Dillard's Inc is on the lookout for new vendors who can supply stores with more exciting merchandise after losing sales in the third quarter to what it describes as "dull fashions."

"We hope we can find branded vendors who can deliver something customers want to pay for," chief financial officer James Freeman said during a conference call on the company's third-quarter results. Where those vendors are small firms, Dillard's wants to "help them grow enough to make them mean something to our business."

The department store chain's comments were prompted by a 4.2 per cent fall in sales to $1.79 billion from $1.87 billion a year earlier. Sales at stores open at least a year dropped 4 per cent in the quarter.

Net loss was $5.1 million, or six cents a share, compared to a year-earlier loss of $40.1 million, or 48 cents a share.

On a more positive note, Dillard's widened its gross margins by 370 basis points. This was achieved through a reduction in markdowns on summer merchandise and increased sales of higher margin private label merchandise.