Dillard's investor seeks more answers

NEW YORK After two failed attempts to receive a meeting with Dillard's chairman and ceo William Dillard, II, Barington Capital Group, L.P., an investor in the company, has brought its disappointment with Dillard's to the attention of the company's board of directors. In a letter sent to the board, the group announced today, Barington questions the commitment of Dillard's to the company's public stockholders in light of the its disappointing financial performance, poor corporate governance record and insular culture under the stewardship of its current ceo.

Barington criticizes Dillard's financial performance under Dillard's leadership as "abysmal," and says the company "lags behind its peers on virtually every financial and retailing metric, including operating margins, return on invested capital, inventory turnover and same-store sales."

In the letter, the group also questions why the most senior and highest paid employees of the company are members of the Dillard family, asking the board if they were really the best people for the job, or just held these positions because of their name.

Barington's letter to Dillard's board of directors was sent a few weeks after the group announced that it had sent a second letter to Dillard's ceo. According to Barington, the letter was sent following its receipt of a July 2007 letter from Dillard, in which he did not consent to Barington's initial request to meet with him in order to present suggestions to improve the company's profitability and better utilize its substantial asset base. Instead, Dillard stated that the company's investor relations director "would be happy to speak with you regarding our corporate strategy and answer your questions."

In the letter, Barington said to Dillard, "As a steward of a publicly-traded company, we had expected that you would be receptive to meeting with one of your larger stockholders, especially one with substantial experience helping improve shareholder value as a long-term investor in a number of retail companies."

 Dillard's Inc. reported a net loss of $25.2 million (31 cents per diluted share) for the second quarter, compared to a net income of $15.7 million (20 cents per diluted share) for the second quarter ended July 29, 2006. Net sales for the quarter were $1.649 billion compared to sales for the 13 weeks ended July 29, 2006 of $1.685 billion. Total net sales declined 2% during the 13-week period. Sales in comparable-stores declined 3%.