Dillard's Inc. (NYSE:DDS) shares fell $1.49, or 5.28%, to $26.75 today after the company rebuffed Barington Capital's attempt to meet with the company's chief executive to discuss ways in which the company can maximize shareholder value. Shareholders clearly disapproved as shares tumbled off of their 52-week highs and many are hoping that the hedge fund will continue working to make meaningful changes to the company.

Barington Capital is a well known activist hedge fund that has been pushing the company to maximize shareholder value. The hedge fund points out that Dillard has lagged in almost every retailing measure of success, including (1) sub-par operating margins and same-store growth, (2) lowered valuation multiples compared to its peers, (3) and it has a ROIC that is two percentage points below its WACC.

Barington Capital said it believes the company's shares are materially undervalued and asked to meet with company executives to discuss ways in which shareholder value can be maximized. Measures to accomplish this would include changes to the company's inventory management, merchandising and also involve measures to contain costs.

The hedge fund also sees ample opportunities with the company's extensive real estate portfolio. These opportunities would include converting certain properties to more profitable uses, closing unprofitable stores and offering sales/leaseback options to owned properties. Combined, these operational and property changes should could result in substantial value being unlocked for shareholders. This makes DDS a stock worth watching!

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