On Thursday, Dillard's (DDS) announced that it plans to form a wholly-owned real estate investment trust. The company will transfer some of its properties to the REIT and then lease back the properties from the entity. The company said that the move may enhance its ability to access debt or preferred stock and improve its liquidity.

The market is currently pricing REITs at rich valuations, and the transaction will allow Dillard's to better monetize its significant real-estate assets. By transferring these holdings into a publicly traded REIT, Dillard's should be able to unlock additional shareholder value. According to Craig Johnson, an analyst at Customer Growth Partners, "the sum of the parts can be greater than the sum of the whole."

Another day of tech concerns took the markets lower during earnings season. Consumer confidence was higher and jobless claims were lower and the dollar was trying to show some strength. Still, housing data was mixed and inflation was picking up in the Philadelphia Fed report this morning. The biggest issue today is that many of these stocks were just up too much ahead of earnings. Despite the caution, the DJIA and S&P500 were close to and even above the red-line for part of the day.

Here were today's unofficial closing bell levels:

Dow Jones 11,822.80 -2.49 (-0.02%)
S&P 500 1,280.26 -1.66 (-0.13%)
Nasdaq 2,704.29 -21.07 (-0.77%)

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Dillard's (DDS - option chain) shares are rising today after last night the company announced plans to form a real estate investment trust so that it will have greater access to debt and equity markets. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on DDS.

DDS opened this morning at $40.06. So far today the stock has hit a low of $40.06 and a high of $44.50. As of 12:00, DDS is trading at $43.98 up $6.44 (17.1%). The chart for DDS looks neutral and S&P gives DDS a neutral 3 STARS (out of 5) hold ranking.

The Federal Reserve's next Beige Book report is scheduled to be released this week. This report is a compilation of anecdotal information on current economic conditions from each of the 12 Federal Reserve Bank districts, and it is released eight times a year. The data comes from interviews with business contacts, economists, market experts, and other sources. The previous report, released in January, showed some improvement in most districts and growth in consumer spending over the holiday period, though unemployment remained high. The December report showed modest improvement in eight of the districts.

Retailers were in the earnings spotlight last week and for the most part made a strong showing of it. Even as the earnings season winds down, some more retailers are scheduled to release quarterly results this week.

Here are some highlights from this past week's earnings coverage on BloggingStocks:

• Ann Taylor Stores Corp. (ANN) declining same-store sales offset better-than-expected Q3 earnings.
• Canadian Solar Inc. (CSIQ) reached a new 52-week high after Q3 results handily exceeded expectations.
• Dillard's Inc. (DDS) said that it swung to a Q3 profit due to cost cutting as revenue declined year over year.
• GameStop Corp. (GME) reported uninspiring Q3 numbers that included a slump in same-store sales.
• Home Depot Inc. (HD) lower Q3 earnings and revenue beat analysts' estimates, but shares still declined.

Analyst upgrades:

• Pali Capital upgraded Lazard (LAZ) to buy from neutral, citing a healthy restructuring environment, improving M&A and strength in the asset management segment. The firm has a $46 target on shares.
• Baird upgraded Scansource (SCSC) to outperform from neutral, citing strength in the channel business and growth drivers from improved telephony and security. The firm has a $30 target on shares.
• Citigroup upgraded Liberty Interactive (LINTA) to buy from hold, citing the company's QVC unit's return to growth. The firm raised its target on shares to $13.25 from $12.
• Hess Corp (HES) was upgraded to overweight from equal weight at Morgan Stanley.
• Vulcan Materials (VMC) was upgraded to buy from neutral at UBS.
• Dillard's (DDS) was upgraded to buy from hold at Deutsche Bank.

Tuesday, TJX Companies Inc. (TJX) reported that its profit soared in the third quarter, and fellow retailers Dillard's Inc. (DDS) and Saks Inc. (SKS) said they swung to year-over-year profits in the same period.

TJX posted earnings of $347.8 million, or 81 cents per share, compared with $235.8 million, or 54 cents, in the year-ago period. Analysts had expected TJX to earn 80 cents a share. Sales rose 10% to $5.24 billion, while same-store sales increased 7%.

Sears Holding (NYSE: SHLD) closed at $50.22 Tuesday. SHLD Q3 results are expected in late November. Deutsche Bank has a Sell rating on SHLD. SHLD December call implied volatility is at 83, puts are at 127; above its 26-week average of 53 according to Track Data, suggesting larger price movement. SHLD puts are priced higher than calls because SHLD is difficult to borrow.

Dillards (NYSE: DDS) closed at $3.86 Tuesday. DDS is expected to report earnings soon. DDS December option implied volatility of 145 is above its 26-week average of 85 according to Track Data, indicating larger price movement.

Kohl's (NYSE: KSS) closed at $30.69 Tuesday. KSS is scheduled to report Q3 financial results on November 13. Deutsche Bank has a Buy rating on KSS. KSS overall option implied volatility of 84 is above its 26-week average of 64 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Shares of Dillard's (NYSE: DDS) rose 35% yesterday. But the occasion wasn't a buyout or a great earnings report. Instead it was the news that hedge funds Barington Capital Group LP and Clinton Group want CEO William Dillard II fired over the company's dismal performance.

You can read the investors' letter here -- it was attached to a 13-D filed with the SEC. A quick sample:

Despite the generous compensation that has been paid to Dillard family members, the performance of the company over the past ten years has been atrocious. . . . As significant shareholders of Dillard's, we therefore call upon you to work with the Board's Class A directors to IMMEDIATELY begin the process of looking for a new chief executive officer. We recommend that this new chief executive be someone with exceptional integrity and proven leadership and turnaround experience in the retail industry.

You can read the letter for more detail but the market's reaction tells you pretty much all you need to know. The stock was up 35% on the suggestion that the CEO be replaced -- on a day when the Dow was down more than 200 points. What else do you need?

Dillard's insiders bought a few shares of stock last week, perhaps in anticipation of this letter. But investors are likely to see through it: decades of under-performance are not undone by a few token insider buys.

Today ended up being another one of those days that almost could have been special. Despite futures being lower all morning after the Asian markets slid into oblivion with Japan at 26-year lows, U.S. markets recovered on less-bad housing sale data and an S&P report that said the Christmas of 2008 shopping season may only be flat compared to 2008. Both were bad, but very acceptable for the current poor sentiment. Unfortunately, late day selling from redemptions and the "re-emergence of fears" took hold.

Here are today's unofficial closing bell levels:
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Dillard's Inc. (NYSE: DDS) was up over 30% at $4.48 in today's final minutes of trading. Management bought shares and insiders want new management.

Humana (NYSE: HUM) almost didn't make sense as far as the trader reaction to earnings is concerned. The health insurer posted earnings at $1.49 EPS vs. estimates of $1.47 and gave guidance of $1.00 to $1.10 after a $0.10 item vs. $1.20 estimates. For 2009, it sees earnings at $5.90 to $6.10 vs. $5.85 EPS estimates. That gives a forward P/E ratio of under 7, yet shares were down 14% at $31.12 right before the close of trading.

J.C. Penney (NYSE: JCP) closed at $31.37 Friday. JCP is scheduled to report September sales data on October 8. JCP October option implied volatility of 83 is above its 26-week average of 54 according to Track Data, suggesting larger price movement.

Kohl's (NYSE: KSS) closed at $41.47 Friday. KSS is expected to report September sales data on October 8. KSS over all option implied volatility of 65 is above its 26-week average of 48 according to Track Data, suggesting larger price movement.

Dillard (NYSE: DDS) closed at $11.06 Friday. DDS is expected to report September sales data on October 8. DDS overall option implied volatility of 108 is above its 26-week average of 73 according to Track Data, indicating larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Kohl's (NYSE: KSS) closed at $51.04 Tuesday. KSS overall option implied volatility of 46 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Dillard (NYSE: DDS) closed at $13.05 Tuesday. DDS September option implied volatility of 80 is above its 26-week average of 65, indicating larger price movement.

Macy's (NYSE: M) closed at $21.62 Tuesday. M overall option implied volatility of 55 is near its 26-week average according to Track Data, suggesting non-directional price movement.

J.C. Penney (NYSE: JCP) closed at $40.63 Tuesday. JCP comparable store sales decreased 4.9% for the four-week period ended August 30, 2008, in-line with company guidance. JCP September option implied volatility of 50 is near its 26-week average, suggesting non-directional price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Big Lots Inc. (NYSE: BIG) Q2 profits topped expectations, but it warned of weak sales in the second half.
• China Petroleum and Chemical Corp. (NYSE: SNP) first-half profits tanked due to government price controls.
• Dell Inc. (NASDAQ: DELL ) fell short of Q2 earnings estimates, surprising even Jim Cramer.
• Dillard's Inc. (NYSE: DDS) beat analysts' expectations despite widening its Q2 net loss.
• Gilat Satellite Networks Ltd. (NASDAQ: GILT) missed Q2 expectations and a merger fell through.
• J. Crew Group Inc. (NYSE: JCG) Q2 net income slipped on lower sales and gross margins.
• JP Morgan & Chase Co. (NYSE: JPM) earnings have been hurt by investments in Fannie Mae/Freddie Mac.
• LDK Solar Co. (NYSE: LDK) raised its 2009 revenue guidance on reaching peak silicon wafer capacity.
• Marvell Technology Group (NASDAQ: MRVL) beat Q2 expectations but gave a conservative Q3 outlook.
• Rio Tinto Group (NYSE: RTP) first-half profits more than doubled on its acquisition of Alcan.
• Sanderson Farms Inc. (NASDAQ: SAFM) swung to a Q3 loss due in part to rising commodities prices.
• Sears Holdings Corp. (NASDAQ: SHLD) Q2 earnings plunged more than expected on further sluggish sales.
• SkillSoft PLC (NASDAQ: SKIL) beat Q2 expectations and offered Q3 and full-year guidance.
• Smithfield Foods Inc. (NYSE: SFD) swung to a Q1 loss due in part to rising commodities prices.
• Talbots Inc. (NYSE: TLB) nearly doubled its Q2 loss due to lower sales and restructuring charges.
• Thornburg Mortgage Inc. (NYSE: TMA) posted a Q2 profit but warned of possible collapse on margin calls.
• Tiffany & Co. (NYSE: TIF) doubled its Q2 profit on strong international sales, and raised its guidance.
• TiVo Inc. (NASDAQ: TIVO) unexpectedly swung to a Q2 profit but forcast another loss in Q3.

Upcoming quarterly reports include Guess (NYSE: GES), Collective Brands (NYSE: PSS), H&R Block, (NYSE: HRB), Staples (NASDAQ: SPLS), Ciena (NASDAQ: CIEN), Toll Brothers (NYSE: TOL); and National Semiconductor (NASDAQ: NSM).

Visit AOL Money & Finance for more earnings coverage.

The economic downturn has meant lower sales for retailers such as department store chain Dillard's Inc. (NYSE: DDS) and apparel retailer Talbots Inc. (NYSE: TLB). On Wednesday both companies reported wider second-quarter losses.

Little Rock, Ark.-based Dillard's said it it lost $38.3 million, or 51 cents a share, in the quarter, compared with a loss of $25.2 million, or 31 cents a share, in the second quarter of the previous year. Same-store sales fell 4%, and overall revenue dropped to $1.65 billion from $1.69 billion a year ago.

Results included a gain of 15 cents per share, mostly from the sale of a company airplane, and store closing and other charges of 8 cents per share.

Analysts surveyed by Thomson Financial had expected a loss of 54 cents per share on revenue of $1.62 billion.

Dillard's said cost-cutting efforts in the second quarter were insufficient to offset disappointing results, but that the company would continue to close under-performing stores and cut back on advertising and general expenses.

Shares of Dillard's jumped 48 cents, or 4%, to $11.85 in early trading, before settling back down. Shares are down about 38% year to date.

In this series, we take a look at the 25 stocks on the S&P 500 Index (SPX) that have turned in the worst performance during the past decade -- what went wrong, and what happens next.

As a mid-market department store, Dillard's (NYSE: DDS) was in the wrong place at the wrong time when a slowdown in spending spread across the U.S. A staggering spike in energy and food prices, as well as a nationwide foreclosure crisis, first hit consumers during the first half of 2007. The middle class couldn't help but notice its discretionary income shrinking with each paycheck, and average Americans found themselves with fewer and fewer reasons to plan a trip to the mall.

What went wrong? At number 21 on our list of SPX laggards, DDS lost 72% of its value during the 10-year period that ended June 30, 2008. The equity's sharpest losses have also been its most recent; after hitting a near-term peak of $40.56 in May 2007, DDS took a 71.4% haircut over the next 13 months. The decline was sparked by a weak earnings report on the 23rd of that month, when Dillard's missed the Street's earnings expectations by a staggering 20 cents per share.

Last August, Dillard's proved once again that analysts were too optimistic. The company lost 31 cents per share in its second quarter, compared to expectations for a loss of just 1 penny per share. In April 2008, the beleaguered department store narrowly dodged a proxy battle by awarding a board seat to a nominee proposed by irate shareholder group Barington Capital. Properly chastised by the sharp decline in its share price, Dillard's also announced plans to shutter underperforming stores, reduce capital expenditures, and ramp up the quality of its merchandise.