Dillard's 2008 Annual Report Download - page 21

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2005
The items below amount to a net $32.0 million pretax charge ($24.7 million after tax gain or $0.30 per
diluted share).
• a $61.7 million pretax charge ($39.6 million after tax or $0.49 per diluted share) for asset impairment
and store closing charges related to certain stores).
• a $29.7 million pretax gain ($18.9 million after tax or $0.23 per diluted share) related to hurricane
recovery proceeds.
• a $45.4 million tax benefit ($0.56 per diluted share) related to the sale of one of the Company’s
subsidiaries.
2004
The items below amount to a net $64.5 million pretax gain ($42.1 million after tax or $0.50 per diluted
share).
• a pretax gain of $83.9 million ($53.7 million after tax or $0.64 per diluted share) pertaining to the
Company’s sale of its private label credit card business to GE.
• a $19.4 million pretax charge ($11.6 million after tax or $0.14 per diluted share) for asset impairment
and store closing charges related to certain stores.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
EXECUTIVE OVERVIEW
Dillard’s, Inc. operates 315 retail department stores in 29 states. In August of 2008, we purchased the
remaining interest in CDI Contractors, LLC and CDI Contractors, Inc. (“CDI”), a former 50% equity method
joint venture investment of the Company that is also a general contractor that constructs stores for the Company,
creating a reportable segment separate from our retail operations.
Our retail stores are located in fashion-oriented shopping malls and open-air centers and offer a broad
selection of fashion apparel and home furnishings. We offer an appealing and attractive assortment of
merchandise to our customers at a fair price. We offer national brand merchandise as well as our exclusive brand
merchandise. We seek to enhance our income by maximizing the sale of this merchandise to our customers by
promoting and advertising our merchandise and by making our stores an attractive and convenient place for our
customers to shop.
In accordance with the National Retail Federation fiscal reporting calendar, the 2008 and 2007 reporting
periods presented and discussed below ended January 31, 2009 and February 2, 2008, respectively, and each
contained 52 weeks. The corresponding 2006 reporting period ended February 3, 2007 contained 53 weeks. For
comparability purposes, where noted, some of the information discussed below is based upon comparison of the
52 weeks ended January 31, 2009 and February 2, 2008 to the corresponding period ended January 27, 2007.
Fiscal 2008
The dramatic economic decline during fiscal 2008 had a significant impact on our results of operations and
caused us to take aggressive action. Net sales from retail operations were $6,742.6 million during fiscal 2008, a
decrease of $464.8 million or 6% from fiscal 2007. The significant slowdown in consumer spending, especially
in the second half of 2008, had a negative impact on net sales. Gross profit from retail operations, as a percentage
of net sales, decreased 400 basis points, primarily due to higher markdown activity. In anticipation of the
weakened economy, we purchased substantially less inventory for the fall season. The combined efforts of
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