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Dillard’s profit falls as sales slump 

Little Rock, Ark. – Regional department store operator Dillard’s reported sharply reduced profit for 2007, with net income of $53.8 million down 78.1% from $245.6 million in the prior year.

The fourth quarter was little help, with net income of $47.3 million down 69.5% from $155.0 million in the year-ago period.

“We simply did not achieve the level of sales necessary to produce more acceptable results,” said William Dillard II, ceo of the 326-store Southeastern chain. “Moving forward, we will execute further improvements to our merchandise mix while working to effectively respond to potentially challenging macro-economic conditions.”

To date, non-merchandising solutions have included store closures and stock buybacks. Management said it closed nine stores in 2007, and has already announced the closure of three stores and a distribution center in 2008. The company repurchased $111.6 million of its Class A common shares during fiscal 2007.

Sales of $7.2 billion for the year ended Feb. 2, 2008 were down 5.6% from $7.6 billion in fiscal 2006. Comparable store sales for the year were not stated, but Dillard’s said fourth-quarter comps fell 5%.

The company today also announced a cash dividend of $0.04 per share. In its retort to yesterday’s publication of a letter by insurgent investors led by Barington Capital, the retailer noted that dividends are one way in which Dillard’s has in the past and continues to enhance shareholder value. Dillard’s yesterday said it has in the past year alone “returned more than $124 million to shareholders through dividends and share repurchases.”

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