LITTLE ROCK, Ark. – Department store operator Dillard's Inc. (DDS) said Tuesday its first-quarter profit dropped 29 percent, as it was forced to make more markdowns to overcome sluggish sales performance. The company's shares tumbled more than 9 percent.
Dillard's, which operates 329 stores around the country, reported earnings of $38 million, or 46 cents per share, compared with $53.8 million, or 64 cents per share, in the year-ago period.
Sales declined 3 percent to $1.8 billion from $1.85 billion a year ago. Comparable store sales, which measure sales at stores open for at least one year, also fell 3 percent.
Wall Street analysts had forecast earnings of 53 cents per share, the mean estimate of eight analysts surveyed by Thomson Financial, on projected sales of $1.92 billion.
The retailer said it had to resort to more markdowns in response to lower than expected sales as it maintained acceptable inventory levels.
The latest sales result — revenues dropped 1 percent for the fiscal year ending Jan. 29, 2005 — could add to pressure on Dillard's management to consider selling the company. The prospect wasn't raised at the annual meeting on Saturday, but the company is considered a logical acquisition target.
Marshal Cohen, senior industry analyst at NPD Group Inc., a market research company in Port Washington, N.Y., said Saturday that Dillard's makes a particularly attractive acquisition target.
"They've got a tremendous amount of local presence ... and loyalty," Cohen said in a phone interview in advance of the meeting.
Dillard's shares fell $2.36, or 9.3 percent, to $23.10 on the New York Stock Exchange (search), where they have traded in a 52-week range of $18.30 to $28.60