Exhibit 99.1
Dillard's, Inc. Cuts Second Quarter Net Loss by More than Half
LITTLE ROCK, Ark.--(BUSINESS WIRE)--Aug. 19, 2005--Dillard's, Inc.
(NYSE:DDS) (the "Company" or "Dillard's") today announced operating
results for the 13 weeks ended July 30, 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 loss for the 13 weeks ended July 30, 2005 was $12.3 million
($0.15 per basic and diluted share) compared to net loss of $26.0
million ($0.31 per basic and diluted share) for the 13 weeks ended
July 31, 2004. Included in net loss for the 13 weeks ended July 30,
2005 were pretax asset impairment and store closing charges of $6.0
million ($3.8 million after-tax or $0.05 per basic and diluted share).
Improvement in operating results for the 13 weeks ended July 30,
2005 compared to the 13 weeks ended July 31, 2004 is primarily
attributable to positive comparable store sales, improved gross margin
performance, decreased advertising, selling, general and
administrative expenses and decreased interest expense.
Revenues
Net sales for the 13 weeks ended July 30, 2005 were $1.692 billion
compared to sales for the 13 weeks ended July 31, 2004 of $1.671
billion. Net sales increased 1% for the 13-week period on both a total
and comparable store basis.
During the 13 weeks ended July 30, 2005, net sales were strongest
in the Western region, exceeding the Company's average sales
performance for the period. Net sales were slightly above trend in the
Eastern region and slightly below trend in the Central region. Net
sales of accessories, lingerie and shoes significantly exceeded the
Company's average sales trend, while performance of children's apparel
and furniture was significantly below trend.
Total revenues for the 13 weeks ended July 30, 2005 does not
include service charge income due to the Company's sale of its credit
card business in November of 2004. The absence of service charge
income during the period is partially offset by income received under
the terms of the long-term marketing and servicing alliance with GE
Consumer Finance.
Gross Margin/Merchandise Initiatives
Gross margin improved 100 basis points as a percentage of sales
for the 13 weeks ended July 30, 2005 compared to the 13 weeks ended
July 31, 2004. The improvement is due to a shift in the Company's
product mix toward higher margin merchandise and a decrease in
markdown activity for the 13 weeks ended July 30, 2005 compared to the
prior year 13-week period. Total inventory increased primarily due to
an increase relating to inventory in transit. Inventory in comparable
stores at July 30, 2005 increased 3% compared to inventory at July 31,
2004.
Dillard's continues to execute key merchandise initiatives as it
works to maintain relationships with existing loyal customers while
attracting new customers with expanded offerings in upscale and
contemporary fashions. These expanded selections include the Company's
improved lines of exclusive brand merchandise. The penetration of
exclusive brand merchandise as a percentage of sales for the 26 weeks
ended July 30, 2005 and July 31, 2004 was 22.8% and 22.1%,
respectively. The Company will continue to use existing technology and
research to edit its assortments by store to meet the specific
preference, taste and size requirements of each local operating area.
Advertising, Selling, Administrative and General Expenses
Advertising, selling, administrative and general ("S G & A)
expenses declined $15.4 million to $484.7 million for the 13 weeks
ended July 30, 2005 from $500.1 million for the 13 weeks ended July
31, 2004. Savings were driven by decreases in bad debt expense,
payroll and communication and advertising costs resulting primarily
from the Company's sale of its credit card business in November of
2004.
Debt/Interest Expense
Interest and debt expense declined $10.3 million during the 13
weeks ended July 30, 2005 compared to the 13 weeks ended July 31, 2004
as a result of lower debt levels. Interest and debt expense was $27.2
million and $37.5 million for the 13 weeks ended July 30, 2005 and
July 31, 2004, respectively.
At July 30, 2005, the Company had $1.5 billion total debt
outstanding (including Guaranteed Preferred Beneficial Interests in
the Company's Subordinated Debentures) compared with $2.4 billion at
July 31, 2004.
During the 13 weeks ended July 31, 2005 the Company announced the
amendment and extension of its senior secured revolving credit
facility. The amendments included an increase in the amount of the
facility to $1.2 billion from the previous amount of $1.0 billion with
no change in the amount of inventory pledged. In addition, the
facility was extended to provide an additional two years of term and
now expires December 12, 2010. At July 30, 2005, letters of credit
totaling $67.3 million were outstanding under the Company's $1.2
billion revolving credit facility.
Share Repurchase Program
During the 13 weeks ended July 30, 2005, the Company completed the
remaining authorized repurchase of Class A Common Stock under its $200
million program, which was approved by the board of directors in May
of 2000, and announced the authorization of a new $200 million share
repurchase program. During the 13 weeks ended July 30, 2005, Dillard's
repurchased $7.4 million of Class A Common Stock under the new
program. Share repurchases during the 13 weeks ended July 30, 2005
under both plans totaled $22.5 million. At July 30, 2005, the Company
had 82.5 million shares of its Class A and Class B Common Stock
outstanding.
Store Openings/Closings
During the 13 weeks ended July 30, 2005, the Company announced the
upcoming closure of three stores consistent with its plan to close
under-performing units where appropriate. These stores are located in
Lexington Mall in Lexington, Kentucky, Hickory Ridge Mall in Memphis,
Tennessee and Richardson Mall in Richardson, Texas. These stores are
expected to close in the fall of 2005.
As previously announced, the Company plans to open these new
locations in the fall of 2005:
Center City Square Feet Month
- ----------------------------------------------------------------------
Northlake Mall North Charlotte, NC 180,000 September
The Shops at La Cantera San Antonio, TX 200,000 September
Firewheel Towne Center Garland, TX 155,000 October
Atlantic Station Atlanta, GA 227,000 October
The Avenue Carriage
Crossing Collierville, TN 200,000 October
At July 30, 2005, the Company operated 329 Dillard's locations
spanning 29 states.
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)
13-Week Period Ended
-------------------------------------------
July 30, 2005 July 31, 2004
-------------------------------------------
% of % of
Amount Net Sales Amount Net Sales
---------- ---------- ---------- ----------
Net sales $ 1,691.9 - $ 1,671.4 -
Total revenues 1,728.5 102.2% 1,730.1 103.5%
Cost of sales 1,144.0 67.6 1,145.8 68.6
Advertising, selling,
administrative and
general expenses 484.7 28.6 500.1 29.9
Depreciation and
amortization 75.9 4.5 74.3 4.4
Rentals 10.1 0.6 13.0 0.8
Interest and debt expense 27.2 1.6 37.5 2.2
Asset impairment and store
closing charges 6.0 0.4 - 0.0
---------- ----------
Total costs and expenses 1,747.9 1,770.7
---------- ----------
Loss before income taxes (19.4) -1.1 (40.6) -2.4
Income taxes (7.1) (14.6)
---------- ---------- ---------- ----------
Net Loss $ (12.3) -0.7% $ (26.0) -1.6%
========== ========== ========== ==========
Basic and and diluted loss
per share $ (0.15) $ (0.31)
========== ==========
Basic and diluted weighted
average shares 82.7 83.7
========== ==========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)
26-Week Period Ended
-------------------------------------------
July 30, 2005 July 31, 2004
-------------------------------------------
% of % of
Amount Net Sales Amount Net Sales
---------- ---------- ---------- ----------
Net sales $ 3,494.9 - $ 3,525.8 -
Total revenues 3,567.2 102.1% 3,641.9 103.3%
Cost of sales 2,314.3 66.2 2,333.3 66.2
Advertising, selling,
administrative and
general expenses 982.0 28.1 1,009.9 28.6
Depreciation and
amortization 150.5 4.3 148.5 4.2
Rentals 20.6 0.6 26.7 0.8
Interest and debt expense 53.4 1.5 75.5 2.2
Asset impairment and store
closing charges 6.4 0.2 4.7 0.1
---------- ----------
Total costs and expenses 3,527.2 3,598.6
---------- ----------
Income before income taxes 40.0 1.2 43.3 1.2
Income taxes 14.3 15.6
---------- ---------- ---------- ----------
Net Income $ 25.7 0.7% $ 27.7 0.8%
========== ========== ========== ==========
Basic and diluted earnings
per share $ 0.31 $ 0.33
========== ==========
Basic weighted average
shares 83.0 83.6
========== ==========
Diluted weighted average
shares 83.2 84.1
========== ==========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Millions)
July 30, July 31,
2005 2004
---------- ----------
Assets
Current Assets:
Cash and cash equivalents $ 177.4 $ 82.8
Trade accounts receivable 8.9 1,036.6
Merchandise inventories 1,926.4 1,723.3
Other current assets 43.7 32.3
---------- ----------
Total current assets 2,156.4 2875.0
Property and equipment, net 3,214.5 3,146.8
Goodwill 35.5 36.7
Other assets 172.4 171.5
---------- ----------
Total Assets $ 5,578.8 $ 6,230.0
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $ 894.8 $ 731.4
Other short-term borrowings - 122.0
Current portion of long-term debt and capital
leases 154.1 257.2
Federal and state income taxes 91.8 113.6
---------- ----------
Total current liabilities 1,140.7 1,224.2
Long-term debt and capital leases 1,177.1 1,772.2
Other liabilities 252.8 150.4
Deferred income taxes 482.9 616.3
Guaranteed preferred beneficial interests in the
Company's subordinated debentures 200.0 200.0
Stockholders' equity 2,325.3 2,266.9
---------- ----------
Total Liabilities and Stockholders' Equity $ 5,578.8 $ 6,230.0
========== ==========
Other Financial Information
(In Millions)
July 30, July 31,
2005 2004
---------- ----------
Square footage 56.1 56.1
========== ==========
Capital expenditures:
13 weeks ended $ 96.4 $ 59.2
26 weeks ended 197.9 102.0
Estimates for 2005
The Company is updating the following estimates for certain income
statement items for the fiscal year ending 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 48 55
Interest and debt expense 105 139
Capital expenditures 335 285
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,
upcoming store openings and closures 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