Dillard's 2008 Annual Report Download - page 22

increasing markdowns and controlling purchases helped bring inventory levels down 20% in comparable stores,
despite softer sales. We took extensive cost reduction measures, lowering advertising, selling, administrative and
general expenses by $133 million compared to last year. We recorded asset impairment charges of $197.9 million
during the year related to underperforming stores. All of our cost saving measures, however, could not offset the
erosion of our gross margin and the effects of the asset impairment charges, and the Company recorded a net loss
of $241 million, or $3.25 per share, compared to net income of $53.8 million or $0.68 per share in the prior year.
As of January 31, 2009, we had working capital of $773 million, cash and cash equivalents of $96.8 million
and $1,183.2 million of total debt outstanding. Cash flows from operating activities were $350.0 million for
fiscal 2008. We operated 315 total stores as of January 31, 2009, a decrease of 3.4% from last year; the Company
closed 21 underperforming stores and opened 10 new stores during the year. At January 31, 2009, we had
availability of approximately $536 million under our $1.2 billion revolving credit facility that expires
December 12, 2012.
Key Performance Indicators
We use a number of key indicators of financial condition and operating performance to evaluate the
performance of our business, including the following:
Fiscal Year Ended
January 31,
2009*
February 2,
2008
February 3,
2007**
Net sales (in millions) ........................................... $6,742.6 $7,207.4 $7,636.1
Sales per square foot ............................................ $ 124 $ 128 $ 135
Total store count at end of period .................................. 315 326 328
Net sales trend ................................................. (6)% (6)% 1%
Comparable store sales trend ..................................... (7)% (6)% 0%
Gross profit (in millions) ........................................ $1,998.6 $2,420.8 $2,603.7
Gross profit as a percentage of net sales ............................. 29.6% 33.6% 34.1%
Comparable store inventory trend ................................. (20)% (1)% (4)%
Merchandise inventory turnover ................................... 2.6 2.5 2.6
Cash flow from operations (in millions) ............................. $ 350.0 $ 254.4 $ 360.6
* Retail segment only, excluding cash flow data
** 53 weeks
Trends and Uncertainties
We have identified the following key uncertainties whose fluctuations may have a material effect on our
operating results.
• Cash flow—Cash from operating activities is a primary source of liquidity that is adversely affected
when the industry faces economic challenges. Furthermore, operating cash flow can be negatively
affected when new and existing competitors seek areas of growth to expand their businesses.
• Pricing—If our customers do not purchase our merchandise offerings in sufficient quantities, we
respond by taking markdowns. If we have to reduce our prices, the cost of goods sold on our income
statement will correspondingly rise, thus reducing our income.
• Success of brand—The success of our exclusive brand merchandise as well as merchandise we source
from national vendors is dependent upon customer fashion preferences.
• Sourcing—Our store merchandise selection is dependent upon our ability to acquire compelling
products from a number of sources. Our ability to attract and retain compelling vendors as well as
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