Discloses 3.7% Ownership Interest in the Company NEW YORK, Aug. 3 /PRNewswire/ -- Barington Capital Group, L.P. sent aletter today to William T. Dillard, II, the Chairman and Chief ExecutiveOfficer of Dillard's, Inc. (NYSE: DDS). In the letter, Barington repeatedits request to meet with Mr. Dillard and members of his management team todiscuss a variety of measures which Barington believes will maximizeshareholder value for the benefit of all of the Company's stockholders. The letter was sent following Barington's receipt of a July 2007 letterfrom Mr. Dillard, in which Mr. Dillard did not consent to Barington'sinitial request to meet with him in order to present suggestions to improvethe Company's profitability and better utilize its substantial asset base.Instead, Mr. Dillard stated that the Company's investor relations director"would be happy to speak with you regarding our corporate strategy andanswer your questions." Barington hopes that Mr. Dillard, as a steward of a publicly-tradedcompany, will reconsider its request and agree to meet with Barington, whois one of the larger owners of Dillard's. Barington has informed Mr.Dillard that it would be happy to meet at a time and location that is mostconvenient for him. A copy of the Barington letter is attached to this press release. About Barington Capital Group: Barington Capital Group, L.P. is an investment firm that, through itsaffiliates, primarily invests in undervalued, small and mid-capitalizationcompanies. Barington and its principals are experienced value-addedinvestors who have taken active roles in assisting companies in creating orimproving shareholder value. Barington represents a group of investors thatowns more than 3 million shares of Class A Common Stock of Dillard's, Inc.,constituting over 3.7% of the outstanding shares of the Company. Barington Capital Group, L.P. 888 Seventh Avenue New York, New York 10019 August 3, 2007 William T. Dillard, II Chairman of the Board and Chief Executive Officer Dillard's, Inc. 1600 Cantrell Road Little Rock, Arkansas 72201 Dear Mr. Dillard: Thank you for your letter. While we appreciate your offer to makeDillard's director of investor relations available to speak with us, ourinterest is to meet with you and members of your management team. As asteward of a publicly-traded company, we had expected that you would bereceptive to meeting with one of your larger stockholders, especially onewith substantial experience helping improve shareholder value as along-term investor in a number of retail companies. There is clearly room for improvement at Dillard's. As reported inMonday's New York Post, Dillard's "has historically lagged behind its peersby almost every retailing measure." Among other things, Dillard's suffersfrom sub-par operating margins(1) and sub-par same store sales growth(2)and trades at a valuation multiple that is considerably lower than theindustry- average.(3) Furthermore, as noted in the July 15, 2007 researchreport of UBS Securities, the Company's Return on Invested Capital (ROIC)has been approximately 2 percentage points below its weighted average costof capital. According to UBS, this is one of the main reasons the Companyhas typically traded at a lower multiple than its peers and implies thatDillard's is destroying value in its business. While we strongly believe in the potential prospects of Dillard's,whose shares we believe are significantly undervalued, we hope yourecognize that the status quo is not acceptable. We would therefore like tomeet with you to discuss initiatives in areas such as inventory management,merchandising and cost containment that we believe the Company shouldimplement to bridge these differences and substantially increaseshareholder value. We would also like to discuss with you a number ofmeasures to enhance the value of Dillard's real estate portfolio, includingthe conversion of certain properties into higher and better uses, theclosure of unprofitable stores and the sale/leaseback of owned properties.Given the highly competitive nature of the retail industry, it is ourbelief that Dillard's needs to take advantage of every opportunity toimprove its operations and realize its vast value potential. As part owners of the Company and in light of our track record, we hopethat you will reconsider our request. We would be happy to meet at a timeand location that is most convenient for you. Sincerely, /s/ James A. Mitarotonda James A. Mitarotonda (1) Dillard's last twelve month earnings before interest, taxes, depreciation, amortization and rent ("EBITDAR") margin is 9.0% versus the industry average of 13.2%. Industry group comprised of Bon Ton Stores Inc., Macy's, Inc., J.C. Penney Company, Inc., Nordstrom Inc., Kohl's Corp., Saks Inc., Stage Stores Inc. and Gottschalks Inc. (2) On average, Dillard's same store sales growth has lagged its competitors by 3.9 percentage points per annum over the past 5 years. Dillard's has not posted an increase in annual same store sales since 1999. (3) Dillard's Adjusted Enterprise Value / EBITDAR is 5.6x versus the industry average of 8.0x. Enterprise Value has been adjusted by capitalizing rent expense at 8x.
