Dillard's 2009 Annual Report Download - page 29

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$5.7 million and $0.4 million during fiscal 2009 and 2008, respectively, from the Visa Check/
Mastermoney Antitrust litigation settlement.
2008 Compared to 2007
Service charges and other income decreased in fiscal 2008 compared to fiscal 2007 primarily as a
result of lower income from the Alliance with GE. Income from the Alliance decreased $9.1 million in
fiscal 2008 compared to fiscal 2007 primarily due to a lower penetration rate of Dillard’s branded
proprietary credit card.
Gross Profit
(in thousands of dollars) Fiscal 2009 Fiscal 2008 Fiscal 2007
Gross profit:
Retail operations segment ............. $1,982,858 $1,998,623 $2,420,762
Construction segment ................ 9,198 4,151 —
Total gross profit ...................... $1,992,056 $2,002,774 $2,420,762
Gross profit as a percentage of segment
net sales:
Retail operations segment ............. 33.7% 29.6% 33.6%
Construction segment ................ 4.5 4.7 —
Total gross profit as a percentage of net sales . 32.7 29.3 33.6
2009 Compared to 2008
Gross profit improved 340 basis points of sales during fiscal 2009 compared to fiscal 2008. Gross
profit from retail operations improved 410 basis points of sales during the same periods due to the
Company’s focused inventory management efforts resulting in lower inventory levels and decreased
markdown activity. Inventory in both total and comparable stores declined 5% as of January 30, 2010
compared to January 31, 2009.
Most merchandise categories experienced significant improvements in gross margin during fiscal
2009 compared to fiscal 2008, while shoes improved moderately and cosmetics was up only slightly.
2008 Compared to 2007
Gross profit declined 430 basis points of sales during fiscal 2008 compared to fiscal 2007. Gross
profit from retail operations declined 400 basis points of sales during the same periods as the Company
responded to notably weak consumer demand by increasing markdown activity. In anticipation of the
weakened economy, the Company purchased substantially less inventory for the fall season. These
combined efforts resulted in a 23% decline in total store inventory and a 20% decline in comparable
store inventory as of January 31, 2009 compared to February 2, 2008.
All merchandise categories experienced gross margin declines during fiscal 2008 compared to fiscal
2007. Cosmetics was down only slightly while home and furniture experienced a significant decline.
Advertising, Selling, Administrative and General Expenses (‘‘SG&A’’)
(in thousands of dollars) Fiscal 2009 Fiscal 2008 Fiscal 2007
SG&A ............................. $1,644,091 $1,932,732 $2,065,288
SG&A as a percentage of net sales ........ 27.0% 28.3% 28.7%
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