Dillard’s, Inc. Reports Fourth Quarter and Fiscal Year Results

Completes $500 Million Share Repurchase Authorization

LITTLE ROCK, Ark.–(BUSINESS WIRE)–Dillard’s, Inc. (NYSE: DDS) (the “Company” or “Dillard’s”) announced
operating results for the 13 and 52 weeks ended January 30, 2016. This
release contains certain forward-looking statements. Please refer to the
Company’s cautionary statements regarding forward-looking information
included below under “Forward-Looking Information.”

Fiscal Year Results

Dillard’s reported net income for the 52 weeks ended January 30, 2016 of
$269.4 million, or $6.91 per share, compared to net income of $331.9
million, or $7.79 per share, for the prior year 52-week period. Included
in net income for the 52-week period ended January 30, 2016 is a net
after-tax credit of $8.1 million ($0.21 per share) related to the sale
of four store locations.

Included in net income for the prior year 52-week period ended
January 31, 2015 is a net after-tax gain totaling $3.8 million ($0.09
per share) related to the sale of a store location.

Net sales for the 52 weeks ended January 30, 2016 were $6.596 billion
and $6.621 billion for the 52 weeks ended January 31, 2015. Total
merchandise sales for the 52-week period ended January 30, 2016 were
$6.389 billion and $6.490 billion for the 52-week period ended
January 31, 2015. Net sales include the operations of the Company’s
construction business, CDI Contractors, LLC (“CDI”). Total merchandise
sales (which exclude CDI) decreased 2% for the 52-week period ended
January 30, 2016. Sales in comparable stores for the period also
decreased 2%.

During the year, the Company purchased $500 million of Class A Common
Stock under its share repurchase authorization. Share repurchases were
accomplished entirely from available cash and operating cash flow.

Fourth Quarter Results

Dillard’s reported net income for the 13 weeks ended January 30, 2016 of
$84.0 million, or $2.31 per share, compared to net income of $130.5
million, or $3.17 per share, for the prior year fourth quarter. Included
in net income for the fourth quarter ended January 30, 2016 is an
after-tax gain of $2.0 million ($0.06 per share) related to the sale of
a store location.

Dillard’s Chief Executive Officer, William T. Dillard, II, stated, “The
fourth quarter was difficult. As sales came in less than planned, we
worked hard to control our inventory during an unusually competitive
environment. Sales were particularly weak on the Southern border and in
the energy producing regions. Higher markdowns affected gross margin,
but we did the right thing as we move on to 2016.”

Net sales for the 13 weeks ended January 30, 2016 were $2.074 billion
and $2.136 billion for the 13 weeks ended January 31, 2015.

Total merchandise sales (which exclude CDI) for the 13-week period ended
January 30, 2016 were $2.021 billion and $2.068 billion for the 13-week
period ended January 31, 2015. Total merchandise sales decreased 2% for
the 13-week period ended January 30, 2016. Sales in comparable stores
for the period also decreased 2%. In relation to the total Company sales
performance, sales were notably strong in home and furniture followed by
ladies’ accessories and lingerie. Weaker performing categories were
juniors’ and children’s apparel and shoes. Sales were strongest in the
Western region followed by the Eastern and Central regions,
respectively. The Company noted weakness particularly on the Southern
border and in energy producing regions.

Gross Margin/Inventory

Gross margin from retail operations (which excludes CDI) declined 344
basis points of sales for the 13 weeks ended January 30, 2016 compared
to the prior year fourth quarter. The decline resulted primarily from
higher markdowns during the quarter as the Company responded to weak
sales. Inventory was flat at January 30, 2016 compared to January 31,
2015. Consolidated gross margin for the 13 weeks ended January 30, 2016
declined 318 basis points of sales compared to the prior year fourth
quarter.

Gross margin from retail operations declined 107 basis points of sales
for the 52 weeks ended January 30, 2016 compared to the prior 52 weeks
ended January 31, 2015. Consolidated gross margin for the 52 weeks ended
January 30, 2016 declined 144 basis points of sales compared to the
prior 52 weeks ended January 31, 2015.

Selling, General & Administrative Expenses

Selling, general and administrative expenses (“operating expenses”) were
$449.4 million (21.7% of sales) and $457.5 million (21.4% of sales)
during the 13 weeks ended January 30, 2016 and January 31, 2015,
respectively. Primary areas of expense savings included supplies,
advertising and payroll.

Operating expenses were $1.670 billion (25.3% of sales) and $1.664
billion (25.1% of sales) during the 52 weeks ended January 30, 2016 and
January 31, 2015, respectively. The increase of $6.0 million during the
year was primarily driven by increased selling payroll expense partially
offset by decreased advertising expense.

Share Repurchase

During the 13 weeks ended January 30, 2016, the Company purchased $117.5
million (1.6 million shares) of Class A Common Stock under its $500
million share repurchase program, completing the plan authorization.
During the 52 weeks ended January 30, 2016, the Company purchased $500
million (5.3 million shares) of Class A Common Stock. Total shares
outstanding (Class A and Class B Common Stock) at January 30, 2016 and
January 31, 2015 were 35.9 million and 41.2 million, respectively.

Store Information

During fiscal 2015, Dillard’s opened three new stores at Fashion Place
in Murray, Utah (200,000 square feet replacing 190,000 square feet),
Fremaux Town Center in Slidell, Louisiana (126,000 square feet) and
Liberty Center in Cincinnati, Ohio (155,000 square feet). The Company
closed two clearance stores comprising 245,000 square feet. Dillard’s
has announced the upcoming closure of its Aiken Mall location in Aiken,
South Carolina. The store is expected to close during the first quarter
of 2016.

At January 30, 2016, the Company operated 273 Dillard’s locations and 24
clearance centers spanning 29 states and an Internet store at www.dillards.com.
Total square footage at January 30, 2016 was 50.1 million.

 
 
 
 
 
Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In Millions, Except Per Share Data)
 
      13 Weeks Ended     52 Weeks Ended
January 30, 2016     January 31, 2015 January 30, 2016     January 31, 2015
Amount    

% of

Net

Sales

Amount    

% of

Net

Sales

Amount    

% of

Net

Sales

Amount    

% of

Net

Sales

Net sales $ 2,073.7 100.0 % $ 2,135.5 100.0 % $ 6,595.6 100.0 % $ 6,621.1 100.0 %
Service charges and other income   43.7 2.1   44.1   2.1   158.9 2.4   159.1 2.4
2,117.4 102.1 2,179.6 102.1 6,754.5 102.4 6,780.2 102.4
 
Cost of sales 1,457.1 70.3 1,432.7 67.1 4,350.8 66.0 4,272.6 64.5
Selling, general and administrative expenses 449.4 21.7 457.5 21.4 1,669.9 25.3 1,663.9 25.1
Depreciation and amortization 62.8 3.0 63.9 3.0 250.0 3.8 250.7 3.8
Rentals 9.4 0.5 9.5 0.4 26.7 0.4 27.0 0.4
Interest and debt expense, net 16.1 0.8 15.7 0.7 60.9 0.9 61.3 0.9
Gain (loss) on disposal of assets   3.1 0.2   (0.3 ) 0.0   12.6 0.2   6.1 0.1
Income before income taxes and income on and equity in losses of
joint ventures
125.7 6.1 200.0 9.4 408.8 6.2 510.8 7.7
Income taxes 42.1 69.5 140.8 179.5
Income on and equity in losses of joint ventures   0.4 0.0     0.0   1.4 0.0   0.6 0.0
Net income $ 84.0 4.1 % $ 130.5   6.1 % $ 269.4 4.1 % $ 331.9 5.0 %
 
Basic and diluted earnings per share $ 2.31 $ 3.17 $ 6.91 $ 7.79
Basic and diluted weighted average shares 36.4 41.2 39.0 42.6
 
 
 
 
 
 
Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In Millions)
         

January 30,

2016

January 31,

2015

Assets
Current Assets:
Cash and cash equivalents $ 202.9 $ 403.8
Restricted cash 7.3
Accounts receivable 47.1 56.5
Merchandise inventories 1,374.5 1,374.5
Other current assets   44.4   46.3
Total current assets 1,668.9 1,888.4
 
Property and equipment, net 1,939.8 2,029.2
Other assets   256.9   252.5
 
Total Assets $ 3,865.6 $ 4,170.1
 
Liabilities and Stockholders’ Equity
Current Liabilities:
Trade accounts payable and accrued expenses $

691.3

$ 730.4
Current portion of long-term debt and capital leases 3.3 0.8
Federal and state income taxes   56.6   69.4
Total current liabilities

751.2

800.6
 
Long-term debt and capital leases 622.1 620.7
Other liabilities

238.9

250.5
Deferred income taxes 258.1 279.0
Subordinated debentures 200.0 200.0
Stockholders’ equity   1,795.3   2,019.3
 
Total Liabilities and Stockholders’ Equity $ 3,865.6 $ 4,170.1
 
 
 
 
 
 
Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In Millions)
         
52 Weeks Ended

January 30,

2016

January 31,

2015

Operating activities:
Net income $ 269.4 $ 331.9
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of property and other deferred cost 252.1 252.3
Deferred income taxes (36.0 ) (30.9 )
Gain on disposal of assets (12.6 ) (6.1 )
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 9.4 (25.7 )
Increase in merchandise inventories (29.1 )
Decrease in other current assets 2.9 1.4
Decrease in other assets 2.9 1.0
(Decrease) increase in trade accounts payable and accrued expenses
and other liabilities
(33.7 ) 104.9
(Decrease) increase in income taxes payable   (4.2 )   11.9  
Net cash provided by operating activities   450.2     611.6  
 
Investing activities:
Purchase of property and equipment (165.7 ) (151.9 )
Proceeds from disposal of assets 25.5 14.8
Decrease (increase) in restricted cash 7.3 (7.3 )
Distribution from joint venture       1.1  
Net cash used in investing activities   (132.9 )   (143.3 )
 
Financing activities:
Principal payments on long-term debt and capital lease obligations (5.3 ) (0.8 )
Cash dividends paid (10.0 ) (10.4 )
Purchase of treasury stock (500.0 ) (290.4 )
Issuance cost of line of credit   (2.9 )    
Net cash used in financing activities   (518.2 )   (301.6 )
 
(Decrease) increase in cash and cash equivalents (200.9 ) 166.7
Cash and cash equivalents, beginning of period   403.8     237.1  
Cash and cash equivalents, end of period $ 202.9   $ 403.8  
 
Non-cash transactions:
Accrued capital expenditures $ 10.9 $ 12.1
Capital lease 9.1
Stock awards 2.8 2.8
 
 
 
 

Estimates for 2016

The Company is providing the following estimates for certain financial
statement items for the fiscal year ending January 28, 2017 based upon
current conditions. Actual results may differ significantly from these
estimates as conditions and factors change – See “Forward-Looking
Information.”

 
                          In Millions
2016     2015
Estimated Actual
Depreciation and amortization $   250   $     250  
Rentals 27 27
Interest and debt expense, net 61 61
Capital expenditures 150 166
 
 

Forward-Looking Information

The foregoing contains certain “forward-looking statements” within the
definition of federal securities laws. The following are or may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995: statements including (a) words
such as “may,” “will,” “could,” “believe,” “expect,” “future,”
“potential,” “anticipate,” “intend,” “plan,” “estimate,” “continue,” or
the negative or other variations thereof, and (b) statements regarding
matters that are not historical facts. The Company cautions that
forward-looking statements contained in this report are based on
estimates, projections, beliefs and assumptions of management and
information available to management at the time of such statements and
are not guarantees of future performance. The Company disclaims any
obligation to update or revise any forward-looking statements based on
the occurrence of future events, the receipt of new information, or
otherwise. Forward-looking statements of the Company involve risks and
uncertainties and are subject to change based on various important
factors. Actual future performance, outcomes and results may differ
materially from those expressed in forward-looking statements made by
the Company and its management as a result of a number of risks,
uncertainties and assumptions. Representative examples of those factors
include (without limitation) general retail industry conditions and
macro-economic conditions; economic and weather conditions for regions
in which the Company’s stores are located and the effect of these
factors on the buying patterns of the Company’s customers, including the
effect of changes in prices and availability of oil and natural gas; the
availability of consumer credit; the impact of competitive pressures in
the department store industry and other retail channels including
specialty, off-price, discount and Internet retailers; changes in
consumer spending patterns, debt levels and their ability to meet credit
obligations; changes in legislation, affecting such matters as the cost
of employee benefits or credit card income; adequate and stable
availability and pricing of materials, production facilities and labor
from which the Company sources its merchandise; changes in operating
expenses, including employee wages, commission structures and related
benefits; system failures or data security breaches; possible future
acquisitions of store properties from other department store operators;
the continued availability of financing in amounts and at the terms
necessary to support the Company’s future business; fluctuations in
LIBOR and other base borrowing rates; potential disruption from
terrorist activity and the effect on ongoing consumer confidence;
epidemic, pandemic or other public health issues; potential disruption
of international trade and supply chain efficiencies; world conflict and
the possible impact on consumer spending patterns and other economic and
demographic changes of similar or dissimilar nature. The Company’s
filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the fiscal year ended January 31, 2015,
contain other information on factors that may affect financial results
or cause actual results to differ materially from forward-looking
statements.

Contacts

Dillard’s, Inc.
Julie Johnson Bull, 501-376-5965
julie.bull@dillards.com