Dillard’s reports 26% fall in profit

Retailer’s shares decline by 6.4%

Dillard’s Inc. shares dropped 6.4 percent Monday after the retailer missed Wall Street expectations in posting a fourth-quarter profit of $119.1 million.

Dillard’s net income for the period fell 26 percent compared with last year’s $161.4 million.

Excluding an after-tax credit of $800,000, the company would have reported a profit of $118.3 million for the quarter that ended Feb. 1.

Earnings per share for the quarter were $2.71, compared with $3.36 per share during the same period a year ago.Analysts polled by Bloomberg News were predicting earnings of $2.99 per share.

“Although it was a profitable fourth quarter, we are disappointed in our gross margin performance, as lower-than-anticipated sales necessitated heavier markdowns,” CEO William Dillard II said in a statement. “We are pleased with our expense control as well as with our strong cash flow for the year.”

Dillard’s shares fell $5.73 to close Monday at $83.60 in heavy trading volume on the New York Stock Exchange. The department released its quarterly financial results before the markets opened.

Total sales and other income were $2.08 billion in the fourth quarter, down from $2.15 billion in 2013. The retailer’s sales total includes income from its construction business, CDI Contractors, LLC.

Total merchandise sales for the quarter, which exclude CDI Contractors, were $2.01 billion, compared with $2.09 billion a year ago.

Dillard’s said sales for the quarter were strongest in ladies accessories and lingerie, followed by shoes.

“This was just an amazingly competitive retail environment this quarter,” said Bob Williams, senior vice president and managing director of Delta Trust Investments Inc. “This was just a matter of them learning to adapt to the new retail environment that comes with the online retailers.”

Several other retailers missed their projected sales and earnings numbers during the fourth quarter, said Claudia Mobley, executive director for the Sam M. Walton College of Business’ Center for Retailing Excellence at the University of Arkansas.

“Weather was an influencer in people getting to the store,so we saw some increase in online shopping,” she said.

Retail sales increased more than expected in December. The Commerce Department reported a 0.2 percent gain in purchases, beating forecasts of a 0.1 percent increase.

The National Retail Federation expects industry sales to increase 4.1 percent this year from 2013, when they were about $3.1 trillion.

For the fiscal year, Dillard’s reported net sales of $6.53 billion, compared with $6.59 billion in the 2013 fiscal year.

Dillard’s had a net income of $323.7 million for the 2014 fiscal year, compared with $336 million during the previous year.

The company said it bought back $301.6 million, or 3.9 million shares, of stock during the fiscal year.

Dillard’s closed stores in Chapel Hill, N.C.; Plano, Texas; and Longmont, Colo., during the fourth quarter.

Business, Pages 21 on 02/25/2014

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