Dillard's Inc. reported a 34% increase in net profit for the second quarter, ended August 1, a rise driven largely by tariff refunds. Over this 13-week period, net income stood at $97.7 million, compared with $72.8 million a year earlier, or $6.25 per share versus $4.66 previously.
Refunds boost margin
Total retail sales rose 1% over the period, to $1.46 billion according to WWD; Retail Dive, for its part, cites retail sales, excluding the construction business, up less than 1% at $1.5 billion, with comparable sales up 1%. Gross margin reached 40.9% of sales, compared with 38.1% a year earlier. Tariff refunds, $37.2 million pre-tax, $28.4 million after tax, according to WWD, provided, according to Retail Dive, 260 of the 280 basis points of this increase.
Chief executive William T. Dillard 2nd said the retailer had ended the quarter with more than $1.2 billion in cash and short-term investments, after repaying $96 million in debt. By category, sales rose significantly in accessories and women's lingerie, moderately in home and furniture, and slightly in shoes, men's apparel and cosmetics, while they declined moderately in junior's, children's and women's clothing.
Consumer resilience, caution on inventory
PDG William Dillard said that « notre hausse de 1 % des ventes traduit un consommateur relativement résilient ». The rise in comparable sales exceeded the expectations of UBS analysts, who had forecast flat sales, while UBS Evidence Lab's analysis found discounting stable year over year. According to research from GlobalData, Dillard's also gained market share against its department-store competitors.
Neil Saunders, of GlobalData Retail, judged the sales « pas spectaculaires » but « solides », praising « les dirigeants de Dillard's [qui] sont de bons gestionnaires de l'entreprise. Leur approche stable ne produit pas toujours des chiffres spectaculaires, mais elle assure la stabilité qui soutient l'économie de l'activité et leur donne une longévité dans un commerce en pleine disruption. » L'analyste nonetheless noted a slight decline in purchase volume in high-frequency categories such as women's apparel, which he attributed to a modest reduction in overall spending rather than a loss of customers to other chains.
L'inventaire at quarter-end was up 5% year over year. For Neil Saunders, the balance between supply and demand remains a point Dillard's will need to monitor closely heading into the second half of the year.
