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Dillard's Shows Q1 Gains in Sales, Profits

Department store chain Dillard's Inc. posted strong gains in the first quarter, with net income of $48.8 million, or 68 cents per share, up dramatically from year-ago profit of $7.7 million, or 10 cents eps.

Total merchandise sales (excluding the affiliated construction company, CDI), for the quarter ended May 1, 2010 were $1.429 billion, up 1% from $1.415 billion in the same period one year ago. The comp store gain was 2%.

The 311-store retailer reported gains in average gross margin and declines in overhead. The company said retail gross margin improved by “approximately 300 basis points,” which in part stemmed from “changes to the cadence of merchandise receipts to shorten the time span between receipt of product and point of sale.” This markdown risk reduction was combined with a 12% cut in inventory on a comp store basis in the quarter.

Dillard's said its “operating expenses,” which it classifies as SG&A plus advertising costs, were down 100 basis points year-over-year, to 27.1% of sales. The company cited “cost control measures combined with store closures,” adding that, “notable areas of reduction during the first quarter of 2010 were payroll and advertising expenses.”

Dillard's ceo William Dillard II in a statement pointed to “good results in our key operational areas including inventory management and cost control. Notably, we achieved strong cash flow which enabled us to confidently execute our share repurchase program, underscoring our commitment to our shareholders and to the company.” The company said it has repurchased about $105 million, or 4.2 million shares of Class A common stock under its current $200 million repurchase program.

Dillard's opened two new stores — in Fairview and Austin, Texas — during the quarter.

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