Dillard's Reports Decline in Net Sales and Income for Third Quarter of Fiscal 2024

Dillard's, Inc. reported its financial results for the third quarter of fiscal 2024, revealing a decline in net sales and net income compared to the same period last year. For the three months ended November 2, 2024, the company generated net sales of $1.427 billion, a decrease of 3.4% from $1.476 billion in the prior year. Net income for the quarter was $124.6 million, or $7.73 per share, down from $155.3 million, or $9.49 per share, in the same quarter of 2023. The decline in sales was attributed to a 4% drop in retail sales, which was partially offset by a 6% increase in the construction segment.

In terms of profitability, the gross margin as a percentage of net sales decreased to 42.6% from 43.5% year-over-year. The retail operations segment saw a gross margin of 44.5%, down from 45.3%, primarily due to increased markdowns. Selling, general, and administrative (SG&A) expenses for the quarter were $418.9 million, slightly lower than the $421.8 million reported in the previous year, but as a percentage of sales, SG&A increased to 29.4% from 28.6%. The company also reported a significant increase in interest income, which contributed to a net interest and debt income of $4.5 million for the quarter, compared to an expense of $1.8 million in the prior year.

Dillard's continues to focus on strategic initiatives, including a new credit card program launched in partnership with Citibank, which replaced the previous Wells Fargo Alliance. This new program is expected to generate lower initial cash flows compared to historical earnings from the Wells Fargo partnership. The company also opened a new store in Sioux Falls, South Dakota, marking its expansion into the 30th state, while closing underperforming locations, including a clearance center in Ohio.

Operationally, Dillard's maintained a total of 273 stores, including 28 clearance centers, as of November 2, 2024. The company reported a 7% decrease in the number of sales transactions during the quarter, although the average transaction value increased by 3%. Total inventory rose by 3% compared to the previous year, reflecting ongoing challenges in managing stock levels amid fluctuating consumer demand.

Looking ahead, Dillard's expects to finance its operations through cash on hand, cash flows from operations, and its credit facility, which has a borrowing capacity of $800 million. The company announced a special dividend of $25.00 per share, payable on January 6, 2025, to stockholders of record as of December 13, 2024. Management remains cautious about the impact of inflation, trade restrictions, and changing consumer behavior on future performance, emphasizing the need to align expenses with sales trends.