Dillard's, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total retail sales increased 1% year-over-year for the 13 weeks ended October 31, 2026, reaching $1.418 billion compared to $1.401 billion in the prior year period.
• Comparable store sales increased 1% for the 13-week period.
• Net income for the 13 weeks ended October 31, 2026, was $130.9 million ($8.38 per share), compared to $129.8 million ($8.31 per share) in the prior year.
• Net income for the 39 weeks ended October 31, 2026, was $479.1 million ($30.68 per share), compared to $366.5 million ($23.39 per share) in the prior year.
• Retail gross margin remained flat at 45.3% of sales for the 13-week period.
• Retail gross margin increased to 44.0% of sales for the 39-week period, up from 42.9% in the prior year.
• Consolidated gross margin was 43.6% for the 13-week period and 42.6% for the 39-week period.
• Operating expenses were $448.9 million (30.3% of sales) for the 13-week period, up from $440.4 million (30.0% of sales) in the prior year.
• Operating expenses were $1.337 billion (29.3% of sales) for the 39-week period, up from $1.296 billion (28.7% of sales) in the prior year.
• Cash and short-term investments totaled approximately $1.385 billion as of October 31, 2026, compared to $1.334 billion in the prior year.
• Merchandise inventories increased 4% year-over-year to $1.781 billion.
• Net cash provided by operating activities for the 39 weeks ended October 31, 2026, was $479.8 million, down from $505.8 million in the prior year.
• Net cash used in investing activities for the 39 weeks ended October 31, 2026, was $334.5 million, compared to net cash provided of $48.4 million in the prior year.
• Net cash used in financing activities for the 39 weeks ended October 31, 2026, was $110.0 million, compared to $122.9 million in the prior year.
• Cash dividends paid were $14.0 million for the 39-week period, up from $11.8 million in the prior year.
• No treasury stock was purchased in the current 39-week period, compared to $107.8 million in the prior year.
• Long-term debt decreased to $145.8 million from $225.7 million in the prior year.

Guidance and Future Outlook:

• The company provided estimates for the 52-week period ending January 30, 2027, including depreciation and amortization of $175 million, rentals of $17 million, and capital expenditures of $100 million.
• Management stated that stores and the team are ready to welcome and serve customers as the company heads into the holiday season.

Business Segments and Product Lines:

• Sales increased moderately in home and furniture, men's apparel and accessories, ladies' accessories and lingerie, and juniors' and children's apparel.
• Sales in cosmetics increased slightly.
• Sales were essentially flat in shoes and decreased slightly in ladies' apparel.
• Retail gross margin increased moderately in men's apparel and accessories and home and furniture.
• Retail gross margin increased slightly in shoes but decreased slightly in ladies' apparel, cosmetics, and ladies' accessories and lingerie.
• Retail gross margin declined moderately in juniors' and children's apparel.

Market and Competitive Landscape:

• The company operates 272 Dillard's stores, including 28 clearance centers, spanning 30 states with a total of 46.1 million square feet, plus an internet store.
• The company noted that sales in comparable stores increased 2% for the 39-week period.

Risks and Challenges:

• The press release includes standard forward-looking statement risks regarding general retail industry conditions, macro-economic conditions, inflation, recession, and changes in traffic at malls.
• Risks include economic and weather conditions, consumer credit availability, competitive pressures from specialty, off-price, discount, and internet retailers, and labor shortages.
• Potential risks include changes in consumer spending patterns, trade disputes, tariffs, tax legislation, system failures, data security breaches, and global conflicts affecting supply chains.

Management Commentary and Tone:

• CEO William T. Dillard, II commented that the company achieved 1% sales growth on top of last year's 3% increase, supporting a strong 45.3% retail gross margin.
• Management expressed confidence that stores and the dedicated team are ready for the holiday season.

Other Key Points:

• Net income for the 39-week period included a $37.2 million refund of International Emergency Economic Powers Act (IEEPA) tariffs ($28.4 million after tax).
• Net income for the 39-week period included a pre-tax gain on litigation settlement of $104.1 million ($79.6 million after tax) related to a favorable settlement of a long-standing payment card interchange fee lawsuit.
• The company announced the upcoming closure of its Boynton Beach Mall Clearance Center in Boynton Beach, Florida (50,000 square feet), expected to close in January 2027.
• The 39-week period net income for the prior year included a pretax gain of $5.5 million primarily related to the sale of four properties.
• The increase in operating expenses for both periods was largely attributed to higher payroll expenses.