Dillard's Comparable Sales Slow After First-Quarter Lift
Retail gross margin reached 40.9% of sales after $37.2 million of IEEPA tariff refunds lifted the rate by 260 basis points.
Dillard’s, Inc. (DDS) posted a 1% rise in comparable store sales for the 13 weeks ended August 1, 2026, after a 3% increase in the immediately preceding quarter. Total retail sales, which exclude the company’s construction unit CDI Contractors, were $1.455 billion. Net sales, which include CDI, were $1.508 billion.
Chief Executive Officer William T. Dillard, II said the 1% sales increase pointed to a somewhat resilient consumer. The department-store operator operates 272 stores, including 28 clearance centers, spanning 30 states and totaling 46.1 million square feet, plus an Internet store.
The sales mix shifted from the first quarter, when every merchandise category rose. In the second quarter, sales increased significantly in ladies’ accessories and lingerie and moderately in home and furniture. Slight increases were noted in shoes, men’s apparel and accessories, and cosmetics. Sales decreased moderately in juniors’ and children’s apparel and ladies’ apparel.
Net income was $97.7 million, or $6.25 a share, compared with $72.8 million, or $4.66 a share, a year earlier. The quarter included $37.2 million ($28.4 million after tax, or $1.82 a share) in refunds of International Emergency Economic Powers Act tariffs. The year-ago quarter included a pretax gain of $4.8 million ($3.7 million after tax, or $0.24 a share) primarily related to the sale of three properties.
Retail gross margin was 40.9% of sales, compared with 38.1% a year earlier. The company said the IEEPA refunds added 260 basis points of sales to that rate. Adjusted for those refunds, retail gross margin increased moderately in ladies’ apparel and slightly in cosmetics and home and furniture, was flat in juniors’ and children’s apparel, decreased slightly in men’s apparel and accessories and shoes, and decreased moderately in ladies’ accessories and lingerie. Consolidated gross margin was 39.7% of sales. Dillard’s said it does not expect any additional significant IEEPA tariff refunds.
Operating expenses were $443.6 million, or 29.4% of sales. The increase was primarily attributable to higher payroll and payroll-related expenses. Ending inventory increased 5%.
Cash and cash equivalents were $763.1 million and short-term investments were $497.7 million, putting cash and short-term investments above $1.2 billion after the company paid off $96 million in debt. Long-term debt was $145.7 million.
For the 26 weeks ended August 1, 2026, total retail sales and comparable store sales increased 2%. Net income was $348.2 million, or $22.30 a share, versus $236.7 million, or $15.08 a share, a year earlier. Retail gross margin was 43.4% of sales, including 120 basis points from the IEEPA refunds. The 26-week period also included a pretax gain on litigation settlement, net of legal fees, of $104.1 million ($79.6 million after tax, or $5.10 a share) related to a favorable settlement of a long-standing lawsuit involving payment card interchange fees. Operating expenses for the 26 weeks were $887.6 million, or 28.9% of sales.
For the 52 weeks ending January 30, 2027, the company estimated capital expenditures of $120 million, depreciation and amortization of $175 million, rentals of $18 million, and net interest and debt income of $(9) million.