On August 15, 2024, Dillard's Inc (DDS, Financial) released its 8-K filing detailing the company's financial performance for the second quarter and year-to-date results. Dillard's Inc is an American fashion apparel, cosmetics, and home furnishings retailer, operating in two business segments: Retail Operations and Construction. The company also runs a general contracting construction company, CDI Contractors.
Performance Overview
Dillard's Inc reported a net income of $74.5 million, or $4.59 per share, for the 13 weeks ended August 3, 2024, compared to $131.5 million, or $7.98 per share, for the same period in 2023. This result fell short of the analyst estimate of $5.95 per share. Net sales for the quarter were $1.490 billion, down from $1.567 billion in the prior year, missing the estimated revenue of $1.528 billion.
Key Financial Metrics
For the 26 weeks ended August 3, 2024, Dillard's reported net income of $254.5 million, or $15.68 per share, compared to $333.0 million, or $19.89 per share, for the same period in 2023. Net sales for the 26 weeks were $3.039 billion, down from $3.151 billion in the prior year.
| Metric | Q2 2024 | Q2 2023 | 26 Weeks 2024 | 26 Weeks 2023 |
|---|---|---|---|---|
| Net Sales ($ million) | 1,490 | 1,567 | 3,039 | 3,151 |
| Net Income ($ million) | 74.5 | 131.5 | 254.5 | 333.0 |
| Earnings Per Share ($) | 4.59 | 7.98 | 15.68 | 19.89 |
Challenges and Commentary
Dillard's faced a challenging consumer environment, which impacted its profitability. The company's CEO, William T. Dillard, II, commented, "We are disappointed with our weak performance in the second quarter. While the consumer environment remained challenged, our expenses were up, squeezing our profitability. We are working to address this. We ended the quarter with over $1 billion in cash and short-term investments."
Financial Achievements
Despite the challenges, Dillard's maintained a strong cash position with over $1 billion in cash and short-term investments. The company's gross margin for the 26 weeks ended August 3, 2024, was 41.2% of sales, compared to 41.3% in the prior year. Retail gross margin was 42.7%, slightly down from 43.0% in the previous year.
Income Statement Highlights
For the second quarter, Dillard's reported a consolidated gross margin of 37.6% of sales, down from 38.8% in the prior year. Retail gross margin was 39.1%, compared to 40.4% in the previous year. Operating expenses increased to $433.6 million (29.1% of sales) from $412.6 million (26.3% of sales) in the prior year, primarily due to increased payroll expenses.
Balance Sheet and Cash Flow
As of August 3, 2024, Dillard's reported total assets of $3.661 billion, up from $3.512 billion in the prior year. The company's cash and cash equivalents increased to $946.7 million from $774.3 million. Net cash provided by operating activities for the 26 weeks was $175.9 million, down from $397.9 million in the prior year.
Analysis and Outlook
Dillard's Inc's performance in the second quarter reflects the broader challenges faced by the retail industry, including a difficult consumer environment and rising expenses. The company's efforts to manage expenses and maintain a strong cash position are crucial as it navigates these challenges. Investors will be closely watching Dillard's strategies to improve profitability and adapt to changing market conditions.
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Explore the complete 8-K earnings release (here) from Dillard's Inc for further details.
