Dillard’s reported a smaller fiscal first-quarter loss than analysts had expected and also said it is starting to reopen its stores.
The department store retailer posted a net loss of $162.0 million, or $6.94 per share, for the quarter ended May 2, compared to net income of $78.6 million, or $2.99 per share, for the year-ago period.
Net sales, which include the operations of the company’s construction business, plunged 46% to $786.7 million. Total retail sales (which excludes the construction business) decreased 47% to $751.0 million.
Dillard’s, which began reopening stores in select markets on May 5, has re-opened 149 locations to date, including 24 clearance centers. The retailer plans to re-open 116 Dillard's stores and five clearance centers next week, giving it a total of 241 Dillard's stores and 29 clearance centers open.
“COVID-19 has impacted every aspect of our business,” stated Dillard's CEO William T. Dillard, II. “The mall business in general and department stores, specifically, have been particularly hard hit. While our balance sheet was already strong, we took decisive, sometimes difficult, actions to preserve liquidity and ensure our long-term viability. As we re-open stores, we see positive things happening.”
Dillard's said it is uniquely positioned, among U.S. department store retailers, to weather the COVID-19 pandemic primarily because of its strong balance sheet and available liquidity. The company said its store rent obligations are small compared to the industry — it owns 90% of its retail store square footage and 100% of its corporate headquarters, distribution and fulfillment facilities.
Under mandatory store closures, Dillard’s said it took “extraordinary measures” to address excess inventory. The company began aggressively discounting merchandise to clear product beginning March 24th by offering an additional 40% off permanently marked down merchandise through April 1, which was immediately followed by an additional 50% off permanently marked down merchandise which was in effect most of April and extended through May 12.
Utilizing the ship-from-store capabilities of dillards.com, Dillard’s also was able to generate sales from closed store locations where allowed. In part as a result of its actions, inventory at May 2, 2020 decreased 14% compared to May 4, 2019.