October 2008 sales at DDS decreased by 9% to $406 million when compared to the same four-week period last fiscal year, and same-store sales were down a whopping 8% during October. In addition to its weak performance, activist shareholders have raised concern over CEO William Dillard II's performance in the last 10 years, citing the decline in profits for the previous six quarters and urging a management team change. Although the demand was rejected by the board of directors, it has raised issue over DDS's top management's ability to safeguard DDS through tough economic times.
All of Dillard's 325 stores are located in malls and the company has no plans to expand to off-mall locations in 2009. This is a potential problem for the company because since 2000, consumers have shifted away from malls and towards shopping centers and off-mall locations. Dillard's competitors such as Kohl's (KSS)is far ahead of the game operating 938 of its 1004 stores in off-mall locations. J.C. Penney, although it only has a few off-mall locations, plans to build 16 out of its 17 new stores in off-mall locations in 2009.