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Dillard’s posts big 2008 loss

Cuts costs, takes charges

Little Rock, Ark. – Department store chain Dillard’s posted a $241.1 million net loss, or $3.25 per share, for the year ended Jan. 31 – a stark reversal from earnings of $53.8 million, or 68 cents EPS, in 2007.

Full year sales of $6.83 billion at the 315-store chain fell 6% from $7.21 billion in 2007; comps fell 7%.

The 2008 losses included $136.5 million in after-tax asset impairment and store closing charges and $4.6 million in hurricane expenses, as well as a $15.5 million benefit from the sales of an historic store in San Antonio, Texas and of an airplane.

Dillard’s took the bulk of those charges in the fourth quarter, which resulted in a dismal net loss of $149.3 million, or $2.03 per share – down from net income of $47.3 million, or 63 cents EPS one year ago. Sales for Q4 fell 9% to $2.04 billion, with a comp drop of 8%.

“Due to the continued dramatic economic decline during the fourth quarter,” said Dillard’s ceo William Dillard, II, “we took aggressive, but costly, action to substantially reduce our inventory position which was down 23% year over year.

“Our extensive cost reduction measures resulted in $67.3 million in expense savings but were not enough to offset the significant declines in sales and gross margin that we experienced during the quarter.

“We remain committed to conserving our cash, managing our inventory, reducing our expenses, improving our merchandise assortments and emerging a stronger competitor in the long term,” Dillard summed up in a prepared statement; the closely-held company does not hold quarterly analyst calls.

The company pointed out key financial metrics, noting for example that that availability under its $1.2 billion revolving credit facility has exceeded $500 million “at all times,” and there are no covenants as long as availability exceeds $100 million. Dillard’s long term debt maturities for 2009 and 2010 together “are less than $26 million,” the company added.

Dillard’s closed 21 stores last year and has to date identified five more to shutter in 2009. With cap ex cut to less than one-third of 2007 levels, there are zero store openings planned this year, but construction will begin soon on two units slated for early 2010 openings.

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