Dillard's Responds to Omission of Online Sales Figures

The failure of Dillard’s Inc. to disclose online sales in its annual report has attracted the attention of the U.S. Securities & Exchange Commission.

In a May 29 letter to the Little Rock department store chain, the SEC wanted to know more about Dillard’s online sales, which weren’t broken out as a percentage of its sales in the report. The letter was made public July 12.

Dillard’s said in its response that it believes investors should view its sales “on a company-wide basis.”

“Whether a sale is attributable to a retail store or online has become less relevant as the line between the two has become progressively blurred,” wrote Phillip Watts and Chris Johnson, who are senior vice presidents and co-principal financial officers. Watts also is the principal accounting officer.

In their response, the two said that, unbeknownst to customers, online orders could be filled from any of the retailer’s distribution/fulfillment centers or any Dillard’s store. In fact, Dillard’s is going to expand this ship-from-store capability this year, they said in the letter.

Watts and Johnson also said sales recorded by Dillard’s internet store may not have originated online, and sales in its brick-and-mortar stores might not have come from there either.

Some customers might go into a Dillard’s store to view an item before ordering it online. “Conversely, customers may view merchandise online before visiting our retail stores,” the letter said.

“Because of the interdependent relationship between our in-store and online sales, separate disclosure of our online sales is not meaningful,” the letter said.

Dillard’s agreed to mention the link between in-store and online sales in future filings.