corresp.htm

Dillard's Inc.

1600 Cantrell Road – P.O. Box 486 – Little Rock, Arkansas 72203

Telephone: 501-376-5200 Fax: 501-376-5917

James I. Freeman
Senior Vice-President
Chief Financial Officer
Telephone: 501-376-5980
Fax: 501-376-5917

April 19, 2007

United States Security and Exchange Commission

Michael Moran, Accounting Branch Chief

100 F Street N.E.

Washington, DC 20549-7010

Dear Mr. Moran:

We are in receipt of your letter dated April 13, 2007 regarding our Form 10-K for the Fiscal Year Ended January 28, 2006 and our Form 10-Q for the Fiscal Quarter Ended October 28, 2006. Our responses to your comments are provided below. We have repeated each of your comments in full and the response to each comment is noted directly below the quoted comment. As noted in response to comment No. 1, we will make the changes discussed in future filings.

Form10-K for the Fiscal Year Ended January 28, 2006

General

Item 7. Management’s Discussion and Analysis of Financial Condition and Result of Operations General-- Service Charges, Interestand Other Income, page 13

Consolidated Statements of Operations, page F-7

1. We note your revised statement of operations presentation in Form 10-K filed April 4, 2007 and response to comment 2 of our letter dated March 20, 2007 and our verbal comment issued by telephone during a conference call on March 29, 2007. We note that in your response letter dated March 30, 2007 you stated the Company would reclassify gains on the sale of assets out of revenue to a separate line within operating income to comply with our verbal comment issued by telephone on March 29, 2007. However, the financial statement presentation in your recently filed Form 10-K denoting the reclassification from revenue of gains on sale of assets did not include the gain from the sale of credit cards as specifically requested and discussed during three phone conversations with the staff on March 29, 2007 and March 30, 2007. In future filings, please also reclassify from revenues the gain on sale of the credit card business. Refer to SFAS 144. Show us what your disclosures will look like revised in future filings in management’s discussion and analysis of financial condition and results of operations, and your Consolidated Statement of Operations for the three years ended February 3, 2007.

Response: The Company sincerely apologizes for the misunderstanding. We do not recall specifically addressing the gain on sale of the credit cards in any of the conference calls you mentioned. However, we will revise in future filings our Consolidated Statement of Operations and have presented this revision below:

Consolidated Statements of Operations

Dollars in Thousands, Except Per Share Data

	Years Ended
	February 3,2007			January 28, 2006			January 29, 2005

Net Sales	$	7,636,056		$	7,551,697		$	7,522,060
Service Charges and Other Income		174,011			142,948			198,692
		7,810,067			7,694,645			7,720,752

Cost of sales		5,032,351			5,014,021			5,017,765
Advertising, selling, administrative and general expenses		2,096,018			2,041,481			2,098,791
Depreciation and amortization		301,147			301,864			301,917
Rentals		55,480			47,538			54,774
Interest and debt expense, net		87,642			105,570			139,056
Gain on sales of assets		(16,413	)		(3,354	)		(86,800	)
Asset impairment and store closing charges		-			61,734			19,417
Income Before Income Taxes and Equity in Earnings of Joint Ventures		253,842			125,791			175,832
Income Taxes		20,580			14,300			66,885
Equity in Earnings of Joint Ventures		12,384			9,994			8,719
Net Income	$	245,646		$	121,485		$	117,666

Earnings Per Common Share:
Basic	$	3.09		$	1.49		$	1.41
Diluted		3.05			1.49			1.41

See notes to consolidated financial statements.

The Company will revise its footnote disclosures as follows:

2. Disposition of Credit Card Receivables

On November 1, 2004, the Company completed the sale of substantially all of the assets of its private label credit card business to GE Consumer Finance (“GE”). The purchase price of approximately $1.1 billion includes the assumption of $400 million of securitization liabilities, the purchase of owned accounts receivable and other assets. Net cash proceeds received by the Company were $688 million. The Company recorded a pretax gain of $83.9 million as a result of the sale. The gain is recorded in gain on sales of assets on the Consolidated Statements of Operations.

Additionally, we will revise our management’s discussion and analysis, with each area shown revised as follows:

Service Charges and Other Income. Service Charges and Other Income includes income generated through the long-term marketing and servicing alliance between the Company and GE subsequent to November 1, 2004. Service Charges and Other Income also includes interest and service charges, net of service charge write-offs, related to the Company’s proprietary credit card sales prior to November 1, 2004. Other income relates to rental income, shipping and handling fees and net lease income on leased departments.

RESULTS OF OPERATIONS

The following table sets forth the results of operations and percentage of net sales, for the periods indicated:

(in millions of dollars)							For the years ended

	February 3, 2007						January 28, 2006						January 29, 2005
				% of						% of						% of
	Amount			Net Sales			Amount			Net Sales			Amount			Net Sales

Net Sales	$	7,636.1			100.0	%	$	7,551.7			100.0	%	$	7,522.1			100.0	%
Service Charges and Other Income		174.0			2.3			142.9			1.9			198.7			2.6
		7,810.1			102.3			7,694.6			101.9			7,720.8			102.6

Cost of sales		5,032.4			65.9			5,014.0			66.4			5,017.8			66.7
Advertising, selling, administrative and general expenses		2,096.0			27.5			2,041.5			27.0			2,098.8			27.9
Depreciation and amortization		301.2			3.9			301.9			4.0			301.9			4.0
Rentals		55.5			0.7			47.5			0.6			54.8			0.7
Interest and debt expense, net		87.6			1.2			105.6			1.4			139.1			1.8
Gain on sales of assets		(16.4	)		(0.2	)		(3.4	)		-			(86.8	)		(1.2	)
Asset impairment and store closing charges		-			-			61.7			0.8			19.4			0.3

Income Before Income Taxes and Equity in Earnings of Joint Ventures		253.8			3.3			125.8			1.7			175.8			2.4
Income Taxes		20.6			0.3			14.3			0.2			66.9			0.9
Equity in Earnings of Joint Ventures		12.4			0.2			10.0			0.1			8.7			0.1
Net Income	$	245.6			3.2	%	$	121.5			1.6	%	$	117.6			1.6	%

During 2004, the Company recognized a gain of $83.9 million related to the sale of the Company’s credit card business to GE. The gain is included in gain on sales of assets.

Service Charges and Other Income

(in millions of dollars)							Dollar Change					Percent Change
	2006		2005		2004		2006-2005		2005-2004			2006-2005			2005-2004
Leased department income	$	10.4	$	8.5	$	6.5	$	1.9	$	2.0			22.4	%		30.8	%
Service charge income		-		-		141.2		-		(141.2	)		-			-
Income from GE marketing and servicing alliance		124.6		104.8		14.2		19.8		90.6			18.9			638.0
Visa Check/Mastermoney Antitrust settlement proceeds		6.5		-		-		6.5		-			-			-
Other		32.5		29.6		36.8		2.9		(7.2	)		9.8			(19.6	)
Total	$	174.0	$	142.9	$	198.7	$	31.1	$	(55.8	)		21.8	%		(28.1	)%
Average accounts receivable (1)	$	-	$	-	$	1,101.2	$	-	$	(1,101.2	)		-	%		-	%

2005 Compared to 2004

Service charges and other income included income from the marketing and servicing alliance with GE of $104.8 million for fiscal 2005 and $14.2 million for the last three months of fiscal 2004. Service charge income of $141.2 million was recorded in fiscal 2004 prior to the sale of our credit card business to GE. No service charge income was recorded in fiscal 2005 due to the sale in 2004.

The Company acknowledges that:

1. We are responsible for the adequacy and accuracy of the disclosures in the filing.

2. Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing.

3. The Company may not assert this action as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Sincerely,

James I. Freeman
Senior Vice President, Chief Financial Officer