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'We will continue to maintain conservative fiscal posture' - Dillard's CEO
19
May '09
Dillard's Inc announced operating results for the thirteen weeks ended May 2, 2009.

Net income for the thirteen weeks ended May 2, 2009 was $7.7 million ($0.10 per share) compared to net income for the thirteen weeks ended May 3, 2008 of $2.7 million ($0.04 per share). Included in net income for the thirteen weeks ended May 2, 2009 is a pretax gain of $1.5 million ($0.9 million after tax or $0.01 per share) related to the repurchase of certain unsecured notes. Included in net income for the thirteen weeks ended May 3, 2008 are asset impairment and store closing charges of $0.9 million ($0.6 million after tax or $0.01 per share).

Dillard's Chief Executive Officer, William Dillard, II, commented, "We are pleased with our results for the first quarter considering the economic conditions in which we are operating. Our aggressive efforts with regard to inventory management, expense reduction and cash conservation clearly benefited us during the quarter.

We are particularly encouraged by our inventory management, which resulted in improved gross margin from retail operations of 150 basis points of sales during the quarter and a comparable store inventory decline of 17%. Additionally, we reduced first quarter operating expenses by $67 million. We will continue to maintain our conservative fiscal posture while focusing on further improving our merchandise assortments to position Dillard's well for the long term.”

Highlights of the thirteen weeks ended May 2, 2009 include:
• Inventory reduction of $371.3 million (18%) compared to the first quarter of 2008. Inventory in comparable stores declined 17%.
• Improved merchandise gross margin performance of 150 basis points of sales.
• Year over year debt reduction of $210.0 million following the repurchase of $5.0 million (face amount) of 9.125% unsecured notes.
• Positive cash flow from operations of $43.9 million compared to $36.5 million for the thirteen weeks ended May 3, 2008.
• Operating expense savings of $66.6 million.

Revenues
Net sales for the thirteen weeks ended May 2, 2009 were $1.474 billion compared to net sales for the thirteen weeks ended May 3, 2008 of $1.676 billion. Total merchandise sales declined 16% during the thirteen-week period. Merchandise sales in comparable stores declined 13%.

Gross Margin/Inventory
Gross margin from retail operations improved 150 basis points of sales during the thirteen weeks ended May 2, 2009 as a result of the Company's successful inventory management efforts evidenced by lower inventory levels, decreased purchases and decreased markdown activity.

Gross margin from retail operations excludes the effect of CDI Contractors, LLC, ("CDI"), a wholly-owned subsidiary of the Company. Including the effect of CDI, gross margin improved 20 basis points of sales during the first quarter. The Company purchased the remaining 50% interest of CDI on August 29, 2008.


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