Dillard's 2012 Annual Report Download - page 33

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Gross Profit
(in thousands of dollars) Fiscal 2012 Fiscal 2011 Fiscal 2010
Gross profit:
Retail operations segment ............. $2,340,754 $2,215,232 $2,138,103
Construction segment ................ 5,307 1,099 1,985
Total gross profit ...................... $2,346,061 $2,216,331 $2,140,088
Gross profit as a percentage of segment net
sales:
Retail operations segment ............. 36.1% 35.8% 35.5%
Construction segment ................ 5.1 1.6 2.0
Total gross profit as a percentage of net sales 35.6 35.4 35.0
2012 Compared to 2011
Gross profit improved 20 basis points of sales during fiscal 2012 compared to fiscal 2011. Gross
profit from retail operations improved 30 basis points of sales during the same periods as a result of
decreased markdowns and increased markups. Inventory in comparable stores decreased 1% as of
February 2, 2013 compared to January 28, 2012.
During fiscal 2012, gross margin improved moderately in the home and furniture category and
improved slightly in ladies’ accessories and lingerie. Gross margin in all other product categories was
essentially flat.
We believe that gross profit from retail operations will improve slightly during fiscal 2013 as
compared to fiscal 2012; however, there is no guarantee of improved gross margin performance.
Gross profit from the construction segment improved $4.2 million (350 basis points of sales). The
improvement was due to increased revenue and improved fee percentages on new contracts as well as a
$1.2 million loss that was recorded during fiscal 2011 on an electrical contract that was completed
during that period.
2011 Compared to 2010
Gross profit improved 40 basis points of sales during fiscal 2011 compared to fiscal 2010. Gross
profit from retail operations improved 30 basis points of sales during the same periods as a result of
increased markups partially offset by increased markdowns. Inventory in comparable stores increased
3% as of January 28, 2012 compared to January 29, 2011.
During fiscal 2011, gross margin improved moderately in the home and furniture category and
improved slightly in shoes and ladies’ apparel. Ladies’ accessories and lingerie and men’s apparel and
accessories experienced a slight decline in gross margin while all other merchandise categories were
flat.
Gross profit from the construction segment declined 40 basis points of sales during fiscal 2011
compared to fiscal 2010. This decline from the prior year was a result of fewer projects caused by the
reduction in demand for construction services combined with pricing pressures in an already
competitive marketplace. This decline was also due to a $1.2 million loss recorded during the year on
an electrical contract partially offset by a $2.5 million loss recorded in the prior year on certain
electrical contracts stemming from job delays related to bad weather and job underperformance.
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