Shares rise on planned sale of credit card unit

Monday, Aug. 9, 2004 | 11:05 a.m.

LITTLE ROCK, Ark. -- Shares of Dillard's Inc., which operates 329 department stores, rose as much as 14 percent today after the company said it would sell its in-store credit card business to General Electric Co. for $850 million in cash.

The shares rose $2.82 to $24.30 at 9:36 a.m. in New York Stock Exchange composite trading. They had gained 30 percent this year.

Dillard's, based in Little Rock, plans to use the proceeds to buy back shares, pay down debt and boost profit amid sluggish sales. Sales at stores open at least a year have fallen in seven of the past 12 months.

General Electric will also assume $400 million in debt. Dillard's expects the sale to close by the end of the year.

Dillard's had $1.093 billion in credit-card loans as of May 1, according to its most recent quarterly financial report. In fiscal 2003, Dillard's collected $207.9 million in interest income on its loans, or about 2.6 percent of overall revenue.

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