Dillard`s, Inc. Reports Second Quarter Results

LITTLE ROCK, Ark.--(Business Wire)--
Dillard`s, Inc. (NYSE: DDS) (the "Company" or "Dillard`s") announced operating
results for the thirteen weeks ended August 1, 2009. This release contains
certain forward-looking statements. Please refer to the Company`s cautionary
statement regarding forward-looking information included below under
"Forward-Looking Information."

The net loss for the thirteen weeks ended August 1, 2009 was $26.7 million
($0.36 per share) compared to the net loss for the thirteen weeks ended August
2, 2008 of $38.3 million ($0.51 per share). Included in net loss for the
thirteen weeks ended August 2, 2008 is a pretax gain of $17.9 million ($11.2
million after tax or $0.15 per share) primarily related to the sale of an
airplane and asset impairment and store closing charges of $9.8 million ($6.1
million after tax or $0.08 per share).

Dillard`s Chief Executive Officer, William Dillard, II, stated, "Although we are
clearly disappointed with a net loss for the second quarter, we were pleased to
realize continued significant benefits from our aggressive actions pertaining to
inventory management, expense reduction and cash conservation." Highlights of
the thirteen weeks ended August 1, 2009 include:

* Improved merchandise gross margin performance of approximately 130 basis
points of sales compared to prior year second quarter.
* Operating expense savings of $82.6 million compared to the prior year second
quarter.
* Positive cash flow from operations of $183.1 million for the twenty six weeks
ended August 1, 2009 compared to $109.7 million for the prior year twenty-six
week period.
* Inventory reduction of $336.5 million (19%) at August 1, 2009 compared to
August 2, 2008. Inventory in comparable stores declined 18%.
* Year over year debt reduction of $326.5 million.

Net Sales/ Total Revenue

Net sales for the thirteen weeks ended August 1, 2009 were $1.428 billion
compared to net sales for the thirteen weeks ended August 2, 2008 of $1.608
billion. Net sales for the thirteen weeks ended August 1, 2009 include the
operations of CDI Contractors, LLC ("CDI") a former equity method joint venture
investment.

Total merchandise sales were $1.366 billion, declining 15% during the
thirteen-week period ended August 1, 2009 compared to the thirteen week period
ended August 2, 2008. Merchandise sales in comparable stores declined 13%.

Gross Margin/Inventory

Gross margin from retail operations improved approximately 130 basis points of
sales during the thirteen weeks ended August 1, 2009 compared to the thirteen
weeks ended August 2, 2008 as a result of the Company`s successful inventory
management efforts evidenced by lower inventory levels, decreased purchases and
decreased markdown activity. Inventory in total and comparable stores declined
19% and 18%, respectively, at August 1, 2009 compared to August 2, 2008.
Dillard`s remains focused on inventory management with realistic purchasing in
light of current economic conditions combined with measures to better match the
timing of merchandise receipts with anticipated customer demand.

Gross margin from retail operations excludes the effect of CDI Contractors, LLC,
("CDI"), a wholly-owned subsidiary of the Company. Including the effect of CDI,
gross margin improved 10 basis points of sales during the second quarter. The
Company purchased the remaining 50% interest of CDI on August 29, 2008.

Advertising, Selling, Administrative and General Expenses

Advertising, selling, administrative and general ("operating expenses") expenses
declined $82.6 million during the thirteen weeks ended August 1, 2009 compared
to the thirteen weeks ended August 2, 2008 primarily as a result of the
Company`s extensive expense reduction measures combined with recent store
closures. Notable areas of savings during the second quarter of 2009 were
payroll, advertising, services purchased and supplies. Management believes
recent expense reduction initiatives combined with savings from store closures
could produce an operating expense decline exceeding $200 million during the
2009 fiscal year.

Interest and Debt Expense

Net interest and debt expense declined $4.0 million for the thirteen weeks ended
August 1, 2009 compared to the thirteen weeks ended August 2, 2008 primarily as
a result of lower average debt. Interest and debt expense was $19.0 million and
$23.0 million during the thirteen weeks ended August 1, 2009 and August 2, 2008,
respectively.

Credit Facility

Dillard`s maintains a $1.2 billion revolving credit facility with JPMorgan Chase
Bank as the lead agent. The credit agreement expires on December 12, 2012, and
there are no financial covenants under this facility provided its availability
exceeds $100 million. As of August 1, 2009, short-term borrowings of $67 million
and letters of credit totaling $92.7 million were outstanding under the
revolving credit facility.

CDI Contractors, LLC.

Operating results for the thirteen weeks ended August 1, 2009 reflect the
operations of CDI Contractors, LLC, a former equity method joint venture
investment. The Company purchased the remaining 50% interest of CDI on August
29, 2008. The increase in accounts receivable from $9.3 million at August 2,
2008 to $68.9 million at August 1, 2009 is primarily due to the consolidation of
CDI.

Store Information

During the thirteen weeks ended August 1, 2009, Dillard`s closed its Tullahoma,
Tennessee location (64,000 square feet). Currently, Dillard`s has identified
five other locations for closure during 2009 and remains committed to closing
under-performing stores where appropriate.

At August 1, 2009, the Company operated 304 Dillard`s locations and 10 clearance
centers spanning 29 states and an Internet store at www.dillards.com.

Dillard`s, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)

13-Week Period Ended

August 1, 2009 August 2, 2008

% of % of
Amount Net Sales Amount Net Sales

Net sales $ 1,427.8 - $ 1,607.8 -
Total revenues 1,455.2 101.9 % 1,646.5 102.4 %
Cost of sales 1,001.0 70.1 1,129.4 70.2
Advertising, selling, administrative and general expenses 396.7 27.8 479.3 29.8
Depreciation and amortization 66.4 4.6 73.0 4.6
Rentals 13.9 1.0 14.5 0.9
Interest and debt expense, net 19.0 1.3 23.0 1.4
Gain on disposal of assets (0.5 ) 0.0 (17.9 ) (1.1 )
Asset impairment and store closing charges - 0.0 9.8 0.6
Loss before income taxes and equity in losses of joint ventures (41.3 ) (2.9 ) (64.6 ) (4.0 )
Income tax benefit (15.0 ) (27.3 )
Equity in losses of joint ventures (0.4 ) (0.0 ) (1.0 ) (0.1 )
Net loss $ (26.7 ) (1.9 )% $ (38.3 ) (2.4 )%

Basic and diluted loss per share $ (0.36 ) $ (0.51 )
Basic weighted average shares 73.8 75.0
Diluted weighted average shares 73.8 75.0

Dillard`s, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)

26-Week Period Ended

August 1, 2009 August 2, 2008

% of % of
Amount Net Sales Amount Net Sales

Net sales $ 2,901.6 - $ 3,283.4 -
Total revenues 2,960.5 102.0 % 3,360.1 102.3 %
Cost of sales 1,980.6 68.3 2,247.7 68.5
Advertising, selling, administrative and general expenses 811.0 27.9 960.3 29.2
Depreciation and amortization 131.9 4.5 145.1 4.4
Rentals 28.4 1.0 30.1 0.9
Interest and debt expense, net 37.4 1.3 45.1 1.4
Gain on disposal of assets (0.6 ) 0.0 (18.0 ) (0.5 )
Asset impairment and store closing charges - - 10.7 0.3
Loss before income taxes and equity in losses of joint ventures (28.2 ) (1.0 ) (60.9 ) (1.9 )
Income tax benefit (10.4 ) (25.7 )
Equity in losses of joint ventures (1.2 ) (0.0 ) (0.4 ) (0.0 )
Net loss $ (19.0 ) (0.7 )% $ (35.6 ) (1.1 )%

Basic and diluted loss per share $ (0.26 ) $ (0.47 )
Basic weighted average shares 73.7 75.1
Diluted weighted average shares 73.7 75.1

Dillard`s, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Millions)

August 1, August 2,
2009 2008
Assets
Current Assets:
Cash and cash equivalents $ 116.9 $ 108.4
Accounts receivable, net 68.9 9.3
Merchandise inventories 1,414.0 1,750.5
Federal income tax receivable 3.9 -
Other current assets 46.3 51.2
Total current assets 1,650.0 1,919.4

Property and equipment, net 2,868.6 3,154.6
Goodwill - 31.9
Other assets 79.2 159.8

Total Assets $ 4,597.8 $ 5,265.7

Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable and accrued expenses $ 672.8 $ 744.2
Current portion of long-term debt and capital leases 27.3 103.5
Other short-term borrowings 67.0 285.0
Federal and state income taxes including current deferred taxes 41.6 27.3
Total current liabilities 808.7 1,160.0

Long-term debt and capital leases 775.1 807.4
Other liabilities 219.4 218.6
Deferred income taxes 366.0 421.8
Guaranteed preferred beneficial interests in the
Company's subordinated debentures 200.0 200.0
Stockholders' equity 2,228.6 2,457.9

Total Liabilities and Stockholders' Equity $ 4,597.8 $ 5,265.7

Dillard`s, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In Millions)

26 Weeks Ended
August 1, August 2,
2009 2008
Operating activities:
Net loss $ (19.0 ) $ (35.6 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of property and deferred financing cost 132.9 146.0
Gain on disposal of property and equipment (0.6 ) (18.0 )
Gain on repurchase of debt (1.5 ) -
Asset impairment and store closing charges - 10.7
Changes in operating assets and liabilities:
Decrease in accounts receivable 19.1 1.6
(Increase) decrease in merchandise inventories and other current assets (32.8 ) 34.5
Decrease in other assets 5.8 7.1
Increase (decrease) in trade accounts payable and accrued expenses, other liabilities and income taxes 79.2 (36.6 )
Net cash provided by operating activities 183.1 109.7
Investing activities:
Purchase of property and equipment (20.6 ) (104.3 )
Proceeds from disposal of property and equipment 1.6 45.3
Net cash used in investing activities (19.0 ) (59.0 )
Financing activities:
Principal payments on long-term debt and capital lease obligations (5.1 ) (97.6 )
Cash dividends paid (5.9 ) (6.0 )
(Decrease) increase in short-term borrowings (133.0 ) 90.0
Purchase of treasury stock - (17.5 )
Payment of line of credit fees and expenses - (0.1 )
Net cash used in financing activities (144.0 ) (31.2 )
Increase in cash and cash equivalents 20.1 19.5
Cash and cash equivalents, beginning of period 96.8 88.9
Cash and cash equivalents, end of period $ 116.9 $ 108.4
Non-cash transactions:
Accrued capital expenditures $ 6.3 $ 14.8
Property and equipment financed by note payable - 23.6
Stock awards 1.7 2.1

Other Information
(In Millions)

August 1, August 2,
2009 2008

Square footage 54.2 56.6
Capital expenditures
13 weeks ended $ 18.8 $ 55.4
26 weeks ended 28.6 119.7

Estimates for 2009

The Company is updating the following estimates for certain financial statement
items for the fiscal year ending January 30, 2010 based upon current conditions.
Actual results may differ significantly from these estimates as conditions and
factors change - See "Forward-Looking Information."

In Millions
2009 2008
Estimated Actual

Depreciation and amortization $ 262 $ 284
Rental expense 59 61
Interest and debt expense, net 77 89
Capital expenditures 90 188

Forward-Looking Information

The foregoing contains certain "forward-looking statements" within the
definition of federal securities laws. The following are or may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995: statements including (a) words such as "may,"
"will," "could," "believe," "expect," "future," "potential," "anticipate,"
"intend," "plan," "estimate," "continue," or the negative or other variations
thereof, and (b) statements regarding matters that are not historical facts. The
Company cautions that forward-looking statements contained in this report are
based on estimates, projections, beliefs and assumptions of management and
information available to management at the time of such statements and are not
guarantees of future performance. The Company disclaims any obligation to update
or revise any forward-looking statements based on the occurrence of future
events, the receipt of new information, or otherwise. Forward-looking statements
of the Company involve risks and uncertainties and are subject to change based
on various important factors. Actual future performance, outcomes and results
may differ materially from those expressed in forward-looking statements made by
the Company and its management as a result of a number of risks, uncertainties
and assumptions. Representative examples of those factors include (without
limitation) general retail industry conditions and macro-economic conditions;
economic and weather conditions for regions in which the Company`s stores are
located and the effect of these factors on the buying patterns of the Company`s
customers, including the effect of changes in prices and availability of oil and
natural gas; the availability of consumer credit; the impact of competitive
pressures in the department store industry and other retail channels including
specialty, off-price, discount, internet, and mail-order retailers; changes in
consumer spending patterns, debt levels and their ability to meet credit
obligations; adequate and stable availability of materials, production
facilities and labor from which the Company sources its merchandise; changes in
operating expenses, including employee wages, commission structures and related
benefits; system failures or data security; possible future acquisitions of
store properties from other department store operators; the continued
availability of financing in amounts and at the terms necessary to support the
Company`s future business; fluctuations in LIBOR and other base borrowing rates;
potential disruption from terrorist activity and the effect on ongoing consumer
confidence; epidemic, pandemic or other public health issues; potential
disruption of international trade and supply chain efficiencies; world conflict
and the possible impact on consumer spending patterns and other economic and
demographic changes of similar or dissimilar nature. The Company`s filings with
the Securities and Exchange Commission, including its annual report on Form 10-K
for the fiscal year ended January 31, 2009, contain other information on factors
that may affect financial results or cause actual results to differ materially
from forward-looking statements.

Dillard`s, Inc.
Julie J. Bull, 501-376-5965

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