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Dillard's sales in comparable stores decline
28
Aug '08
Dillard's Inc announced operating results for the 13 weeks ended August 2, 2008.

Net loss for the 13 weeks ended August 2, 2008 was $38.3 million ($0.51 per share) compared to net loss of $25.2 million ($0.31 per share) for the 13 weeks ended August 4, 2007. Included in net loss for the 13 weeks ended August 2, 2008 is a pretax gain of $17.9 million ($11.2 million after tax or $0.15 per share) primarily related to the sale of an airplane and asset impairment and store closing charges of $9.8 million ($6.1 million after tax or $0.08 per share).

Dillard's Chief Executive Officer, William Dillard, II, stated, “We continued to manage our business conservatively during the second quarter in the prevailing economic uncertainty. However, our accomplishments with expense reduction were not sufficient to offset large disappointments in sales and gross margin.

Clearly, we believe our continued efforts to reduce both capital and operating expenditures and to close under-performing stores are appropriate as we weather challenging economic times. At the same time, we remain focused on fashion and on presenting our customers with an exciting and differentiated assortment storewide.”

Dillard's will drive awareness of its new fall looks with the “Dillard's – The Style of Your Life.” campaign which will be featured in top fashion publications and online and supported by in-store events.

Highlights of Dillard's second quarter include:
• Control of inventory in a difficult retail environment with comparable inventory declining 5%.
• Reduction of advertising, selling, administrative and general expenses (“S G & A”) with a decline of $17.2 million during the second quarter.
• Continuing review of store base for closures with seven more announced since the first quarter press release for a total of 14 store closures announced to date for fiscal year 2008.
• Repurchase of $17.4 million (1.8 million shares) of Class A Common Stock under the Company's $200 million share repurchase plan.

Revenues:
Sales for the 13 weeks ended August 2, 2008 were $1.608 billion compared to sales for the 13 weeks ended August 4, 2007 of $1.649 billion. Total sales declined 3% during the 13-week period. Sales in comparable stores declined 4%.
During the 13 weeks ended August 2, 2008, net sales were above the Company's average performance trend in the Central region and below trend in the Eastern and Western regions. Sales in the juniors' and children's apparel category and in the home and furniture category were significantly below trend during the period.

Gross Margin/Cost of Sales:
Gross margin declined 170 basis points of sales during the 13 weeks ended August 2, 2008 primarily as a result of increased markdowns in a notably difficult sales environment. Inventory in comparable stores declined 5% as of August 2, 2008 compared to August 4, 2007. Cost of sales as a percentage of sales for the period was 70.2% compared to 68.5% for the prior year second quarter.


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