The Dillard family could use a session with Dr. Phil.
The Arkansas-based family — which controls the struggling Dillard’s chain of more than 300 department stores — has produced underwhelming sales, profit and stock performances over the past seven years that have left suppliers and former executives scratching their heads.
Many blame feuding family members for wrong-headed merchandising decisions and micro-managed operations, which have produced a long trail of lackluster results that lag rivals like Macy’s, Nordstrom and J.C. Penney.
“For years, there has been a story floating around how Bill [Dillard, Jr., chairman and chief executive] and Alex [Dillard, his younger brother and company president] once got into a fistfight in the middle of a store,” one former Dillard’s executive told The Post. “I can’t say whether they ever really came to blows, but it wouldn’t surprise me.”
Dillard’s and its management declined to comment for this story. Former executives and vendors familiar with Dillard’s, who spoke on the condition of anonymity, say a competitive and sometimes hostile relationship between Bill Jr. and Alex has divided company employees and vendors — hampering its performance.
The brothers apparently don’t see eye-to-eye on merchandising. Critics say one quirk that hasn’t served the company well is Bill Jr.’s stubborn ambition to dominate the men’s suit business, even as workplaces have become increasingly casual.
“Bill always used to say, ‘We’ll hang more suits, so we’ll sell more suits,'” according to one former executive.
Alex, who has “a more realistic view that a department store should be a customer’s editor,” according to one top apparel executive, has fallen into the role of a frustrated iconoclast.
The problems at Dillard’s, some say, date back to 2002, when Bill Dillard Sr., the founder, died. The elder Dillard, who started the chain in 1938, was a penny pincher who ran a tight ship.
Critics of the company in recent years complain that Bill Jr. is too familiar with corporate jets, opulent stores, and golf.
As they vie for control of the business, sources say the rival brothers micromanage their respective fiefdoms, routinely over-riding decisions made by lower management.
While Dillard’s has famously clashed with big brands like Hugo Boss and Tommy Hilfiger, giving some the impression that the management team was tough as nails, sources say Bill Jr. and his team are surprisingly lax — compared to rivals — when it comes to demanding markdown money.
This can lead to anemic margins.
“Honestly, I love them for that, but I’d say that’s probably a major factor in their [lackluster] financial performance,” one supplier says. Bill Jr. likewise has earned the reputation of an executive that “slick vendors can sweet-talk.”
“The last thing a Dillard’s buyer wants is for a vendor to get into a room alone with Bill,” says one apparel executive. “If they do, they’ll sell him more than he needs.”
While Bill Sr. was a shrewd penny pincher, critics charge that Bill Jr. has spent lavishly on corporate jets and big, fancy stores.
“Bill Jr. always wanted stores to be big, big, big — if Nordstrom was opening at the other end of the mall, his store had to be bigger,” a former executive said. “It’s an ego deal. It’s not like the business was there to support it.”
While Bill Jr. is said to always covet the large, airy stores of rival Nordstrom, the Seattle-based chain has long put a premium on employee training and customer service. Dillard’s, say critics, has taken shortcuts as it looks to sell pricey Coach handbags and Ralph Lauren suits.
“Rather than having one experienced guy on the floor making $75,000 a year, they figure, ‘We’ll get two people off the street and pay them $25,000 each,’ ” a former executive says. “The place is being run almost like Wal-Mart.”
Unlike Wal-Mart, Dillard’s has long packed its stores with merchandise, refusing to mark the goods down until season’s end.
The result of Bill Jr.’s six-year management reign was a stock price last May — even before the markets began to slide — that was 16 percent below the level before he took over. By comparison, Macy’s stock price last May was more than double the price of May 2002.
The poor performance attracted a pair of hedge funds that threatened a proxy battle last spring. That threat may have started a turnaround at the retailer.
Dillard’s has replaced four board members, and “seems to be swinging towards normalcy,” according to one longtime supplier. “They’re promoting more and making more trips to New York lately.”
Profit in the first quarter rose sharply, and inventory — which was once bloated, leading to markdowns and slim margins — was down.
But for a turnaround to be successful, people close to the retailer say, members of the Dillard family — who retain a controlling grip on the company’s top management positions in addition to its board — need to put aside decades of sibling rivalry.