Dillard's Inc announced operating results for the 13 weeks ended August 4, 2007.
Net loss for the 13 weeks ended August 4, 2007 was $25.2 million ($0.31 per diluted share) compared to net income of $15.7 million ($0.20 per diluted share) for the 13 weeks ended July 29, 2006. Dillard's attributes the disappointing performance primarily to a gross margin decline (190 basis points of sales) as lackluster sales during the quarter necessitated higher markdown activity in order to maintain acceptable inventory levels. Inventory in comparable stores at August 4, 2007 declined 4% compared to the prior year second quarter.
Included in net income for the prior year second quarter are the following items:
• A pretax gain on the sale of the Company's interest in a mall joint venture of $13.5 million ($8.5 million after-tax or $0.11 per diluted share).
• Settlement proceeds of $6.5 million ($4.0 million after-tax or $0.05 per diluted share) received from the Visa Check/Mastermoney Antitrust litigation.
• A pretax charge of $21.7 million ($13.6 million after-tax or $0.17 per diluted share) for a memorandum of understanding reached in a litigation case.
• Recognition of an income tax benefit of approximately $5.8 million ($0.07 per diluted share) for the change in a capital loss valuation allowance due to capital gain income during the quarter and $6.5 million ($0.08 per diluted share) due to the release of tax reserves.
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