Dillard's 2005 Annual Report Download - page 25

The percent change by region in the Company’s sales for the past two years is as follows:
Percent Change
Fiscal
2005-2004
Fiscal
2004-2003
Eastern ................................................. 2.7 0.2
Central ................................................. (1.7) (2.2)
Western ................................................ 3.4 1.5
Sales were unchanged on a percentage basis for the 52-week period ended January 28, 2006 compared to the
52-week period ended January 29, 2005 on both a total and comparable store basis. Sales were strongest in shoes
and accessories and lingerie with sales increases also noted in cosmetics, junior’s clothing and men’s clothing.
Sales declined in the remaining merchandising categories with significant decreases noted in furniture. Sales
were strongest and increased in the Western and Eastern regions in fiscal 2005 while sales declined in the Central
region. Dillard’s will continue to make notable changes to its merchandise mix, positioning its stores toward a
more upscale and contemporary tone in an effort to attract new customers who are seeking exciting statements in
fashion while at the same time Dillard’s will work to maintain valued relationships with its existing loyal
customer base by providing updated fashion choices, dependable quality, reliable service and measurable value.
The Company will continue to use existing technology and research to edit its assortments by store to meet the
specific preference, taste and size requirements of each local operating area. During the fiscal years 2005, 2004
and 2003, sales of exclusive brand merchandise as a percent of total sales were 24.0%, 23.1% and 20.9%,
respectively.
During the year ended January 28, 2006, Hurricane Katrina, Hurricane Rita and Hurricane Wilma
interrupted operations in approximately 60 of the Company’s stores for varying amounts of time.
Three stores remain closed as a result of Hurricane Katrina. These stores are located in the New Orleans
area (two stores), and Biloxi, Mississippi. The Company’s Port Arthur, Texas store remains closed as a result of
Hurricane Rita. The Company expects these four stores in the Gulf area to remain closed for at least the first half
of fiscal year 2006. Property and merchandise losses in the affected stores are covered by insurance.
Sales decreased 1% for the 52-week period ended January 29, 2005 compared to the 52-week period ended
January 31, 2004 on both a total and comparable store basis. Sales were strongest and increased in cosmetics and
shoes, accessories and lingerie while sales declined in the remaining merchandising categories. Sales in the
Western and Eastern regions increased in fiscal 2005 while sales declined in the Central region.
Cost of Sales
Cost of sales as a percentage of sales decreased to 66.3% during 2005 compared with 66.6% for 2004. The
increase of 30 basis points in gross margin during fiscal 2005 was due to a $29.7 million hurricane recovery gain
related to insurance settlements received covering losses incurred in the 2005 hurricane season. Excluding the
effect of the insurance gain, gross margin declined six basis points of sales as a result of slightly higher levels of
markdowns compared to the year ended January 29, 2005. Gross margins were higher in shoes, women’s,
juniors, and children’s categories compared with the prior year with lower gross margin noted in cosmetics,
men’s, lingerie and accessories, decorator home and furniture categories.
Total inventory at January 28, 2006 compared to January 29, 2005 increased 4%, while inventory in
comparable stores increased 3%.
Cost of sales as a percentage of sales decreased to 66.6% during 2004 compared with 68.0% for 2003. The
increase of 140 basis points in gross margin during fiscal 2004 was due to the Company’s successful efforts to
17