Dillard's 2005 Annual Report Download - page 2

The year 2005 was marked by sweeping changes
in the fashion retail sector. Recent signicant
developments include the merger of our two largest
peers, Federated Department Stores, Inc. and
The May Department Stores Company. Additionally,
Saks Incorporated’s divestiture of Proftt’s,
McRae’s and the stores of its Northern Department
Store Group has further altered the landscape.
At Dillard’s, we believe these changes present
opportunities — specically, opportunities for us
to set ourselves apart in this quickly evolving
marketplace as America’s favorite destination for
fashion excitement. Nameplates on stores across the
nation are changing, but the Dillard’s nameplate,
with a legacy spanning over 65 years, remains on all
of our 330 stores. Our relationships with existing,
loyal customers remain strong and new customers
now have even more reasons to take a fresh
look at Dillard’s.
We believe there is opportunity in America’s
marketplace for a national retailer focused on a more
upscale and contemporary style. This belief has
been strengthened by the recent changes in our
industry, as customers reevaluate their shopping
choices. Our efforts during 2005 remained focused
on updating the tone of our stores to reect our
renewed enthusiasm for fashion. Our customers
responded favorably to these changes, particularly in
the second, third and fourth quarters, where we
accomplished positive comparable store sales results.
Our ongoing mission is to provide market-right
merchandise assortments to each area we serve,
selected to match the tastes and preferences of
each store’s unique clientele and supported by the
best customer care anywhere.
We believe this mission is well-served in our
continued focused execution of the following
merchandise initiatives:
— We will work to maintain valued relationships
with our existing loyal customer base by
providing even more updated fashion choices
complemented by the dependable quality,
reliable service and measurable value they
have come to expect from Dillard’s.
— We will continue to make notable changes to
our merchandise mix, positioning our stores
toward a more upscale and contemporary tone
to attract new customers who are seeking
exciting statements in fashion.
— We will continue to expand and improve our
exclusive branded merchandise which allows us
to present our customers with differentiated
fashion choices.
— We will seek to develop and maintain
relationships with both new and established
up-market national vendor sources that
are successfully connecting with our targeted
new customer.
— We will continue to use existing technology and
research to edit our merchandise assortments
by store to meet the specic preference, taste
and size requirements of each of our local
operating areas.
During 2006, we will open eight new Dillard’s
stores in promising locations such as Reno, Nevada
and Bonita Springs, Florida. Four of these stores
will be opened in successful Dillard’s markets, such
as Jonesboro, Arkansas and St. George, Utah,
where we will be replacing existing units with
exciting, new and larger Dillard’s stores.
Reection of 2005 is impossible without
consideration of the devastating hurricanes that
swept the Gulf area. Due to our strong presence in
the region, we were affected more extensively
than our peers, with 60 of our stores’ operations
interrupted for varying amounts of time by the
storms. We worked diligently to reopen our stores
as quickly as possible to return a measure of
normalcy and stability to the disrupted lives of many
of our associates. In most cases, we were able to
reopen in a commendably short time span because
of the determined efforts of many of our people.
However, four of our stores in the area were heavily
damaged and will remain closed for at least the
rst half of 2006.
The retail landscape will continue to change in
2006. At Dillard’s, we will continue to change, as
well, embracing the revolution of our sector as
opportunity to reach more and more customers.
With the continuing support of our shareholders
and associates, we will solidify our place as
America’s choice for fashion.
William Dillard, II Alex Dillard
Chairman of the Board President
& Chief Executive Ofcer
to our shareholders