Arkansas-based Dillard's to open fewer stores in 2009
01 Nov '08
2 min read
Dillard's Inc responded to concerns raised regarding its financial strength.
We reiterate our belief that the best way to serve the long-term interests of all stakeholders is to operate our business conservatively in light of the near-term economic uncertainty. Accordingly, we would like to highlight the following:
* We maintain a $1.2 billion revolving credit facility with JP Morgan Chase Bank as the lead agent. The credit agreement expires December 12, 2012. There are no financial covenants under this facility provided availability exceeds $100 million. Even at peak working capital requirements in late November, availability should well exceed $500 million.
* After we pay the $100 million 6.625% notes maturing on November 15, 2008, total maturities of long-term debt over the next two years are less than $26 million.
* We have announced the closure of 20 under-performing stores in 2008 to date. This action will result in over $50 million less working capital requirement from inventory alone. We are continually evaluating the store base and anticipate more closures in 2009.
* New store openings in 2009 have been reduced to two compared to ten in 2008. Capital expenditures for 2009 have been trimmed to approximately $120 million from approximately $204 million in fiscal 2008 following $396 million in fiscal 2007. Rating agency metrics ignore the greatly enhanced cash flows from this significant reduction in capital expenditures.
* We expect over $50 million of savings in advertising, selling, administrative and general expenses in fiscal 2008 as a result of measures implemented earlier in the year. We continually review our expenses for additional reduction.
Dillard's remains committed to maintaining our conservative financial posture as we navigate the most challenging economic time in modern history. At the same time, we remain focused on presenting exciting, differentiated choices in fashion and on serving our customers exceptionally well during the important upcoming holiday season.
Dillard's, Inc. is one of the nation's largest fashion apparel and home furnishing retailers. The Company's stores operate with one name, Dillard's, and span 29 states. Dillard's stores offer a broad selection of merchandise, including products sourced and marketed under Dillard's exclusive brand names.
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