Dillard’s is back in growth mode.
The Little Rock, Ark.-based department store chain reported Thursday that net income for the first quarter ended May 2, jumped 53 percent to $250.6 million, or $16.04 a share, from $163.8 million, or $10.39 a share in the prior year.
Included in the most recent results is a pre-tax gain on litigation settlement, net of legal fees, of $104.1 million related to the company’s favorable settlement of a long-standing lawsuit involving payment card interchange fees. Without these gains, net income was up around 4 percent.
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Total sales for the period rose 3.4 percent to $1.52 billion from $1.47 billion. Comparable-store sales increased 3 percent.
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All merchandise categories reported sales increases compared with the prior year, the company said. Sales increased significantly in home and furniture, women’s accessories and lingerie, and shoes. Sales of men’s apparel and accessories, juniors’ and children’s apparel and women’s apparel increased moderately while sales in cosmetics increased slightly during the quarter.
Retail gross margin for the 13 weeks totaled 45.8 percent of sales compared with 45.5 percent a year earlier with a modest increase in shoes and a slight rise in women’s accessories and lingerie. Gross margin was unchanged in juniors’ and children’s apparel, cosmetics and men’s apparel and accessories, decreased slightly in women’s apparel and slipped moderately in home and furniture.
During the quarter, the company opened a 160,000-square-foot store at The Mall at Fairfield Commons in Beavercreek, Ohio, bringing its total to 272 Dillard’s stores and clearance in 30 states.
Neil Saunders, managing director of GlobalData, gave the retailer a thumbs-up after seeing the earnings. “After a spell of softer performance, this puts Dillard’s back on a path of growth even at a time when there are some headwinds from poor consumer confidence and a modest reluctance to spend,” he wrote in an analysis.
Saunders attributed at least some of the company’s success to its customer, who is “somewhat more robust than average,” giving the retailer “a more stable base against which to operate.”
And while shoppers are more reluctant to spend overall, Dillard’s manages to draw them in by offering “strong assortments, good standards of presentation and excellent customer service. Taken together the proposition is strong and it gives consumers permission to spend,” he said.
The company also continues to invest in its stores to keep pace with competitors such as Macy’s, which is also improving its presentation.
Looking ahead, Saunders said, Dillard’s will “start to come up against some tougher prior-year numbers. It will also see some of the benefit of tax refunds fade in the back half of the year. Even so, the addition of a new store, a position of financial stability and propositional clarity will all continue to serve it well.”