Exhibit 99.1
Dillard's, Inc. Reports Second Quarter Results
LITTLE ROCK, Ark.--(BUSINESS WIRE)--Aug. 14, 2006--Dillard's, Inc.
(NYSE:DDS) (the "Company" or "Dillard's") announced operating results
for the 13 weeks ended July 29, 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."
Income
Net income for the 13 weeks ended July 29, 2006 was $15.7 million
($0.20 per diluted share) compared to a net loss of $12.3 million
($0.15 per basic and diluted share) for the 13 weeks ended July 30,
2005. Included in net income for the 13 weeks ended July 29, 2006 are
the following items:
-- A pretax gain on the sale of the Company's interest in a mall
joint venture of $13.5 million ($8.5 million after-tax or
$0.11 per basic and diluted share).
-- Settlement proceeds of $6.5 million ($4.0 million after-tax or
$0.05 per diluted share) received from the Visa
Check/Mastermoney Antitrust litigation.
-- A pretax charge of $21.7 million ($13.6 million after-tax or
$0.17 per diluted share) for a memorandum of understanding
reached in a current litigation case.
-- Recognition of an income tax benefit of approximately $5.8
million ($0.07 per dilute share) for the change in a capital
loss valuation allowance due to capital gain income during the
quarter and $6.5 million ($0.08 per diluted share) due to the
release of tax reserves.
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).
Revenues
Net sales for the 13 weeks ended July 29, 2006 were $1.688 billion
compared to sales for the 13 weeks ended July 30, 2005 of $1.692
billion. Net sales for the period were unchanged on a percentage basis
in both total and comparable stores.
Included in total revenues for the 13 weeks ended July 29, 2006 is
a $13.5 million pretax gain on the Company's sale of its interest in a
mall joint venture at Yuma Palms in Yuma, Arizona ($8.5 million
after-tax or $0.11 per basic and diluted share). Also included in
total revenues for the 13 weeks ended July 29, 2006 is settlement
proceeds of $6.5 million ($4.0 million after-tax or $0.05 per diluted
share) received from the Visa Check/Mastermoney Antitrust litigation.
During the 13 weeks ended July 29, 2006, net sales were strongest
in the Western region, where performance exceeded the Company's total
trend for the period. Net sales were consistent with trend in the
Eastern region and slightly below trend in the Central region.
Net sales of furniture, particularly in areas recovering from the
hurricanes of 2005, significantly exceeded the Company's average sales
trend for the 13 weeks ended July 29, 2006, while performance in
children's apparel was significantly below trend.
Gross Margin
Dillard's achieved gross margin improvement of 110 basis points of
sales for the 13 weeks ended July 29, 2006 compared to the 13 weeks
ended July 30, 2005. The Company attributes its improved gross margin
performance to lower levels of markdowns partially offset by lower
levels of markups, as customers responded positively to the Company's
improved merchandise selections early in the season.
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. Notable changes to the Company's
merchandise mix include expanded and improved selections of exclusive
brand merchandise. Penetration of exclusive brand merchandise as a
percentage of sales was 23.4% and 22.8% for the 26 weeks ended July
29, 2006 and July 30, 2005, respectively.
Total inventory and comparable store inventory as of July 29, 2006
declined 3% compared to July 30, 2005.
Advertising, Selling, Administrative and General Expenses
Advertising, selling, administrative and general ("S G & A")
expenses were $510.6 million and $484.7 million for the 13 weeks ended
July 29, 2006 and July 30, 2005, respectively.
Included in S G & A expenses for the 13 weeks ended July 29, 2006
is a pretax charge of $21.7 million for a preliminary settlement
agreement reached during the period in a current lawsuit filed on
behalf of a putative class of former Mercantile Stores Pension Plan
participants. The Company had been defending the litigation
vigorously. During the 13 weeks ended July 29, 2006, the Company
signed a memorandum of understanding for $35.0 million to settle the
case and, accordingly, accrued an additional $21.7 million ($13.6
million after-tax or $0.17 per diluted share) regarding the case. The
litigation continues between the Company and the Plan's actuarial firm
over the Company's cross claim against the actuarial firm seeking
reimbursement for the $35.0 million tentative settlement and
additional damages.
Interest and Debt Expense
Interest and debt expense declined $2.6 million to $24.6 million
for the 13 weeks ended July 29, 2006 compared to the 13 weeks ended
July 30, 2005 as a result of lower debt levels.
As of July 29, 2006, letters of credit totaling $74.3 million were
outstanding under the Company's $1.2 billion revolving credit
facility.
Store Information
Four stores in the Gulf Coast area which were damaged by Hurricane
Katrina and Hurricane Rita remained closed as of July 29, 2006. The
Company plans to open its Oakwood Mall location in Gretna, Louisiana
later this month and its Central Mall location in Port Arthur, Texas
in mid-October. Details regarding the two remaining affected stores in
New Orleans, Louisiana and Biloxi, Mississippi are still being
determined.
During the 13 weeks ended July 29, 2006, Dillard's closed its Town
Square Mall location in Pasadena (Houston), Texas (110,000 square
feet) and its Buckingham Square location in Aurora, Colorado (208,000
square feet). Accordingly, the Company opened its new location at
Aurora Mall in Aurora, Colorado (180,000 square feet) earlier this
month.
As of July 29, 2006, the Company operated 325 Dillard's locations
spanning 29 states, net of the four locations closed at the time due
to hurricane damage.
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In Millions, Except Per Share Data)
13-Week Period Ended
--------------------------------------
July 29, 2006 July 30, 2005
--------------------------------------
% of % of
Amount Net Sales Amount Net Sales
--------- --------- -------- ---------
Net sales $1.687.7 - $1,691.9 -
Total revenues 1,748.5 103.6% 1,728.5 102.2%
Cost of sales 1,122.3 66.5 1,144.0 67.6
Advertising, selling,
administrative and general
expenses 510.6 30.3 484.7 28.6
Depreciation and amortization 74.0 4.4 75.9 4.5
Rentals 11.6 0.7 10.1 0.6
Interest and debt expense 24.6 1.4 27.2 1.6
Asset impairment and store
closing charges 0.0 0.0 6.0 0.4
--------- ---------
Total costs and expenses 1,743.1 1,747.9
--------- ---------
Income (loss) before income
taxes 5.4 0.3 (19.4) -1.1
Income taxes (10.3) (7.1)
--------- --------- --------- ------
Net Income (Loss) $15.7 0.9% $(12.3) -0.7%
========= ========= ========= ======
Basic and diluted earnings
(loss) per share $0.20 $(0.15)
========= =========
Basic weighted average shares 79.4 82.7
========= =========
Diluted weighted average shares 80.2 82.7
========= =========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In Millions, Except Per Share Data)
26-Week Period Ended
----------------------------------------
July 29, 2006 July 30, 2005
----------------------------------------
% of % of
Amount Net Sales Amount Net Sales
--------- --------- -------- ----------
Net sales $3,525.2 - $3,494.9 -
Total revenues 3,627.6 102.9 % 3,567.2 102.1 %
Cost of sales 2,301.7 65.3 2,314.3 66.2
Advertising, selling,
administrative and general
expenses 1,005.2 28.5 982.0 28.1
Depreciation and amortization 147.4 4.2 150.5 4.3
Rentals 23.2 0.6 20.6 0.6
Interest and debt expense 48.2 1.4 53.4 1.5
Asset impairment and store
closing charges 0.0 0.0 6.4 0.2
--------- ---------
Total costs and expenses 3,525.7 3,527.2
--------- ---------
Income before income taxes 101.9 2.9 40.0 1.2
Income taxes 24.8 14.3
--------- --------- --------- --------
Net Income $ 77.1 2.2 % $ 25.7 0.7 %
========= ========= ========= ========
Basic and diluted earnings per
share $ 0.97 $ 0.31
========= =========
Basic weighted average shares 79.4 83.0
========= =========
Diluted weighted average
shares 79.8 83.2
========= =========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Millions)
July 29, July 30,
2006 2005
--------- ---------
Assets
Current Assets:
Cash and cash equivalents $ 145.4 $ 177.4
Trade accounts receivable 12.2 8.9
Merchandise inventories 1,870.0 1,926.4
Other current assets 41.7 43.7
--------- ---------
Total current assets 2,069.3 2,156.4
Property and equipment, net 3,183.0 3,214.5
Goodwill 34.5 35.5
Other assets 169.5 172.4
--------- ---------
Total Assets $5,456.3 $5,578.8
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $ 878.1 $ 894.8
Current portion of long-term debt and capital
leases 105.9 154.1
Federal and state income taxes including current
deferred taxes 26.5 91.8
--------- ---------
Total current liabilities 1,010.5 1,140.7
Long-term debt and capital leases 1,088.2 1,177.1
Other liabilities 283.1 252.8
Deferred income taxes 456.2 482.9
Guaranteed preferred beneficial interests in the
Company's subordinated debentures 200.0 200.0
Stockholders' equity 2,418.3 2,325.3
--------- ---------
Total Liabilities and Stockholders' Equity $5,456.3 $5,578.8
========= =========
Other Information
(In Millions)
July 29, July 30,
2006 2005
--------- ---------
Square footage 56.5 56.1
========= =========
Capital expenditures
13 weeks ended $105.0 $96.4
26 weeks ended 169.7 197.9
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 97 106
Capital expenditures (net of asset
trade in) 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, store
opening information 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