Exhibit 99.1
Dillard's, Inc. Reports Third Quarter Earnings
LITTLE ROCK, Ark.--(BUSINESS WIRE)--Nov. 13, 2006--Dillard's, Inc.
(NYSE:DDS):
Third Quarter 2006 Highlights
-- Net income of $13.6 million compared to a net loss of $2.7 million
-- Gross margin improvement of 140 basis points of sales
-- Comparable store inventory decline of 3%
-- Launch of "Dillard's - The Style of Your Life" - a comprehensive
national branding campaign
Dillard's, Inc. (the "Company" or "Dillard's") announced operating results
for the 13 weeks ended October 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".
Income
Net income for the 13 weeks ended October 28, 2006 was $13.6 million ($0.17
per basic and diluted share) compared to a net loss of $2.7 million ($0.03 per
basic and diluted share) for the 13 weeks ended October 29, 2005. Third quarter
net income improvement was primarily driven by Dillard's improved gross margin
performance of 140 basis points of sales.
Revenues
Net sales for the 13 weeks ended October 28, 2006 were $1.722 billion
compared to sales for the 13 weeks ended October 29, 2005 of $1.727 billion.
Total net sales for the period were unchanged on a percentage basis. Sales in
comparable store for the period declined 2%.
During the 13 weeks ended October 28, 2006, the net sales performance in
Dillard's Eastern and Central regions was consistent with the Company's
performance for the period. The net sales performance was slightly below trend
in the Western region.
During the 13 weeks ended October 28, 2006, net sales of lingerie and
accessories significantly exceeded Company's performance for the period. Sales
of juniors' and children's apparel and decorative home merchandise were
significantly below trend for the period.
Gross Margin
Dillard's achieved gross margin improvement of 140 basis points of sales
for the 13 weeks ended October 28, 2006 compared to the 13 weeks ended October
29, 2005. The Company primarily attributes its improved gross margin performance
to lower levels of markdowns and decreased purchases resulting in lower
inventory levels as it executed a disciplined approach to merchandising and
inventory control during the period.
Total inventory declined 1% as of October 28, 2006 compared to October 29,
2005. Inventory in comparable stores declined 3%.
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.
Advertising, Selling, Administrative and General Expenses
Advertising, selling, administrative and general ("S G & A") expenses were
$513.2 million and $507.0 million for the 13 weeks ended October 28, 2006 and
October 29, 2005, respectively. Increases in payroll, utilities, supplies,
services purchased and insurance were partially offset by savings in advertising
and store pre-opening expenses.
In August of 2006, the Company launched its comprehensive national branding
campaign, "Dillard's - The Style of Your Life". The campaign features Dillard's
fashion merchandise in a variety of lifestyle vignettes distributed through
multiple media channels including national fashion magazines, broadcast and
Internet. The branding campaign supports Dillard's upscale and contemporary
approach to the marketplace in a series of customized, sophisticated portfolios.
The current campaign will continue through the holiday season.
The Company continues to evaluate its advertising strategy to position
advertising spending toward the most appropriate media sources to reach its
targeted customers. During the third quarter, advertising spending formerly
dedicated to more traditional sources, such as newspaper and other print media,
was redirected to the new branding campaign.
Interest and Debt Expense
Interest and debt expense declined $2.3 million to $23.4 million for the 13
weeks ended October 28, 2006 compared to the 13 weeks ended October 29, 2005 as
a result of lower debt levels.
As of October 28, 2006, letters of credit totaling $75.4 million were
outstanding under the Company's $1.2 billion revolving credit facility.
Store Information
Two stores in the Gulf Coast area which were damaged by Hurricane Katrina
remained closed as of October 28, 2006. Details regarding these stores, which
are located in New Orleans, Louisiana and Biloxi, Mississippi, are still being
determined.
During the 13 weeks ended October 28, 2006, Dillard's opened the following
new locations:
Center City Square Feet Open Month
- ----------------------------------------------------------------------
Town Center at Aurora(a) Aurora, Colorado 180,000 August
- ----------------------------------------------------------------------
Red Cliffs Mall(a) St. George, Utah 90,000 September
- ----------------------------------------------------------------------
Pinnacle Hills Promenade Rogers, Arkansas 155,000 October
- ----------------------------------------------------------------------
(a)replacement store
- ----------------------------------------------------------------------
During the 13 weeks ended October 28, 2006, the Company closed its
Jamestown Mall location in Florissant, Missouri (170,000 square feet) and its
Rolling Acres clearance center in Akron, Ohio (127,000 square feet).
Earlier this month, Dillard's opened its new location at Coconut Point in
Bonita Springs, Florida (180,000 square feet) and new store at Southwest Plaza
in Littleton, Colorado (180,000 square feet replacing 132,000 square feet).
As of October 28, 2006, the Company operated 327 Dillard's locations
spanning 29 states, net of the two 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
-----------------------------------------
October 28, 2006 October 29, 2005
-------------------- --------------------
% of % of
Amount Net Sales Amount Net Sales
--------- --------- --------- ----------
Net sales $1,721.5 - $1,727.1 -
Total revenues 1,762.6 102.4 % 1,761.2 102.0 %
Cost of sales 1,118.3 65.0 1,147.1 66.4
Advertising, selling,
administrative and general
expenses 513.2 29.8 507.0 29.4
Depreciation and amortization 73.6 4.3 75.8 4.4
Rentals 12.8 0.7 9.8 0.6
Interest and debt expense 23.4 1.4 25.7 1.5
--------- ---------
Total costs and expenses 1,741.3 1,765.4
--------- ---------
Income (loss) before income
taxes 21.3 1.2 (4.2) -0.3
Income taxes 7.7 (1.5)
--------- --------- --------- ---------
Net Income (Loss) $13.6 0.8 % $(2.7) -0.2 %
========= ========= ========= =========
Basic and diluted earnings
(loss) per share $0.17 $(0.03)
========= =========
Basic weighted average shares 79.6 81.0
========= =========
Diluted weighted average
shares 80.9 81.0
========= =========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In Millions, Except Per Share Data)
39-Week Period Ended
-----------------------------------------
October 28, 2006 October 29, 2005
-------------------- --------------------
% of % of
Amount Net Sales Amount Net Sales
--------- --------- --------- ----------
Net sales $5,246.7 - $5,222.0 -
Total revenues 5,390.2 102.7 % 5,328.4 102.0 %
Cost of sales 3,420.0 65.2 3,461.4 66.3
Advertising, selling,
administrative and general
expenses 1,518.4 28.9 1,489.0 28.5
Depreciation and amortization 221.0 4.2 226.2 4.3
Rentals 36.0 0.7 30.4 0.6
Interest and debt expense 71.6 1.4 79.2 1.5
Asset impairment and store
closing charges 0.0 0.0 6.4 0.1
--------- ---------
Total costs and expenses 5,267.0 5,292.6
--------- ---------
Income before income taxes 123.2 2.3 35.8 0.7
Income taxes 32.5 12.8
--------- --------- --------- ---------
Net Income $90.7 1.7 % $23.0 0.4 %
========= ========= ========= =========
Basic earnings per share $1.14 $0.28
========= =========
Diluted earnings per share $1.13 $0.28
========= =========
Basic weighted average shares 79.5 82.3
========= =========
Diluted weighted average
shares 80.2 82.5
========= =========
Dillard's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Millions)
October 28, October 29,
2006 2005
----------- -----------
Assets
Current Assets:
Cash and cash equivalents $95.0 $73.5
Trade accounts receivable 10.7 9.7
Merchandise inventories 2,392.6 2,411.7
Other current assets 40.4 66.8
----------- -----------
Total current assets 2,538.7 2,561.7
Property and equipment, net 3,190.7 3,224.2
Goodwill 34.5 35.5
Other assets 170.1 142.9
----------- -----------
Total Assets $5,934.0 $5,964.3
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $1,373.4 $1,423.7
Current portion of long-term debt and capital
leases 205.0 103.7
Federal and state income taxes including
current deferred taxes 19.3 81.0
----------- -----------
Total current liabilities 1,597.7 1,608.4
Long-term debt and capital leases 985.8 1,175.8
Other liabilities 251.1 251.2
Deferred income taxes 467.4 486.8
Guaranteed preferred beneficial interests in
the Company's subordinated debentures 200.0 200.0
Stockholders' equity 2,432.0 2,242.1
----------- -----------
Total Liabilities and Stockholders' Equity $5,934.0 $5,964.3
=========== ===========
Other Information
(In Millions)
October 28, October 29,
2006 2005
----------- -----------
Square footage 56.8 56.9
=========== ===========
Capital expenditures
13 weeks ended $83.7 $85.5
39 weeks ended 253.4 283.4
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 58 48
Interest and debt expense 98 106
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