Dillard’s, Inc. Reports Record Second Quarter Earnings per Share

  Dillard’s, Inc. Reports Record Second Quarter Earnings per Share

Business Wire

LITTLE ROCK, Ark. -- August 14, 2013

Dillard’s, Inc. (NYSE: DDS) (the “Company” or “Dillard’s”) announced operating
results for the 13 and 26 weeks ended August 3, 2013. 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.”

Highlights of the Company’s Second Quarter Performance

  *A 25% increase in second quarter earnings per share compared to the prior
    year
  *A 1% increase in comparable store sales
  *Merchandise gross margin improvement of 10 basis points of sales

Second Quarter Results

Dillard’s reported net income for the 13 weeks ended August 3, 2013 of $36.5
million, or $0.79 per share compared to net income of $31.0 million, or $0.63
per share, for the prior year second quarter.

Dillard’s Chief Executive Officer, William T. Dillard, II, stated, “Following
a strong start to the year, we made further progress in the second quarter.
Positive comparable store sales and gross margin expansion combined with
continued expense control enabled us to report another quarter of year over
year improvement at Dillard’s.”

26 Week Results

Dillard’s reported net income for the 26 weeks ended August 3, 2013 of $153.7
million, or $3.30 per share compared to net income of $126.0 million, or $2.53
per share, for the prior year 26-week period. Included in net income for the
26-week period ended August 3, 2013 is a net after-tax credit totaling $4.4
million ($0.09 per share) comprised of the following three items:

  *A $7.6 million after tax gain ($0.16 per share) related to the sale of an
    investment
  *A $1.0 million after tax credit ($0.02 per share) related to a pension
    adjustment
  *After-tax asset impairment and store closing charges of $4.2 million
    ($0.09 per share)

Excluding this credit, Dillard’s would have reported net income of $149.3
million ($3.20 per share) for the 26-week period ended August 3, 2013, a 26%
earnings per share increase over the prior year 26-week performance.

Net Sales

Net sales for the 13 weeks ended August 3, 2013 were $1.480 billion and $1.488
billion for the 13 weeks ended July 28, 2012. Net sales include the operations
of the Company’s construction business, CDI Contractors, LLC (“CDI”).

Total merchandise sales (which exclude CDI) for the 13-week period ended
August 3, 2013 were $1.459 billion and $1.456 billion for the 13-week period
ended July 28, 2012. Total merchandise sales were unchanged on a percentage
basis for the 13-week period ended August 3, 2013. Sales in comparable stores
for the period increased 1%.

Sales trends were notably strong in ladies’ accessories and lingerie followed
by juniors’ and children’s apparel. Sales were weakest in the home and
furniture category followed by ladies’ apparel. Sales trends were strongest in
the Central region, followed by the Western and Eastern regions, respectively.

Gross Margin/Inventory

Gross margin from retail operations (which excludes CDI) improved 10 basis
points of sales to 34.4% for the 13 weeks ended August 3, 2013 compared to
34.3% for the prior year second quarter. Consolidated gross margin for the 13
weeks ended August 3, 2013 improved 40 basis points of sales to 34.0% from
33.6% during the prior year second quarter. Inventory increased 7% at August
3, 2013 compared to July 28, 2012.

Selling, General & Administrative Expenses

Selling, general and administrative expenses (“operating expenses”) were
$398.2 million (26.9% of sales) and $398.8 million (26.8%) during the 13 weeks
ended August 3, 2013 and the 13 weeks ended July 28, 2012, respectively.
Decreases in advertising expense and services purchased were partially offset
by increases in selling payroll expense and insurance.

Store Information

During the second quarter of 2013, the Company closed its Randolph Mall
location in Asheboro, North Carolina (60,000 square feet).

At August 3, 2013, the Company operated 282 Dillard’s locations and 18
clearance centers spanning 29 states and an Internet store at
www.dillards.com. Total square footage at August 3, 2013 was 50.9 million.




Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In Millions, Except Per Share Data)

                                  13 Weeks Ended        13 Weeks Ended
                                   August 3, 2013        July 28, 2012
                                                                   
                                               % of                   % of
                                               Net                    Net
                                   Amount                 Amount
                                               Sales                  Sales
                                                                      
Net sales                          $ 1,479.9   100.0. %   $ 1,487.9   100.0. %
Service charges and other income    36.9      2.5         37.3      2.5
                                     1,516.8   102.5        1,525.2   102.5
                                                                      
Cost of sales                        976.8     66.0         987.8     66.4
Selling, general and                 398.2     26.9         398.8     26.8
administrative expenses
Depreciation and amortization        64.2      4.3          64.2      4.3
Rentals                              5.5       0.4          8.6       0.6
Interest and debt expense, net       16.3      1.1          17.7      1.2
Gain on disposal of assets           -         0.0          0.1       0.0
Income before income taxes and
income on and equity in losses       55.8      3.8          48.2      3.2
of joint ventures
Income taxes                         19.7                   17.3
Income on and equity in losses      0.4       0.0         0.1       0.0
of joint ventures
Net income                         $ 36.5      2.5    %   $ 31.0      2.1    %
                                                                      
Basic earnings per share           $ 0.79                 $ 0.64
Diluted earnings per share         $ 0.79                 $ 0.63
Basic weighted average shares       46.3                  48.3
Diluted weighted average shares     46.3                  49.2




Dillard’s, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In Millions, Except Per Share Data)

                                    26 Weeks Ended       26 Weeks Ended
                                     August 3, 2013       July 28, 2012
                                                                    
                                                 % of                  % of
                                                 Net                   Net
                                     Amount                Amount
                                                 Sales                 Sales
                                                                     
Net sales                            $ 3,029.0   100.0 %   $ 3,037.2   100.0 %
Service charges and other income      77.2      2.5        73.9      2.4
                                       3,106.2   102.5       3,111.1   102.4
                                                                       
Cost of sales                          1,914.6   63.2        1,944.7   64.0
Selling, general and                   788.4     26.0        792.0     26.1
administrative expenses
Depreciation and amortization          129.4     4.3         128.2     4.2
Rentals                                11.1      0.4         16.9      0.6
Interest and debt expense, net         32.6      1.1         35.1      1.2
Gain on disposal of assets             12.4      0.4         1.1       0.0
Asset impairment and store closing    6.5       0.2        -         0.0
charges
Income before income taxes and
income on and equity in losses of      236.0     7.8         195.3     6.4
joint ventures
Income taxes                           83.1                  70.3
Income on and equity in losses of     0.8       0.0        1.0       0.0
joint ventures
Net income                           $ 153.7     5.1   %   $ 126.0     4.1   %
                                                                       
Basic earnings per share             $ 3.30                $ 2.58
Diluted earnings per share           $ 3.30                $ 2.53
Basic weighted average shares         46.6                 48.8
Diluted weighted average shares       46.6                 49.8




Dillard’s, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)
(In Millions)
                                                                  
                                                         August 3,   July 28,
                                                         2013        2012
Assets
Current Assets:
Cash and cash equivalents                                $ 113.7     $ 162.5
Accounts receivable                                        26.2        33.4
Merchandise inventories                                    1,459.3     1,362.1
Other current assets                                      50.1       44.6
Total current assets                                       1,649.3     1,602.6
                                                                     
Property and equipment, net                                2,198.7     2,388.1
Other assets                                              259.5      270.8
                                                                     
Total Assets                                             $ 4,107.5   $ 4,261.5
                                                                     
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses              $ 713.1     $ 699.0
Other short term borrowings                                -           24.0
Current portion of long-term debt and capital leases       0.9         78.2
Federal and state income taxes including current          83.5       74.3
deferred taxes
Total current liabilities                                  797.5       875.5
                                                                     
Long-term debt and capital leases                          621.9       622.8
Other liabilities                                          229.2       246.7
Deferred income taxes                                      248.0       295.0
Subordinated debentures                                    200.0       200.0
Stockholders' equity                                      2,010.9    2,021.5
                                                                     
Total Liabilities and Stockholders' Equity               $ 4,107.5   $ 4,261.5




Dillard’s, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In Millions)

                                                       26 Weeks     26 Weeks

                                                       Ended        Ended
                                                                
                                                       August 3,    July 28,

                                                       2013         2012
Operating activities:                                            
Net income                                             $ 153.7      $ 126.0
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of property and            130.3        129.2
deferred financing cost
Gain on disposal of assets                               (12.4  )     (1.1   )
Asset impairment and store closing charges               6.5          -
Excess tax benefits from share-based compensation        -            (2.0   )
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable               5.3          (4.7   )
Increase in merchandise inventories                      (164.7 )     (58.1  )
Increase in other current assets                         (7.5   )     (9.9   )
Decrease in other assets                                 1.3          7.8
Increase in trade accounts payable and accrued           54.9         44.4
expenses and other liabilities
Decrease in income taxes payable                       (35.7  )   (78.8  )
Net cash provided by operating activities              131.7     152.8  
Investing activities:
Purchase of property and equipment                       (40.9  )     (86.7  )
Proceeds from disposal of assets                       18.3      7.8    
Net cash used in investing activities                  (22.6  )   (78.9  )
Financing activities:
Principal payments on long-term debt and capital
lease                                                    (1.2   )     (2.0   )

obligations
Cash dividends paid                                      (2.3   )     (5.0   )
Purchase of treasury stock                               (114.7 )     (153.1 )
Increase in short term borrowings                        -            24.0
Excess tax benefits from share-based compensation        -            2.0
Proceeds from stock issuance                             -            3.7
Issuance cost of line of credit                        (1.3   )   (5.3   )
Net cash used in financing activities                  (119.5 )   (135.7 )
Decrease in cash and cash equivalents                    (10.4  )     (61.8  )
Cash and cash equivalents, beginning of period         124.1     224.3  
Cash and cash equivalents, end of period              $ 113.7    $ 162.5  
Non-cash transactions:
Accrued capital expenditures                           $ 3.3        $ 3.4
Stock awards                                             0.8          2.8
Accrued treasury stock purchase                          -            9.0
                                                                             
                                                                             

Estimates for 2014

The Company is providing the following estimates for certain financial
statement items for the fiscal year ending February 1, 2014 based upon current
conditions. Actual results may differ significantly from these estimates as
conditions and factors change – See “Forward-Looking Information.”

                                In millions
                                 2013        2012
                                           
                                 Estimated   Actual
Depreciation and amortization    $   261    $ 260
Rentals                              27        35
Interest and debt expense, net       65        70
Capital expenditures                 125       137
                                                   
                                                   

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 February 2,
2013, contain other information on factors that may affect financial results
or cause actual results to differ materially from forward-looking statements.

Contact:

Dillard’s, Inc.
Julie Johnson Bull, 501-376-5965