N.Y. Post Ignores Earnings in Mocking Dillards

Dillard's doesn't say a lot and, despite some surprisingly good results posted Friday, its reward was a New York Post story about how struggles in the family controlling the retailer threaten to tear it down.

Truth is, if publicly trade companies won't talk, others will talk about them. The company provided no webcast or conference call detailing its earnings announcement Friday, but the numbers had Wall Street abuzz. In the first quarter ended May 2, Dillard's turned a $7.7 million profit that about doubled earnings from the year-earlier quarter and, at nine cents per share after one-time charges, did a lot better than the 29 cents per share loss analysts polled by Zaks predicted.

Sales were down and profit came on cost cutting and store closures. Still, Wall Street liked what it saw, and the company's share price, which closed at around $7.50 on Friday opened at about $9 today and climbed to $10.18 by session's end.

Some observers criticized Dillard's for simply hoarding cash in the recession and not investing in promotions that might drive sales in key departments. But that didn't concern the Post. Rather, the personality clash between founding family members Bill Dillard, Jr., company CEO, and brother Alex Dillard, its president, occupied the tabloid article, including mention of an unconfirmed fist fight between the two at a company store.

A reference to Bill's over fondness for golf was illustrated by a graphic of the executive club in hand and clad in playing card pants. It included a chart detailing how he had presided over a decline in share price from over $85 in 2006 to $7.51 late Friday. The chart further noted that Bill Dillard's golf score had not declined with the share price, although the source for the stroke count, like the source for the story, remained unidentified.

In a more focused appraisal, Standard & Poors analyst Jason Asaeda opined, in a research note:

While we see Dillard's making positive merchandising changes, we still see risk of the company losing business this year to more promotional competitors, as well as from customers trading down in a weak economy. However, with inventories aligned to sales trends and Dillard's targeting up to $200 million in expense reductions, we narrow our fiscal year 2010 loss per share estimate by 40 cents to 25 cents. We raise our target price by $2 to $10 on revised peer-based enterprise value-to-EBITDA valuation.