Dillard’s Inc. plans to continue to close stores and tweak its merchandise mix after lackluster sales led to a 69.5 percent drop in fourth-quarter earnings.

The retailer said on Thursday that profits for the three months ended Feb. 2 fell to $47.3 million, or 63 cents a diluted share, compared with $155 million, or $1.90, a year ago. Revenues decreased 9.4 percent to $2.21 billion from $2.44 billion, which includes a 9.7 percent decline in sales to $2.16 billion.

For all of 2007, profits fell 78.1 percent to $53.8 million, or 68 cents a diluted share, on a 5.6 percent drop in revenues to $7.37 billion. Sales for the year also fell by 5.6 percent to $7.21 billion.

“We remain committed to strengthening our appeal to aspirational and contemporary shoppers to set Dillard’s apart in the marketplace,” said chief executive officer William Dillard 2nd.

Dillard’s has also been pressured by activist investors who want the company to boost profits.

Barington Capital Group this week said it and an investor group would try to fill four slots on the firm’s 12-person board at the retailer’s annual meeting in May. The Dillard family, which controls the firm’s Class B shares, fills the other eight slots.

Southeastern Asset Management, which holds about 12.9 percent of the firm’s Class A stock, said it had spoken with the Little Rock, Ark.-based firm “regarding opportunities to build the value of the company for all shareholders.”

Dillard’s already said it would close a distribution center and three stores. The retailer said it plans to continue to buy its own stock, after picking up $111.6 million worth of Class A shares last year.

Dillard’s has been increasing its focus on exclusive merchandise, which made up 24.2 percent of its offering last year, up from 23.8 percent the year before.