Dillard's Profit Surges

Helped by a big $64 million tax credit, and putting behind $55 million in charges that cut income a year ago, Dillard's pushed fourth-quarter profits up by 57.4%, to $155.0 million from $98.5 million last year.

Dillard's layered on a $6.6 million after-tax interest credit and reined in stockpiles.

Sales improved by 2.6%, to $2.4 billion from $2.3 billion during the Christmas quarter, but same-store sales fell by 4.0%.

Average gross margin contracted modestly, while costs edged higher. Margins thinned by 80 basis points, to 32.8% from 33.6%, solely because last year's quarter included a hurricane recovery gain. Excluding that one item, margins actually improved by 40 basis points. Operating costs rose by 50 basis points, or half a percentage point, due to extra costs associated with the extra week in this year's 14-week fiscal quarter. Inventory was reduced by 1.7%, even as sales climbed higher by 2.6%.

Dillard's Inc.

Qtr. 2/3 (x000) 2006 2005 % change
a. Fourth quarter results include an after-tax interest credit of $6.6 million; and an income tax benefit of $64.0 million. Prior-year results include a $55.3 pre-tax million asset impairment charge.
b. 12-month results include the $6.6 million after-tax interest credit; the $64.0 million tax credit; an $8.5 million after-tax gain on the sale of its interest in a mall; a $4.5 million after-tax gain form the Visa settlement; a $13.6 million charge stemming from litigation; a $5.8 million gain stemming from a change in a capital loss valuation allowance; and a $6.5 million gain due to the release of tax reserves. Prior-year results include a $61.7 million pre-tax impairment charge; a $29.7 million pre-tax hurricane recovery gain; and a $35.1 million tax benefit due to the sale of a subsidiary.
Sales $2,399,800 $2,338,200 2.6
Oper. Income (EBIT) 269,300 274,500 -1.9
Net income 155,000a 98,500a 57.4
Per share (diluted) 1.90 1.24 53.2
Average gross margin 32.8% 33.6%
SG&A expenses 24.1% 23.6%
12 months
Sales 7,646,500 7,560,200 1.1
Oper. Income (EBIT) 721,000 652,500 10.5
Net income 245,600b 121,500b 102.1
Per share (diluted) 3.05 1,49 104.7
Average gross margin 34.2% 33.7%
SG&A expenses 27.4% 27.0%

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