Dillard's reported a $7.7 million profit in the first quarter of 2009, which is 185% higher than the $2.7 million gained in the first quarter of 2008. In addition, the profit breaks a three quarter streak of negative profits for the company. The company attributes the profit to inventory reductions and by cutting costs through advertising, payroll, and supplies.
In January 2011, Dillard's announced that it intended to set up a real estate investment trust (REIT), which analysts say would allow the company to borrow around $1.7 billion dollars. Dillard's, which owns 87% of its 310 stores, has real estate valued at around $2.8 billion. With the money Dillard's would be able to buy back stock, which would increase earnings-per share numbers and potentially share prices.
Dillard's has gone through relatively unnoticed store changes since 2007 in order to revive the store's sales and bottom line. The company has managed to cut costs by closing 27 under-performing stores since 2008. Dillard's has also switched to a more boutique-like department store like Macy's and Bloomingdales rather than trying to compete with discount stores like Kohl's. Additionally, the company has been buying fewer but higher quality items in order to match this new feeling. These changes have been overshadowed over the past couple over years due to the sluggish economy and a lack of consume spending. However, as the economy recovers and consumers start spending more, we are now seeing the positive affects of Dillard's re-birth. In Q3 2010, the company's net income was $14.4 million compared to $8 million in 2009. Over the course of 2010, the company's stock price nearly doubled. If the company can sustain this growth, investors will be pleased.
Although DDS sales and profits have been pummeled by the slow-down in consumer demand for its mid-to-high-end goods during this recession, DDS has implemented large cost-saving measures such as closing 20 under-performing stores in 2008 and cutting 500 jobs, or 0.8% of its workforce. Working capital expenditures are expected to be $50 million less in 2008, and more store closures are expected in 2009. The company also has strong debt structure with ample cash availability, with debt of less than $26 million in the next two years, as of Nov. 15, 2008. Costs cuts and maintained good debt structure allow DDS to improve its performance to shield some of the effect of the economic downturn. [1]
