Barington Fires at Dillard's, Cites 'Chronic Underperformance'

by Mark Friedman  on Tuesday, Jan. 29, 2008 1:35 pm  

Two New York investment firms said Tuesday they now own more than 5.3 percent of the outstanding Class A Common Stock of Dillard’s Inc. and are demanding changes.

Barington Capital Group L.P. and Clinton Group Inc. sent a letter to the Dillard’s board of directors Tuesday asking that several changes be made to improve the value of the retail chain.

“In our opinion, if the Company were more effectively managed it would be worth substantially more than its current stock price,” the letter said. “Given the Company’s poor share price performance over the past six months, we are convinced that Dillard’s is an undervalued asset with tremendous opportunity for improvement.”

Click here to see the full text of the letter.

Dillard's stock (NYSE: DDS) price fell 52 percent from June to Jan. 25, erasing more than $1.5 billion in shareholder value, the letter said. The group suggested that Dillard's cut costs, improve marketing, re-merchandise its inventory and tweak various aspects of its real estate holdings to drive customer traffic and improve margins.

“Dillard’s can and must deliver considerably better financial and share price performance,” the letter said. “As significant stockholders of the Company, we are committed to taking all actions necessary to enhance shareholder value.”

A spokesman for Barington Group wouldn’t say Tuesday what that action might be. Julie Bull, a spokeswoman for Dillard’s, declined comment.

Barington began buying stock in Dillard's in the second quarter of 2007, and has since criticized Dillard's management for what it sees as poor performance. Barington's chairman and CEO, James A. Mitarotonda, has repeatedly requested meetings with Dillard's management, which has not granted a sit-down.


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