Exhibit 99.1
Dillard's, Inc. Reports Fourth Quarter and Fiscal Year Results
LITTLE ROCK, Ark.--(BUSINESS WIRE)--March 3, 2006--Dillard's, Inc.
(NYSE:DDS) (the "Company" or "Dillard's") today announced operating
results for the 13 and 52 weeks ended January 28, 2006. 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".
Highlights
Dillard's remains committed to providing a differentiated shopping
experience to position its merchandise mix toward a more upscale and
contemporary tone to continue to attract customers who are seeking
exciting statements in fashion.
-- Same store sales increased 2% for the 13 weeks ended January
28, 2006 compared to the 13 weeks ended January 29, 2005.
-- Continued disciplined expense management resulted in a $15.4
million (100 basis points of sales) reduction in advertising,
selling, administrative and general expenses for the 13 weeks
ended January 28, 2006.
13 Weeks
Net income for the 13 weeks ended January 28, 2006 was $98.5
million ($1.24 per diluted share) compared to net income of $108.6
million ($1.30 per diluted share) for the 13 weeks ended January 29,
2005. Included in net income for the 13 weeks ended January 28, 2006
are pretax impairment charges of $55.3 million ($35.6 million
after-tax or $0.45 per diluted share). Also included in net income for
the 13 weeks ended January 28, 2006 is a $28.2 million hurricane
recovery gain ($18.0 million after-tax or $0.23 per diluted share) and
a net $35.1 million ($0.44 per diluted share) tax benefit recorded due
to the sale of a subsidiary by the Company.
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).
52 Weeks
Net income for the 52 weeks ended January 28, 2006 was $121.5
million ($1.49 per diluted share) compared to net income of $117.6
million ($1.41 per diluted share) for the 52 weeks ended January 29,
2005. Included in net income for the 52 weeks ended January 28, 2006
are pretax impairment charges of $61.7 million ($39.6 million
after-tax or $0.49 per diluted share). Also included in net income for
the 52 weeks ended January 28, 2006 is a $29.7 million hurricane
recovery gain ($18.9 million after-tax or $0.23 per diluted share) and
a net $35.1 million ($0.43 per diluted share) tax benefit recorded due
to the sale of a subsidiary by the Company.
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).
Revenues
Net sales for the 13 weeks ended January 28, 2006 were $2.338
billion compared to sales for the 13 weeks ended January 29, 2005 of
$2.304 billion. Net sales increased 1% in total stores for the 13-week
period. Net sales in comparable stores increased 2% for the 13-week
period.
Net sales for the 52 weeks ended January 28, 2006 were $7.560
billion compared to sales for the 52 weeks ended January 29, 2005 of
$7.529 billion. Net sales were unchanged on a percentage basis for the
52-week period on both a total and comparable store basis.
During the 13 weeks ended January 28, 2006, net sales were
strongest in the Eastern and Western regions, where performance
exceeded the Company's total trend for the period. Net sales were
below trend in the Central region.
Net sales of shoes significantly exceeded the Company's average
sales trend for the 13 weeks ended January 28, 2006 while performance
in children's apparel and furniture was significantly below trend.
On November 1, 2004, Dillard's completed the sale of substantially
all of the assets of its private label credit card business. Included
in total revenues for the 13 weeks ended January 29, 2005 is a pretax
gain of $83.9 million related to the transaction. Accordingly, total
revenues for the 13 weeks ended January 28, 2006 and January 29, 2005
does not include service charge income from the Company's operation of
the credit card business, but does include income received under the
terms of the long-term marketing and servicing alliance with GE
Consumer Finance.
Total revenues for the 52 weeks ended January 29, 2005 includes 39
weeks of service charge income from the Company's operation of the
credit card business, 13 weeks of income received under the terms of
the long-term marketing and servicing alliance with GE Consumer
Finance and the pretax gain on the sale of the credit card business.
Gross Margin/Merchandise Initiatives
Gross margin improved 60 basis points as a percentage of sales for
the 13 weeks ended January 28, 2006 compared to the 13 weeks ended
January 29, 2005. The improvement is due to a $28.2 million hurricane
recovery gain related to insurance settlements received covering
inventory losses incurred in the 2005 hurricane season. Excluding the
effect of the insurance gain, gross margin declined 60 basis points of
sales during the fourth quarter as a result of lower levels of markups
slightly offset by lower levels of markdowns compared to the 13 weeks
ended January 29, 2005.
While Dillard's management is somewhat pleased with the sales
improvement accomplished during the fall season of fiscal 2005, it
strongly believes that opportunities exist for improvement in both
sales and gross margin performance in the continued focused execution
of its merchandise initiatives:
-- Dillard's will continue to make notable changes to its
merchandise mix, positioning its stores toward a more upscale
and contemporary tone to attract new customers who are seeking
exciting statements in fashion.
-- The Company's expanded selections of more upscale and
contemporary choices will include, but will not be limited to,
Dillard's improved lines of exclusive brand merchandise such
as Antonio Melani, Gianni Bini, J Vincent and Daniel Cremieux.
-- Dillard's will seek to develop and maintain relationships with
both new and established up-market national vendor sources
that are successfully connecting with the targeted new
customer.
-- Dillard's will work to maintain valued relationships with its
existing loyal customer base by providing updated fashion
choices, dependable quality, reliable service and measurable
value.
-- 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.
Penetration of exclusive brand merchandise as a percentage of
sales for the 52 weeks ended January 28, 2006 and January 29, 2005 was
24.0% and 23.1%, respectively.
Total inventory at January 28, 2006 compared to January 29, 2005
increased 4%, while inventory in comparable stores increased 3%.
Advertising, Selling, Administrative and General Expenses
Advertising, selling, administrative and general ("S G & A")
expenses declined $15.4 million (100 basis points of sales) for the 13
weeks ended January 28, 2006. S G & A expenses were $552.5 million and
$567.9 million for the 13 weeks ended January 28, 2006 and January 29,
2005, respectively. Savings in payroll, advertising and insurance
expense were partially offset by increases in utilities, supplies and
services purchased.
Debt/Interest Expense
Interest and debt expense declined $2.0 million during the 13
weeks ended January 28, 2006 compared to the 13 weeks ended January
29, 2005 as a result of lower debt levels. Interest and debt expense
was $26.4 million and $28.4 million for the 13 weeks ended January 28,
2006 and January 29, 2005, respectively.
At January 28, 2006, letters of credit totaling $67.2 million were
outstanding under the Company's $1.2 billion revolving credit
facility.
Asset Impairment and Store Closing Charges
Asset impairment and store closing charges were $55.3 million for
the 13 weeks ended January 28, 2006. Included in asset impairment and
store closing charges is a pre-tax loss on the disposition of all of
the outstanding capital stock of an indirect wholly-owned subsidiary
in the amount of $40.1 million.
The remaining $15.2 million of asset impairment and store closing
charges for the 13 weeks ended January 28, 2006 consists of charges
related to 11 stores.
Hurricane Update
Four stores in the Gulf Coast area which were damaged by Hurricane
Katrina and Hurricane Rita remained closed at January 28, 2006. These
stores will remain closed during the first half of fiscal year 2006.
Center City Square Feet
- ----------------------------------------------------------------------
Edgewater Mall Biloxi, MS 215,000
Oakwood Shopping Center New Orleans, LA 178,000
Plaza Lake Forest New Orleans, LA 148,000
Central Mall Port Arthur, TX 96,000
Store Openings/Closings
Consistent with its plan to close under-performing locations where
appropriate, the Company closed its Mission Mall store in Kansas City,
KS, its Hickory Ridge Mall location in Memphis, Tennessee and its
Richardson Mall store in Richardson, Texas during the fourth quarter
of 2005.
Dillard's plans to open these new locations in fiscal year 2006:
Center City Square Feet Month
- ----------------------------------------------------------------------
Southaven Towne Center Southaven, MS 155,000 March
The Summit Sierra Reno, NV 200,000 March
The Mall at Turtle Creek(1) Jonesboro, AR 155,000 March
Town Center at Aurora(1) Aurora, CO 180,000 August
Red Cliffs Mall(1) St. George, UT 90,000 September
Pinnacle Hills Promenade Rogers, AR 155,000 October
Coconut Point Bonita Springs, FL 180,000 October
Southwest Plaza(1) Littleton, CO 180,000 November
(1) Replacement store
At January 28, 2006, the Company operated 326 Dillard's locations
spanning 29 states, net of four locations closed at the time due to
hurricanes.
On January 29, 2006, Dillard's opened its new store at the Mall of
Louisiana in Baton Rouge, Louisiana. The 160,000 square foot store was
purchased during the fourth quarter of 2005 and provides the Company a
new dual-anchor format at that center.
Dillard's has announced the closure of the following locations in
the spring of 2006:
Center City Square Feet
- ---------------------------------------------------------------------
Southglenn Mall Centennial (Denver), CO 165,000
Heritage Park Mall Midwest City (OK City), OK 100,000
Town Square Mall Pasadena (Houston), TX 110,000
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)
13-Week Period Ended
----------------------------------
January 28, 2006 January 29, 2005
----------------------------------
% of % of
Amount Net Amount Net
Sales Sales
---------------- -----------------
Net sales $2,338.2 - $2,303.9 -
Total revenues 2,379.6 101.8 % 2,419.2 105.0 %
Cost of sales 1,552.6 66.4 1,543.5 67.0
Advertising, selling, administrative
and general expenses 552.5 23.6 567.9 24.6
Depreciation and amortization 75.7 3.2 78.9 3.4
Rentals 17.1 0.7 15.4 0.7
Interest and debt expense 26.4 1.2 28.4 1.3
Asset impairment and store closing
charges 55.3 2.4 14.7 0.6
-------- --------
Total costs and expenses 2,279.6 2,248.8
-------- --------
Income before income taxes 100.0 4.3 170.4 7.4
Income taxes 1.5 61.8
-------- ------ -------- ------
Net Income $ 98.5 4.2 %$ 108.6 4.7 %
======== ====== ======== ======
Basic earnings per share $ 1.24 $ 1.31
======== ========
Diluted earnings per share $ 1.24 $ 1.30
======== ========
Basic weighted average shares 79.1 82.7
======== ========
Diluted weighted average shares 79.2 83.4
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)
52-week Period Ended
---------------------------------------
January 28, 2006 January 29, 2005
---------------------------------------
% of % of
Amount Net Amount Net
Sales Sales
---------- ------ ------------ ------
Net sales $ 7,560.2 - $ 7,528.6 -
Total revenues 7,708.0 102.0 % 7,816.3 103.8 %
Cost of sales 5,014.0 66.3 5,017.8 66.6
Advertising, selling,
administrative and general
expenses 2,041.5 27.0 2,098.8 27.9
Depreciation and amortization 301.9 4.0 301.9 4.0
Rentals 47.5 0.7 54.8 0.7
Interest and debt expense 105.6 1.4 139.1 1.8
Asset impairment and store
closing charges 61.7 0.8 19.4 0.3
-------- --------
Total costs and expenses 7,572.2 7,631.8
-------- --------
Income before income taxes 135.8 1.8 184.5 2.5
Income taxes 14.3 66.9
-------- ------ -------- ------
Net Income $ 121.5 1.6 % $ 117.6 1.6 %
======== ====== ======== ======
Basic earnings per share $ 1.49 $ 1.41
======== ========
Diluted earnings per share $ 1.49 $ 1.41
======== ========
Basic weighted average shares 81.5 83.2
======== ========
Diluted weighted average
shares 81.7 83.7
======== ========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Millions)
Jan. 28, Jan. 29,
2006 2005
-------- --------
Assets
Current Assets:
Cash and cash equivalents $ 299.8 $ 498.2
Trade accounts receivable 12.5 9.7
Merchandise inventories 1,802.7 1,733.0
Other current assets 35.5 52.6
-------- --------
Total current assets 2,150.5 2,293.5
Property and equipment, net 3,158.9 3,180.8
Goodwill 34.5 35.5
Other assets 173.0 181.8
-------- --------
Total Assets $ 5,516.9 $ 5,691.6
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $858.1 $ 820.2
Current portion of long-term debt and capital
leases 204.4 96.6
Federal and state income taxes including
current deferred taxes 84.9 128.4
-------- --------
Total current liabilities 1,147.4 1045.2
Long-term debt and capital leases 1,090.8 1,343.0
Other liabilities 259.1 269.1
Deferred income taxes 479.1 509.6
Guaranteed preferred beneficial interests in the
Company's subordinated debentures 200.0 200.0
Stockholders' equity 2,340.5 2,324.7
-------- --------
Total Liabilities and Stockholders' Equity $ 5,516.9 $ 5,691.6
======== ========
Other Information
(In Millions)
Jan. 28, Jan. 29,
2006 2005
------ --------
Square footage 56.4 56.3
====== ========
Capital expenditures (net of asset trade-in):
13 weeks ended $ 83.7 $ 114.8
52 weeks ended 367.1 303.5
Estimates for 2006
The Company is updating the following estimates for certain income
statement items for the fiscal year ending February 3, 2007 based upon
current conditions. Actual results may differ significantly from these
estimates as conditions and factors change - See "Forward-Looking
Information".
In Millions
-------------
2006 2005
Estimated Actual
----------- ---------
Depreciation and amortization $ 300 $ 302
Rental expense 57 48
Interest and debt expense 99 106
Capital expenditures 340 367
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 2006 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.
Julie J. Bull, 501-376-5965