Dillard's (DDS) Q3 2024 earnings summary

Executive summary

• Third quarter retail sales declined 4% year-over-year, with comparable store sales also down 4%.

• Net income for Q3 was $124.6 million ($7.73 per share), down from $155.3 million ($9.49 per share) in the prior year.

• Year-to-date net income was $379.1 million, compared to $488.3 million for the same period last year.

• Gross margin decreased to 42.6% from 43.5% year-over-year, with retail gross margin at 44.5% versus 45.3% last year.

• Cash and short-term investments exceeded $1.1 billion after $107 million in share repurchases.

Financial highlights

• Q3 net sales were $1.43 billion, down from $1.48 billion year-over-year; nine-month sales were $4.47 billion, down from $4.63 billion.

• Q3 EPS was $7.73, compared to $9.49 last year; year-to-date EPS was $23.42, down from $29.38.

• Retail gross margin for Q3 was 44.5% of sales, slightly lower than 45.3% last year; consolidated gross margin was 42.6%, down from 43.5%.

• Operating expenses for Q3 were $418.9 million (29.4% of sales), slightly down in dollar terms but up as a percentage of sales.

• Inventory increased 3% year-over-year at quarter end; store count remained at 273.

Outlook and guidance

• Management expects income from the new Citibank credit card alliance to initially be less than historical earnings from the prior Wells Fargo alliance.

• Fiscal 2024 federal and state effective income tax rate is expected to approximate 19%, reflecting tax benefits from a special dividend.

• The company plans to finance operations from cash on hand, operating cash flow, and credit facility if needed.

• Estimates for the full year ending February 1, 2025: depreciation and amortization of $180 million and rentals of $22 million.

• Management expects continued focus on expense control and gross margin management.