UPDATE 1-Dillard's posts profit despite flat sales

* Q2 EPS $0.10 vs year-earlier loss of $0.36

* Q2 same-store sales flat; overall revenues down 2.4 pct

* Gross margins up 3.1 pct points on lower inventory

NEW YORK, Aug 13 (Reuters) - Dillard's Inc (DDS.N) reported a quarterly profit despite stagnant sales, as tighter inventory levels helped the retailer avoid discounts.

Dillard reported net income of $6.8 million, or 10 cents per share for its second quarter ended July 31, compared to a loss of $26.7 million, or 36 cents per share a year earlier.

Revenue fell 2.4 percent $1.42 billion, while same-store sales, or sales at stores open at least a year, were unchanged from a year earlier.

Gross margins rose 3.1 percentage points to 33 percent, helped by lower inventory levels, which fell by 6 percent. (Reporting by Phil Wahba; Editing by Derek Caney)