Solid third quarter results have Dillard’s feeling good about the holidays.
Dillard’s third quarter merchandise sales for the quarter ended October 27 increased 4% to more than $1.4 billion, same store sales increased 5% and operating profits increased 84% to nearly $73 million. Gross margins expanded 40 basis points to 37.1% and same store inventory levels were down 1%.
"Driven by a strong 5% sales increase, we were able to double our earnings per share for the third quarter on top of a record performance last year," said Dillard’s CEO William Dillard, referring to adjusted earnings per share of 96 cents compared to the prior year’s 48 cents. "We are pleased with our gross margin improvement and expense control during the quarter as well as with our ending inventory level. We are entering the holiday season confidently based on these strong results and we look forward to serving our customers at the highest possible level in the coming weeks."
Third quarter comparison were complicated by a number of one time factors that muddied the waters. For example, this year’s unadjusted earnings per share figure of $1.01 included five cents worth of benefit related to a gain on the sale of two former locations and a tax benefit related to the reversal of something called, "a valuation allowance related to a deferred tax asset consisting of a capital loss carryforward." The prior year’s third quarter also included a lot of noise in the form of a whopping after tax credit of $202.5 million, or $3.83 per share, that enabled the company to report profits of $228.2 million or $4.31 a share.
After stripping out these one time benefits, Dillard’s was left with a respectable quarter that demonstrated improvement from the prior year. The company operates 284 stores and 18 clearance centers in 29 states, in addition to an e-commerce site, and appears well positioned for the holidays.