Byline: David Moin

NEW YORK — In a cost-cutting move away from regionalization, Dillard Department Stores Inc. plans to close its San Antonio and Cleveland buying offices and consolidate their functions into the Fort Worth, Tampa and St. Louis regional offices.
Dillard’s said the consolidation will affect less than one percent of the company’s 40,000 employees, or about 300 employees. “We hope to offer alternative positions elsewhere in the company to a substantial number of the affected employees,” said Alex Dillard, executive vice president, in a statement.
The closings reflect sluggish sales over the long term and a sense that Dillard’s operations may be too decentralized. The chain has seven buying offices geared to tailor assortments based on regional preferences. Dillard’s, which has stores in 23 states in the Midwest, Southeast and Southwest, also has buying offices in Phoenix and Little Rock, where the chain is based.
Isaac Lagnado, publisher of Tactical Monitor, described Dillard’s as a “relentless expense hound for well over a decade, with some of the lowest expense ratios in the department store industry. Its Achilles heel has been the top line.”
The closings also reflect the ongoing consolidation in the department store industry toward greater centralization. Federated Department Stores is merging its Bullock’s, Broadway and Jordan Marsh divisions into Macy’s and Bloomingdale’s, while May Department Stores has over the last several years, merged several divisions, including G. Fox into Filene’s.
In the nine months ended Oct. 28, sales advanced 5.1 percent to $4 billion from $3.8 billion, and same-store sales edged up 2 percent. Profits rose 3.8 percent to $138 million, or $1.22 a share, from $132.9 million, or $1.18.
“This realignment of stores affects some 84 of our 240 locations,” Dillard said in a statement. “The merger of operating divisions and realignment of stores will result in an improved and strengthened buying program.”

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