Dillard’s wins big in 1Q results
May 23, 2006-- Home Textiles Today,
Little Rock, Ark. -- Snapping a long string of weak results and climbing back on track, Dillard's Inc. pushed first-quarter profits up by almost two-thirds. Sales, helped by stronger margins, lower costs and a deep cut in interest expense, gained 2%.
But acting as if it wanted no one to notice all the good news, the retailer put out its earnings release on a Saturday, a time when public companies usually try to bury bad news.
In this case, the news was unusually good for the Southern department-store retailer, with a big earnings jump capping a recent rebound. Following a third-quarter loss last year, and a drop of more than 9% during the all-important Christmas quarter, profits shot up by 61.3% in the opening quarter, to $61.3 million from $38.0 million last year. Sales edged up by 1.9%, to $1.8 billion, and same-store sales increased by 2%.
Fueling the big improvement was a potent mix of stronger margins and lower overhead. Average gross margin improved by 70 basis points, or seven-tenths of a percentage point, to 35.8% from 35.1% during the same period a year ago. Combined with rising sales, that provided a boost in gross margin dollars of $25.4 million.
Operating costs declined in lock step by 70 basis points, or seven-tenths of a percentage point, to 26.9% of sales, yielding a savings of $2.7 million. In another lift to the bottom line, interest costs were pared by 9.9%, to $23.6 million from $26.2 million, generating a further cash savings of $2.6 million.
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