Aggressive cost cutting at Dillard's was unable to offset "significant declines" in sales and gross margin, pushing the department store retailer to a fourth quarter loss.

Net loss for the three weeks to 31 January was $149.3m or $2.03 per share, and compares with a profit of $47.3m or $0.63 per share, posted in the same period a year earlier.

This year's results include asset impairment and store closing charges of $123.9m after tax or $1.69 per share, the Little Rock, Arkansas based company said in a statement yesterday (5 March).

In December it announced plans to cut around 500 jobs - or 0.8% of its workforce - as part of its ongoing efforts to reduce operating expenses.

CEO William Dillard II said: "Our extensive cost reduction measures resulted in a $67.3 million savings but were not enough to offset the significant declines in sales and gross margin that we experienced during the quarter."

Quarterly sales fell 5.7% to $2.039bn from $2.163bn. Total merchandise sales were down 9% and merchandise sales in comparable stores dropped 8%.

Gross margin from retail operations fell by 7.1% of sales, as a result of higher markdown activity. However, inventory levels were down 23% year over year.

For the full year, net loss was $241.1m or $3.25 per share, compared with a net income of $53.8m or $0.68 per share, the year before.

Annual revenues were down 5.6% to $6.8bn from $7.2bn, with total merchandise sales dropping 6% and merchandise sales in comparable stores falling 7%.

The retailer, which operates 306 Dillard's stores and 9 clearance centres, is cutting its capital expenditures by 36% during 2009 to $120m, down from $188m in 2008. No store openings are planned for the year.