Lowered expenses fuel growth
Little Rock, AK-based Dillard’s department store reported second quarter results on Wednesday, August 14. The retailer cited earnings increased 18 percent, while costs dropped and its margins improved.
Net income for the department store chain was reported at $36.5 million or 79 cents per share, for the quarter, up from $31 million, or 63 cents per share, in the same time span of 2012. The profits for the quarter were much greater than market expectations — analysts at FactSet anticipated earnings of 74 cents per share. This lead to further increases in share prices in the hours after the report’s release. However, sales revenue slipped from $1.49 billion down to $1.48 billion which lead to total revenue of $1.52 billion opposed to $1.53 billion.
Dillard’s, operating 282 stores in the U.S. — including department store locations and clearance centers — says that comparable store sales increase a full percent in the last year. This is a key figure as newly opened and closed stores can skew numbers dramatically.
The retailer credits strong sales numbers in ladies’ accessories and lingerie departments, along with juniors’ and childrenswear. Weakest sales were reported in the home and furniture departments, along with ladies’ apparel. It also benefited from decreases in expenses and increases in merchandise gross margin or a tenth of a percent from last year. Selling, general, and administrative costs have fallen to $398.2 million from $398.8 million last year. These decreases were slightly offset by payroll and insurance costs increasing.
Many retailers this week, like Macy’s, American Eagle, Kohl’s, and Aeropostale, reported disappointing sales numbers in the second quarter, some of which cause annual sales projections to be cut dramatically. Retail juggernaut Walmart even felt the heat of declining sales numbers in the second quarter. Despite some of the big names in retail revealing subpar figures in the second quarter, and no dramatic changes in business models, Dillard’s defied the odds and posted surprisingly positive numbers in fiscal quarter two.