Dillard's Posts 4Q, Fiscal Year Loss

Dillard's Inc. of Little Rock on Thursday swung to losses in its most recent fourth quarter and fiscal year as it struggled to cut costs and close underperforming stores amid a deteriorating economic climate.

The department chain reported a fourth-quarter loss of $149.3 million, or $2.03 per share. The loss includes non-cash pretax asset impairment and store closing charges of $177.9 million, as well as pretax hurricane-related expenses of $2.9 million.

The results from Dillard's most recent quarter, which ended Jan. 31, compares to a $47.3 million, or 63 cents per share, profit in last year's fourth quarter, which ended Feb. 2, 2008.

"Due to the continued dramatic economic decline during the fourth quarter, we took aggressive, but costly, action to substantially reduce our inventory position which was down 23 percent year over year," Dillard's CEO William Dillard II said in a news release. "Our extensive cost reduction measures resulted in a $67.3 million 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, and improving our merchandise assortments to emerge a stronger competitor in the long term," Dillard said.

For the fiscal year, the retailer reported a loss of $241.1 million, or $3.25 per share, compared to a profit of $53.8 million, or 68 per share, for the previous fiscal year.

Earlier Thursday, Dillard's reported a 13 percent drop in February same-store sales.

In its report, Dillard's said it closed 21 stores in 2008 and have marked five more for closure in 2009. It did not name those stores.

Meanwhile, the department store chain said it wouldn't open any new stores in 2009. This year, it plans to begin construction on only two stores, which are scheduled to open in 2010. For 2009, capital expenditures will be about $120 million, which is down from $188 million in 2008 and $396 million in 2007.

Dillard's said its expense-cutting measures, implemented in 2008, resulted in about $133 million in operating expense savings during 2008. Dillard's expects those measures to result in about $200 millionin additional savings during fiscal 2009.

Dillard's said it has planned purchases "conservatively" for 2009 "in anticipation of a continued weakened economy." It said it has implemented a program to "dramatically" improve inventory turn and to conserve cash.

Dillard's also said it expect to completely pay down outstanding borrowings under a credit facility during the first quarter of 2009 before again drawing on the facility to fund spring merchandise purchases.