Net sales in the first quarter fell to $1.803 billion, a 3% decrease from $1.854 billion during the same period last year. Gross margin for Q1 declined 90 basis points as a percentage of sales due to slashed prices "as the company monitored and responded to lower than expected sales performance," states the report.
The eastern and western regions proved to be a high point for Dillard's. While the company's lingerie, accessories and shoe sales outperformed, performance of women's apparel and furniture plummeted.
After the disappointing results, the company said it would "continue to use existing technology and research to edit its assortments by store to meet the specific preference, taste and size requirements of the local area."
The assessment may prove crucial to Dillard's survival. The merger of Federated Department Stores Inc. and May Department Stores Co., which operates stores in many of the same markets as Dillard's, is expected to close in the third quarter. The completed union will bring Federated's merchandising expertise into May's stores, placing even more pressure on Dillard's to improve its offerings.
In March, the company opened four stores, which included: a 240,000-sf store at St. Johns Town Center, Jacksonville, FL; a 140,000-sf unit at Imperial Valley Mall, El Centro, CA; a 200,000-sf store at Crestview Hills Town Center, Crestview Hills, KY; and a 260,000-sf store at Perimiter Mall, Atlanta.
In April, Dillard's closed four stores, which consisted of: a 362,000-sf unit at Westgate Shopping Center, Cleveland; a 100,000-sf store at Harding Mall, Nashville; a 50,000-sf store at Harper's Station Home Store, Cincinnati; and a 188,000-sf store at River Falls Mall.
After Tuesday's closing bell, Dillard's announced its board of directors has approved a buyback of up to $200 million of its class A common shares. Dillard's stores offer products sourced and marketed under Dillard's exclusive brand names. The company currently owns 329 stores in 29 states.
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