A Dillard, a Dollar

Dillard's (Little Rock, Ark.) reported a 55 percent rise in fourth-quarter profits, for the period ending Feb. 2, 2002, a result the company said of trimming expenses, cutting prices and selling more profitable private-label goods, such as women's shoes.

In making the financial statement, the company also said it has adopted a “poison-pill''plan to prevent a hostile takeover. Though there have been no acquisition activities aimed at the 340-unit department store chain, there has been speculation that the death last month of chairman and founder William T. Dillard would lead to the company being bought.

May Department Stores (St. Louis) and Federated Department Stores (Cincinnati) have been mentioned as likely suitors if Dillard's were to be put up for sale. But the takeover-defense plan would allow shareholders to buy Class A common shares at a discount in the event anyone outside the organization were to acquire as much as a 15 percent stake in the company. Nonetheless, some observers regard the plan as redundant, since the Dillard family owns about 99 percent of the company's Class B voting shares, which allows it to elect two- thirds of the board. “Nothing can happen without the Dillard's family voting for it,''said a senior securities analyst at Arnhold & S. Bleichroeder, which manages about 270,000 Dillard's shares in its $2.5 billion First Eagle Sogen Funds. “That leads me to believe that a number of Dillard's family members may be inclined to pursue an acquisition.''

During the recent recession, say analysts, Dillard's discounted merchandise more quickly than in the past; reduced expenses, including payroll costs; and closed four less-profitable stores in the quarter. The retailer also added four lines of women's shoes to its exclusive offerings, which have higher profit margins than national brands.

Though the retailer's net income beat analysts'estimates, quarterly sales fell 4.8 percent and same-store sales fell 1 percent.