Upscale department store chain Dillard's has narrowed its third-quarter loss thanks to an improved merchandise mix and reduced costs.

Quarerly loss totalled US$2.7m compared to a loss of $18.7m in the same period last year, as sales rose to $1.73bn from $1.7bn a year ago. Same-store sales grew 2% during the quarter.

Dillard's believes ongoing efforts to boost merchandise mix have driven a better customer response.

The company said it is working to keep existing customers while also reaching out to new ones with a wider selection of upscale and contemporary fashions.