Dillard's 2010 Annual Report Download - page 2

Our 2010 results underscore a year of great progress at Dillard’s.
We began 2010 well positioned to achieve notable results, and we
remained focused on our core initiatives throughout the year as
we executed disciplined inventory management and controlled
our expenses. With rising consumer confidence and a dramatically
improved merchandise mix, we achieved a comparable store
merchandise sales increase of 3% which led the way to a significantly
improved gross margin performance and profitability. With our
strong cash flow, we were able to confidently execute our share
repurchase program, acquiring $414 million of our Class A Common
Stock as a vote of confidence in Dillard’s and in support of
our shareholders.
Equally as important as the execution of these initiatives,
we took decisive action in 2010 to further establish a place of
clear distinction for Dillard’s in the mind of the fashion consumer.
Specifically, we believe people shop at Dillard’s because they want
to feel good about themselves. Throughout our history, we have
pursued, and will continue to pursue, a visible separation from
simple transactional retailing to a mindset of people-centric
retailing – where customers become clients and lasting
relationships are built over time through premium Dillard’s service
delivered consist ntly with every visit. In 2010, we strengthened
the framework to elevate product and people over price and
promotion, because we believe there is room in the marketplace
for a distinctive store that focuses on higher quality and more
contemporary merchandise supported with outstanding client
service. Accordingly, we have empowered our associates with
the training, the tools and the incentives necessary
to get excited about the bold changes underway at Dillard’s
and to seek and maintain strong client relationships.
Our success in 2010 was further evidenced by the following:
• We achieved earnings per share of $2.67 compared to $0.93
for the prior year. Net income grew to $179.6 million from
$68.5 million.
• We generated merchandise sales improvement of 2% over
the prior year as a result of improving consumer confidence
combined with our improved merchandise mix.
• By confidently executing our inventory control initiatives,
we improved gross margin from retail operations by 190 basis
points of sales. Throughout the year, we continued our efforts
to better match merchandise receipts to point of sale, creating
a more constant flow of fresh merchandise selections
specifically refined to the discerning tastes of our customers.
• We maintained control of our operating expenses, improving
them by 40 basis points of sales.
• We produced cash flow from operations of $513 million
allowing the repurchase of approximately $414 million
(14.6 million shares) of Class A Common Stock under our
share repurchase programs.
We will maintain our conservative financial posture which has
served us well during the past few years, resulting in a leaner, more
focused company, well-positioned for the future with a strong
financial position, ample liquidity and a clear strategy and vision.
We are greatly encouraged by our 2010 results, and we are excited
about the future of Dillard’s. We sincerely thank our customers,
associates and shareholders for their contributions to this success,
and we look forward to serving you further in 2011.
William Dillard, II Alex Dillard
Chairman of the Board & President
Chief Executive Officer
Dear Shareholder,
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