Dillard's 1Q Profit Drops 94

New York City Dillard's Inc. said Thursday its fiscal first-quarter profit tumbled 94% on a sharp decline in same-store sales, fueled by a weak economic environment.

For the period ended May 3, the company reported income of $2.7 million compared with $42.9 million in the year-ago quarter.

Total revenue dipped to $1.71 billion from $1.8 billion in the same quarter last year. Same-store sales dropped 6% during the quarter.

The company said sales of home merchandise and furniture declined more than the average performance trend during the period.

"Our first-quarter performance was certainly disappointing," CEO William T. Dillard II said in a statement. "The weak economic conditions, particularly in Florida, made it extremely difficult to achieve profitable sales levels. The detrimental effect on our gross margin performance was dramatic as we worked to control inventory position. We will continue to run our business conservatively to navigate the near-term economic uncertainty."

Dillard's cut advertising and selling, general and administrative expenses by $17.8 million during the quarter, and has announced six additional store closures for 2008. The company said cost-saving measures enacted in the first quarter could save the company up to $50 million this fiscal year.