Dillard's 2009 Annual Report Download - page 2

To Our Shareholders:
We are tremendously encouraged by our Company’s
dramatically improved performance during 2009, and we
are excited about the future of Dillard’s as we emerge from
a historically challenging year as a stronger company.
These results would have been impossible without the
collective efforts of the entire Dillard’s team and their
strong commitment to conservative, balanced scal
discipline while providing our customers with exceptional
fashion choices and premium service. Together, we made
notable progress in 2009 in key operating and nancial
areas as evidenced by the following:
• We achieved a 410 basis point (of sales) improvement
in merchandise gross margin compared to the 2008
scal year. We underscored this performance with
a signicant 820 basis point merchandise gross
margin improvement during the fourth quarter.
We accomplished year-over-year inventory
reduction of 5% in 2009, following a prior year
inventory reduction of 23%. This leaner inventory
approach reects not only the reality of our
economic environment but also a change in mindset
regarding merchandise presentation, arising
from a redened view of our position in the market-
place. We believe our stores look bolder and better
than ever – with a more edited, more exciting
assortment of merchandise, thoughtfully selected
to truly resonate with fashion-connected customers
who believe shopping is as much of an experience
as a necessity.
• We delivered a $289 million reduction in advertising,
selling, administrative and general expenses compared
to the prior year as our associates corporate wide
supported and executed our cost control initiatives
as we weathered continued economic uncertainty.
These efforts combined with expense savings from
recent store closures delivered remarkable results.
• We substantially improved our bottom line during
2009, reporting net income of $69 million compared
to a prior year net loss of $241 million.
• We produced $554 million of cash ow from
operations and a solid ending cash position of $342
million as a result of our overall conservative approach
to managing the business combined with focused
inventory management. Accordingly, we ended the
year with no short-term borrowings under our
$1.2 billion revolving credit facility.
• We achieved year-over-year debt reduction of $234
million with our total indebtedness dropping below
$1 billion for the rst time since 1990.
We believe we have emerged from 2009 a better positioned
competitor – with a leaner operating structure, lower debt
and ample liquidity – and we are energized by a strength-
ened condence in our ability to deliver inspiring fashions
that truly help our customers feel good about themselves.
In 2010, we will maintain a conservative scal stance
while executing a bold approach to fashion. We believe our
customers visit Dillard’s expecting us to be different from
other retailers, and we will continue to seek exciting new
brands and new levels of service to further set ourselves
apart in the marketplace.
With sincere thanks to our customers, associates and
shareholders for their contributions to the successes of
2009, we look forward to serving you in 2010.
Warm regards,
William Dillard, II Alex Dillard
Chairman of the Board President
& Chief Executive Ofcer