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Fitch raises Dillard's rating to investment grade

NEW YORK (AP) -- Fitch Ratings is raising Dillard's long-term issuer default rating, citing the improvement of a key revenue metric.

The ratings agency said Tuesday that the department store operator's revenue at stores open at least a year has climbed for 10 straight quarters. Last month Dillard's reported a 3 percent rise in fourth-quarter revenue at stores open at least a year. This figure is a key indicator of a retailer's health because it excludes results from stores recently opened or closed.

Fitch anticipates Dillard's Inc. will be able to sustain a low single-digit increase in revenue at stores open at least a year over the next 24 to 36 months, as the company has worked on offering more upscale products in its stores so that it can differentiate itself better from more moderately priced, traditional department stores.

Fitch boosted the long-term issuer default rating to investment grade status with a "BBB-." Its prior rating was in junk status, at "BB+." The company's outlook is "Stable."

Shares of Dillard's, based in Little Rock, Ark., fell $1.22 to $78.62 in morning trading.