Shares of Dillard's Inc. soared in trading Monday after the department store operator reported strong gains for its fourth quarter.
The company, based in Little Rock, Ark., reported that sales dropped 10 percent but it was able to significantly lower costs and inventory levels to post a profit.
Dillard's earned $79.5 million, or $1.08 per share, for the quarter, a major gain compared with the prior year when it lost $149.3 million, or $2.03 per share, for the quarter.
Investors were cheered by the results, sending shares up almost 17 percent in midday trading.
Retailers nationwide have struggled during the economic downturn as shoppers curbed discretionary spending and relied on cost cuts and tighter inventory levels to deliver results for shareholders.
Standard & Poor's Equity Research raised its opinion on Dillard's shares to "hold" from "sell" on the results. S&P retail analyst Jason Asaeda said the company's opportunity to make further cuts will be limited. He expects the company will continue to improve its margins through tight inventory management and a focus on its most productive brands and stores.
S&P also raised its target price to $20 from $11.
Shares of Dillard's rose $2.88 to $19.75 in trading Monday.