170.4 7.4 81.4 3.5
Income taxes 61.8 30.2
--------- --------- --------- --------
Net Income $108.6 4.7 % $51.2 2.2 %
========= ========= ========= ========
Basic income per share $1.31 $0.61
========= =========
Diluted income per share $1.30 $0.61
========= =========
Basic weighted average shares 82.7 83.4
========= =========
Diluted weighted average
shares 83.4 83.7
========= =========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)
52-Week Period Ended
----------------------------------------
January 29, 2005 January 31, 2004
----------------------------------------
% of % of
Amount Net Sales Amount Net Sales
--------- --------- --------- ---------
Net sales $7,528.6 - $7,598.9 -
Total revenues 7,816.3 103.8 % 7,863.7 103.4 %
Cost of sales 5,017.8 66.6 5,170.2 68.0
Advertising, selling,
administrative and general
expenses 2,098.8 27.9 2,097.9 27.6
Depreciation and amortization 301.9 4.0 290.7 3.8
Rentals 54.8 0.7 64.1 0.8
Interest and debt expense 139.1 1.8 181.1 2.4
Asset impairment and store
closing charges 19.4 0.3 43.7 0.6
--------- ---------
Total costs and expenses 7,631.8 7,847.7
--------- ---------
Income before income taxes 184.5 2.5 16.0 0.2
Income taxes 66.9 6.7
--------- --------- --------- --------
Net Income $117.6 1.6 % $9.3 0.1 %
========= ========= ========= ========
Basic income per share $1.41 $0.11
========= =========
Diluted income per share $1.41 $0.11
========= =========
Basic weighted average shares 83.2 83.6
========= =========
Diluted weighted average
shares 83.7 83.9
========= =========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Millions)
January 29, January 31,
2005 2004
----------- -----------
Assets
Current Assets:
Cash and cash equivalents $498.2 $160.9
Trade accounts receivable 9.7 1,191.5
Merchandise inventories 1,733.0 1,632.4
Other current assets 52.6 38.9
----------- -----------
Total current assets 2,293.5 3,023.7
Property and equipment, net 3,180.8 3,197.5
Goodwill 35.5 36.7
Other assets 181.8 153.2
----------- -----------
Total Assets $5,691.6 $6,411.1
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $820.2 $679.9
Other short-term borrowings - 50.0
Guaranteed Preferred Beneficial Interests in
the Company's Subordinated Debentures - 331.6
Current portion of long-term debt and
capital leases 96.6 168.3
Federal and state income taxes 128.4 106.5
----------- -----------
Total current liabilities 1,045.2 1,336.3
Long-term debt and capital leases 1,343.0 1,872.6
Other liabilities 269.1 147.9
Deferred income taxes 509.6 617.2
Guaranteed preferred beneficial interests in
the Company's subordinated debentures 200.0 200.0
Stockholders' equity 2,324.7 2,237.1
------------ -----------
Total Liabilities and Stockholders' Equity $5,691.6 $6,411.1
============ ===========
Other Financial Information
(In Millions)
January 29, January 31,
2005 2004
------------ -----------
Square footage 56.3 56.0
============ ===========
Capital expenditures:
13 weeks ended $114.8 $55.6
52 weeks ended 303.5 227.4
Supplemental Information
Sales by Category
During the 13 weeks ended January 29, 2005, sales of lingerie and
accessories significantly exceeded the Company's average sales trend
for the period. Sales of juniors' apparel, decorative home merchandise
and furniture were significantly below trend.
Sales by Region
During the 13 weeks ended January 29, 2005, sales in the Company's
Eastern region were above trend, exceeding the Company's average sales
performance for the period. Sales in the Western region were slightly
above trend, and sales in the Central region were below trend.
Estimates for 2005
The Company is updating the following estimates for certain income
statement items for the fiscal year ended January 28, 2006 based upon
current conditions. Actual results may differ significantly from these
estimates as conditions and factors change - See "Forward-Looking
Information".
In Millions
---------------------
2005 2004
Estimated Actual
---------- ----------
Depreciation and amortization $ 310 $ 302
Rental expense 54 55
Interest and debt expense 103 139
Capital expenditures 335 303
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 execution of merchandise initiatives,
the store opening schedule and estimates for 2005 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;
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; events causing disruption or delays in the
store construction schedule, 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