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Danny Johnston, Associated Press
Arkansas Gov. Mike Beebe, left, greets Dillard's Inc., President Alex Dillard in Maumelle, Ark., Wednesday, Dec. 22, 2010, after Dillard announced the company's plan to locate an Internet fulfillment center in the city.

MAUMELLE, Ark. — Department store chain Dillard's Inc. said Wednesday that it will open a distribution center close to home, taking over a shuttered Target facility in Maumelle that closed last year and left 500 people out of work.

Company President Alex Dillard said the Little Rock-based chain initially looked out of state for a place to locate a distribution center that will fulfill Internet orders. It came close to choosing a site in Fort Worth, Texas, but opted for the Little Rock suburb of Maumelle after state and local officials came up with millions in incentives, he said.

Dillard also said it was important for the company to remain loyal to its home state.

"Dillard's is homegrown. It's Arkansas. And we're really proud of that," he said.

Dillard said the new center is a reflection of the company's added emphasis on Internet sales.

"It won't replace stores, but it's certainly important," he said.

The 850,000-square-foot facility will create more than 300 jobs in the central Arkansas area and is expected to be fully operational by the end of 2012, the company said.

The state provided $2 million for Dillard's to locate in Maumelle, and the company will be eligible for more incentives if it invests more money in the center or hires more workers, Gov. Mike Beebe said.

The closure of the Target distribution center in early 2009 hurt the area, Beebe said, noting that people from throughout the Little Rock metropolitan area worked there.

"That was a blow back when Target closed that distribution center," he said. "The good news is, even though it's been a year and a half, two years, we now have the opportunity to replace those jobs."

Dillard's has 294 stores and 14 clearance centers in 29 states. The company now employs 2,300 people in Arkansas.

It has six other distribution centers, including one in Mabelvale, and another Internet distribution center in Nashville, Tenn.