Dillard's Rises on Profit Surprise Tied to Inventory, Cost Controls

Dillard's shares were higher after the retailer, keeping inventory and costs under control, reported better-than-expected third-quarter earnings.
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Dillard's  (DDS) - Get Report shares were higher after the retailer, keeping inventory and costs under control, reported better-than-expected third-quarter earnings.

The Little Rock, Ark., company finished up 4.49% to $47.02.

Dillard's reported net income of $31.9 million, or $1.43 a share, compared with $5.5 million, or 22 cents, in the year-earlier period. 

Analysts polled by FactSet had expected the company to post a GAAP loss of $1.45 a share, or an adjusted loss of 86 cents a share.

Sales totaled $1.05 billion, down from $1.42 billion a year earlier. The FactSet consensus called for sales of $1.17 billion. Same-store sales fell about 24%. 

Total retail sales, which excludes the company’s construction business, CDI Contractors, fell almost 25% to $994.6 million.

Dillard's said that home and furniture sales significantly outperformed the other categories. Women's accessories and lingerie and cosmetics followed, while sales of women's apparel were "significantly below trend."

"We have worked hard on inventory and expense control in unpredictable conditions throughout the pandemic," Chief Executive William Dillard said in a statement. 

"We achieved a [2.49 percentage point] gross-margin improvement for the third quarter with ending inventory down 22%. Additionally, we cut expenses $100 million." 

Selling, general and administrative expense decreased $99.9 million. 

The company repurchased $19.5 million of stock, about 600,000 shares.

Payroll expense declined about 28% during the quarter partially as a result of the company's reduced operating hours.

Dillard's said it is closing its 200,000-square-foot Paradise Valley Mall location in Phoenix at the end of the fiscal year. 

A company spokesperson said employees at the location are being offered positions in other Dillard's locations in the area.

"We strategically close locations from time to time, so an occasional closure is not uncommon," the spokesperson said in an email. 

The company operates 250 Dillard’s locations and 32 clearance centers in 29 states.

Shares of retailers Nordstrom  (JWN) - Get Report, Abercrombie & Fitch  (ANF) - Get Report and Kohl's  (KSS) - Get Report were also climbing.