LITTLE ROCK -- Dillard's Inc. reported that its loss narrowed in the second quarter to nearly half of what it was a year ago, but it was still far more than Wall Street expected as the chain was dragged down by sluggish sales.
The Little Rock-based department store chain said Wednesday that it lost 26 million, or 31 cents per share, for the three months ended July 31. That compared with a loss of $50.4 million, or 60 cents per share, in the year-ago period.
The 2003 results included charges of $10.9 million, or 13 cents a share, for asset-impairment and store closing charges related to certain stores. It also included a $125.9 million call of debt that added interest expenses of $10 million or 12 cents per share.
Analysts surveyed by Thomson First Call had forecast a loss of 16 cents per share.
Dillard's reported that its overall sales for the 13 weeks were $1.67 billion, a 3 percent decline from $1.72 billion in the year-ago period. Sales in stores open at least a year also fell by 3 percent.
Shares fell 5.72 percent, or $1.32 in morning trading on the New York Stock Exchange, reaching $21.76.
The company said it improved its profit margin slightly, but not enough to offset the drop in sales. Dillard's said it reduced its inventory by 2 percent and cut advertising and other expenses by $7.7 million in the period, compared to its spending the same quarter in 2003.
Dillard's says it is continuing to further differentiate its merchandise from its competitors. The company said it is bringing in national brands that focus on younger consumers and increasing its use of upscale, exclusive brands. The company is also tailoring its merchandise mix to accommodate local demographics served by different stores.
On Aug. 8, Dillard's announced it had agreed to sell it's credit card division, Dillard National Bank, to GE Consumer Finance. The price tag is $1.25 billion, which includes the assumption of $400 million of securitization liabilities, the purchase of owned accounts receivable and an undisclosed premium.
The transaction is expected to close by the end of the fiscal year, though regulatory review is pending. Dillard's says it plans to use the money from the sale to reduce its debt, to buy back stock and for other expenses.
Dillard's said Hurricane Charley in Florida led 14 of its 43 stores in the state to close early on Friday. One store, in Port Charlotte, remained closed Wednesday. The store sustained minimal property damage.