Dillard’s reaching out again to analysts
Posted on Wednesday, July 23, 2008
URL: http://www.nwanews.com/adg/Business/232135/
Dillard’s Inc., whose silence has long drawn the ire of securities analysts, has turned a new leaf.
It’s talking with the analysts, even inviting them to Little Rock.
The change came as the Little Rock-based retailer’s stock was falling to its lowest point in more than 20 years last week.
Dillard’s lack of communication with analysts, the media and investors was a criticism raised by activist investor Barington Capital Group last year.
The company eventually settled a board challenge from Barington and other investors, which resulted in the election of four new directors in May.
Spokesman Ju lie Bull wouldn’t say Monday if the new approach was influenced by the company’s new board members.
Banc of America Securities ’ analyst Dana Cohen called her meeting the first “in five-plus years” with William Dillard II, chief executive officer of Dillard’s.
Credit Suisse said in a report its meeting with the retailer last week followed “an eight-year absence in speaking directly with Dillard’s management.”
Bull said Monday that “we believe reaching out more to the investment community is in the best interest of our shareholders and our company. While we have always valued the opinions of the investment community, it is no secret we have recently met with shareholders and sellside analysts more than in the past. We look forward to more dialogue in the future. We gain a lot of insight from these meetings.”
She would not say who attended the recent meetings. Dillard’s invited the analysts and met with them in Little Rock within the past two weeks.
Last year, UBS analyst Michelle Tan noted that Dillard’s hadn’t hosted an earnings call with analysts since 2003. Bull said the company has no plans to bring back calls at this time.
Bob Williams, managing director of Delta Trust in Little Rock, said he thinks Dillard’s is meeting with the investment community because of recent pressure from shareholders and the retailer’s low stock price.
Dillard’s share price reached a more than 20-year low of $ 7. 61 last week.
On Tuesday, shares closed at $ 10. 87 on the New York Stock Exchange, up 89 cents, or 8. 92 percent. Shares have traded as high as $ 37. 11 and as low as $ 7. 61 over the past year.
The situation has put Dillard’s management “in a position where they feel like, even despite the dual class system of share ownership, they’re to talk about this and address it publicly,” Williams said.
The Dillard family, whose members remain in top management positions, through its Class B shares has the power to elect eight of 12 board members.
The company in the past year also has faced weak sales and earnings. Dillard’s in May blamed a slow economy for a 94 percent drop in profit for its first quarter compared with the year-earlier period.
Credit Suisse analyst Michael Exstein said in his report that the analysts met with William Dillard II on July 16.
“We clearly view management’s reaching out to the street as an affirmation that Dillard’s is not operating in a vacuum or with a ‘business as usual’ mindset as may have been the case in prior years,” the report said.
William Dillard II said the consumer spending environment is “the worst he has seen since 1974,” the report said.
Cohen, the Banc of America Securities analyst, said “we perceived a real sense of greater urgency on [William Dillard II’s ] part and he was clear in his view that the current performance is unacceptable. While we came away feeling like they are doing the right things in the near term, we also were able to discuss some longer-term strategies and it is here we continue to have questions.”