Dive Brief:
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Total retail sales at Dillard’s (not including the company’s construction business) edged down 1% year over year in Q1 to $1.49 billion, with store comps down 2%.
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Retail gross margin expanded to 46.2% from 45.6% a year ago. Inventory was down 2% compared to April 29, 2023. Net income fell 10.7% to $180 million.
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In March, Dillard’s opened a new store at The Empire Mall in Sioux Falls, South Dakota, bringing its fleet — 274 stores, including 29 clearance centers — to a total of 30 states. In July, the department store will close its Eastwood Mall Clearance Center in Ohio.
Dive Insight:
Dillard’s managed to keep declines in check in what the company said was a tough quarter.
The department store beat expectations from UBS analysts, who earlier this month said they “believe [Dillard’s] comp sales and gross margin remain under pressure” and estimated that in Q1 comps would decline between 3% and 5% and gross margin would decline as much as 100 to 125 basis points. Instead, comps fell to a much lesser extent, and gross margin expanded.
“While the consumer environment remained challenging, we focused on profitable sales by offering interesting product combined with inventory control,” CEO William Dillard said in a statement, noting the favorable effects of that on gross margin and inventory. “For the first time in our history, we reported cash and short-term investments exceeding $1 billion.”
Cosmetics sales performed best, while men’s apparel and accessories were weakest, the company said. In terms of gross margin: Home and furniture, and ladies’ accessories and lingerie, had moderate increases; men’s apparel and accessories, ladies’ apparel, and juniors’ and children’s apparel had slight increases; and footwear and cosmetics margins were flat, per the release.
The department store launched several merchandising initiatives in the first quarter, part of a concerted effort to differentiate its assortment. Last month, one of its private labels debuted M.G. Style for Antonio Melani, a limited-edition capsule collection by Birmingham, Alabama-based stylist and wardrobe consultant Mary Glenn McElveen. Earlier this year, another of the retailer’s labels partnered with influencer Caelynn Bell on a spring and summer collection, and The Coterie Shop, a luxury concept in partnership with four fashion designers, opened in select stores and online.
