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Dillard’s to Close More Stores in 2009

Family-managed retailer remains under fire from large shareholders

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Dillard’s Inc. (Little Rock, Ark.) has announced plans to close additional stores in 2009, on top of 20 it shuttered in 2008, following mounting pressure from investors to replace its ceo and change its overall management.

According to The Cincinnati Business Courier, the department store operator also said it will open just two stores in 2009, in Texas and Louisiana, compared with 10 in 2008. That will result in a 40 percent reduction in expected capital expenditures, to $120 million. The chain hasn’t announced which stores it will close related to the newest cuts.

Dillard’s made the announcement after two investment firms that own 5.7 percent of Dillard’s stock – Barington Capital Group LP and Clinton Group Inc. – sent a letter to some of the company’s directors, asking them to immediately begin the process of seeking new leadership, beginning with ceo William Dillard II. “The performance of the company over the past 10 years has been atrocious,” the investment group leaders wrote in their letter, which was filed with the Securities and Exchange Commission. “Since Dillard was appointed ceo in May 1998, the company’s market capitalization has plummeted from over $4.36 billion to less than $246 million.”

Dillard’s also has not posted a same-store sales increase since 1999, the group said. In mid-October, Standard & Poor’s replaced the company on the S&P 500 Index of large companies.

A Dillard’s spokeswoman said the retailer continues to improve its merchandise mix, close underperforming stores and reduce expenses as it weathers “the most challenging economic time in modern history.”

“We believe the best way to serve the long-term interests of all shareholders is to concentrate our efforts on running our business conservatively and on navigating the near-term economic uncertainty while focusing on the important upcoming holiday selling season,” she said.

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