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Dillard's Posts Surprise Profit

Improved margins offset a drop in sales.


(DDS) - Get Dillard's, Inc. Class A Report

swung to a third-quarter profit, besting analysts' expectation for a loss, as improved margins helped offset declining sales.

The department store operator posted a profit of $13.6 million, or 17 cents a share, compared with a year-earlier loss of $2.7 million, or 3 cents a share. Analysts polled by Thomson First Call expected a loss of 1 cent a share for the most recent period.

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The Little Rock, Ark.-based retailer said sales fell slightly to $1.722 billion from $1.727 billion last year. Same-store sales, or sales at stores open at least a year, declined 2%.

Sales of juniors' and children's apparel, as well as decorative home merchandise, were significantly below trend for the period, Dillard's said. That offset higher-than-expected sales of lingerie and accessories.

The company's bottom-line results were aided by a 140-basis-point improvement in gross margins, which Dillard's attributed to fewer markdowns and lower inventory levels.