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Dillard's tightens its belt, sees profits soar
By MARK ALBRIGHT, Times Staff Writer Dillard's Inc. on Tuesday reported a 55 percent increase in fourth-quarter earnings, reflecting steep cost-cutting, promotions and better sales of private-label goods. The Little Rock, Ark., department store chain, which has been the subject of buyout speculation since the recent death of founder William T. Dillard, also adopted tougher antitakeover provisions to lessen the chance of a hostile takeover. The company said the move was not in response to any purchase offer. Dillard family members, who hold many of the top management jobs, control 99 percent of the shares that elect two-thirds of the company board. Under the new plan, existing shareholders will get a new type of preferred stock that gives them the right to buy more shares at a comparatively low price. The so-called "poison pill" defense is triggered if anyone buys 15 percent of the company's outstanding shares. That would force an unwelcome suitor to assemble far more shares to get a controlling interest. Company officials would not say whether the family will entertain an offer. "Nothing can happen without the Dillard family voting it," said Abhay Deshpande, a securities analyst with Arnhold & S. Bleichroeder, which manages a stake in Dillard's for First Eagle Sogen Funds. "That leads me to believe that a number of Dillard's family members may be inclined to pursue an acquisition." The most frequently-named prospective suitors are Federated Department Stores Inc., which owns Burdines, and May Department Stores Inc., which owns Lord & Taylor. Meanwhile, Dillard's improved financial performance caps a six-quarter campaign to revive the company's profitability by slashing inventory, reducing debt and taking more Dillard's stock out of circulation. The company also sharpened its pricing so unsold merchandise goes on sale faster. For the fiscal fourth quarter ended Feb. 2, net income rose to $102-million, or $1.21 a share, up from $66-million, or 78 cents a share in the year-ago quarter. Revenues slipped to $2.5-billion from $2.7-billion. The chain also broadened its private brand offerings in household goods and four new lines of shoes. During the fourth quarter, private label products accounted for 15 percent of Dillard's sales, up from 13 percent a year earlier. For the fiscal year, Dillard reported net earnings of $72-million, or 85 cents a share, compared with a loss of $6-million, or 6 cents a share. Revenues fell to $8.2-billion from $8.6-billion. Dillard's shares closed Tuesday at $21, up 53 cents. -- Information from Bloomberg News was used in this report. Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.
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From the Times Business report Robert Trigaux
From the AP
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