Shares of Dillard's, which trade on the New York Stock Exchange, fell to $64 before the market opened Thursday.
The Little Rock, Arkansas-based company reported fiscal third-quarter net income of $7.4 million, or 27 cents a share, down from $14.5 million, or 50 cents, in the year-earlier period.
Sales rose to $1.42 billion from $1.36 billion. Same-store sales - a widely-watched performance gauge among retailers - rose 3%, above the 1% consensus estimate of analysts surveyed by FactSet.
"While we are encouraged by our 3% comparable sales performance, this was a disappointing quarter as markdowns weighed heavily on gross margin, particularly in the first month," CEO William Dillard said in a statement. "However, operating performance improved as the quarter progressed and sales turned positive."
Dillard's joins a growing list of retail companies that are struggling to maintain profits amid strong competition from the likes of Amazon.com Inc. (AMZN - Get Report) and discount retailers like Costco Wholesale Corp. (COST - Get Report) and Walmart Inc. (WMT - Get Report) . Shares of Macy's (M - Get Report) took a hit on Wednesday despite the company reporting better-than-expected earnings.
Analysts and investors are watching retailers' financial performance closely ahead of the critical holiday shopping season, which informally kicks off after Thanksgiving.