Dillard's Inc. (DDS), a leading fashion apparel, cosmetics and home furnishings retailer, posted strong fourth-quarter and fiscal 2011 earnings results. Quarterly earnings of $2.21 per share outpaced the Zacks Consensus Estimate of $2.00 per share and prior-year quarter earnings of $1.55 per share. On a reported basis, including one-time items, Dillard's reported fourth-quarter earnings of $2.77 per share compared with the prior-year quarter's earnings of $1.75 per share.
For fiscal 2011, Dillard’s earnings of $4.21 per share topped the Zacks Consensus Estimate of $4.06 per share and the prior fiscal year earnings of $2.43 per share. On a GAAP basis, including one-time items, the company’s yearly earnings came in at $8.52 per share compared with $2.67 per share in the prior- year period.
Sales & Comps
In the fourth quarter, Dillard's top line (including CDI Contractors LLC or CDI) inched up 1.9% to $1,970 million from $1,934 million in the year-ago quarter. Merchandise sales, excluding CDI, came in at $1,946 million compared with $1,912 million in the year-ago quarter. The company’s total revenue (including other income) of $2,009.4 million outpaced the Zacks Consensus Estimate of $1,972 million.
Dillard's net sales (including CDI Contractors LLC or CDI) inched up 2.3% to $6,263.6 million for fiscal 2011 from $6,121 million in the prior year. Merchandise sales, excluding CDI, came in at $6,194 million compared with $6,020 million last year. The company’s total annual revenue (including other income) of $6,399.8 million was above the Zacks Consensus Estimate of $6,265 million.
Comparable store sales (comps) growth for the fourth quarter was 3%, while full-year comps were up 4%.
Operating Results
During the quarter, both gross margin from retail operations (excluding CDI) and consolidated gross margin (including CDI) contracted 10 basis points from the year-ago quarter to 34.4% and 34.0%, respectively. For fiscal 2011, gross margin from retail operations improved 30 basis points from last year to 35.9%, while consolidated gross margin recorded an improvement of 50 basis points to 35.5%.
Dillard's operating expenses for the quarter declined marginally to $440.8 million from $441.6 million in the prior-year quarter. Consequently, operating expenses as a percentage of sales contracted 40 basis points to 22.4% in the fourth quarter.
In fiscal 2011, the company’s operating expenses climbed $5.1 million from last year to $1,630.9 million. However, as percentage of sales, it declined 60 basis points to 26.0%.
Other Financial Details
Dillard’s ended fiscal 2011 with cash and cash equivalents of $224.3 million compared with $343.3 million in the prior fiscal year. At year-end, the company’s long-term debt and capital leases (including current portion) declined to $623.9 million from $708.6 million at year-end 2010. In fiscal 2011, net cash flow from operations came in at $501.1 million.
During the fourth quarter, Dillard’s bought back nearly 2.1 million shares worth $98.8 million, brining the full-year share repurchases to 11.4 million shares for an aggregate of $491.1 million. As of the year-end 2011, the company had nearly $27.5 million worth authorization remaining under its $250 million share repurchase program.
Store Update
Dillard’s closed fiscal 2011 with stores operating in 288 Dillard's locations and 16 clearance centers spanning 29 states and an Internet store at www.dillards.com. Total square footage as of the year-end was 52.7 million.
Based in Little Rock, Arkansas, Dillard's Inc. is a large departmental store chain, featuring fashion apparel and home furnishings in the United States.
The company’s primary competitor Macy's Inc. (M) reported better-than-expected fourth-quarter and fiscal 2011 results on the back of strong holiday season sales, improved operating margin, and effective cost management. The quarterly earnings of $1.70 per share outshined the Zacks Consensus Estimate of $1.65, and rose 6.9% from $1.59 earned in the prior-year quarter. The company’s fiscal 2011 earnings registered a growth of 36.5% to $2.88 per share, and came ahead of Zacks Consensus Estimate of $2.82.
Dillard's shares maintain a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Our long-term recommendation on the stock remains ‘Outperform’.
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