Dillard's(DDS) - 2026 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Dillard's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents Dillard's unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes on accounting policies and financial disclosures Condensed Consolidated Balance Sheets Total assets and stockholders' equity increased as of August 2, 2025, primarily due to higher cash and cash equivalents, while current liabilities also rose Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :-------------------- | :------------- | :--------------- | :------------- | | Cash and cash equivalents | $1,012,011 | $717,854 | $946,728 | | Merchandise inventories | $1,219,765 | $1,172,047 | $1,191,432 | | Total current assets | $2,572,080 | $2,368,070 | $2,453,542 | | Total assets | $3,684,473 | $3,531,054 | $3,661,862 | | Total current liabilities | $958,712 | $834,906 | $780,293 | | Total stockholders' equity | $1,919,112 | $1,796,160 | $1,948,921 | Condensed Consolidated Statements of Income Net sales slightly increased for the three months ended August 2, 2025, but net income and income before taxes decreased, while EPS saw a modest rise due to fewer shares outstanding Condensed Consolidated Statements of Income (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Net sales | $1,513,830 | $1,489,938 | $3,042,693 | $3,038,989 | | Income before income taxes | $94,585 | $97,113 | $308,282 | $331,921 | | Net income | $72,835 | $74,483 | $236,652 | $254,521 | | Basic and diluted EPS | $4.66 | $4.59 | $15.08 | $15.68 | Condensed Consolidated Statements of Comprehensive Income Comprehensive income decreased for both three and six months ended August 2, 2025, primarily due to lower net income, partially offset by retirement plan adjustments Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric (in thousands) | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Net income | $72,835 | $74,483 | $236,652 | $254,521 | | Other comprehensive income | $808 | $1,943 | $1,616 | $3,887 | | Comprehensive income | $73,643 | $76,426 | $238,268 | $258,408 | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity increased for the three and six months ended August 2, 2025, driven by net income, despite treasury stock repurchases and cash dividends Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Three Months Ended Aug 2, 2025 | Six Months Ended Aug 2, 2025 | | :-------------------- | :----------------------------- | :--------------------------- | | Net income | $72,835 | $236,652 | | Purchase of treasury stock | $(9,840) | $(108,820) | | Cash dividends declared | $(3,903) | $(7,827) | | Total stockholders' equity (end of period) | $1,919,112 | $1,919,112 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly increased for the six months ended August 2, 2025, driven by income tax changes, while investing generated cash and financing used cash for repurchases Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $319,393 | $175,957 | | Net cash provided by (used in) investing activities | $93,746 | $(29,403) | | Net cash used in financing activities | $(118,982) | $(8,113) | | Increase in cash and cash equivalents | $294,157 | $138,441 | | Cash and cash equivalents, end of period | $1,012,011 | $946,728 | Notes to Condensed Consolidated Financial Statements These notes provide essential context to the financial statements, detailing basis of presentation, accounting standards, segment information, EPS, commitments, benefit plans, credit, stock repurchases, income taxes, and fair value disclosures Note 1. Basis of Presentation Unaudited interim financial statements are prepared under SEC rules and GAAP, with management noting that interim results are not indicative of full fiscal year performance due to seasonality - The financial statements are unaudited and prepared in accordance with SEC rules and GAAP, with all necessary adjustments included[19] - Operating results for the interim periods are not necessarily indicative of full fiscal year results due to the seasonal nature of the business[19] Note 2. Accounting Standards No recently adopted accounting pronouncements had a material impact, while the company evaluates new ASUs on income tax and expense disaggregation disclosures - No recently adopted accounting pronouncements had a material impact on the financial statements[21] - The company is evaluating ASU No. 2023-09, 'Improvements to Income Tax Disclosures,' effective for fiscal years beginning after December 15, 2024[23] - The company is evaluating ASU No. 2024-03, 'Expense Disaggregation Disclosures,' effective for annual reporting periods beginning after December 15, 2026[24] Note 3. Business Segments Dillard's operates in retail and construction segments, with retail accounting for 96% of net sales; construction sales increased, while retail sales were mixed across periods - The Company operates in two reportable segments: retail department stores ("retail operations") and a general contracting construction company ("construction")[25] Percentage of Net Sales by Segment and Major Product Line | Product Line / Segment | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Retail operations segment: | | | | | | Cosmetics | 15 % | 15 % | 15 % | 15 % | | Ladies' apparel | 22 | 22 | 22 | 23 | | Ladies' accessories and lingerie | 15 | 14 | 14 | 13 | | Juniors' and children's apparel | 8 | 8 | 9 | 9 | | Men's apparel and accessories | 20 | 20 | 19 | 19 | | Shoes | 13 | 14 | 14 | 14 | | Home and furniture | 3 | 3 | 3 | 3 | | Subtotal Retail | 96 | 96 | 96 | 96 | | Construction segment | 4 | 4 | 4 | 4 | | Total | 100 % | 100 % | 100 % | 100 % | Segment Net Sales and Gross Margin (in thousands) | Metric | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Retail Net Sales | $1,446,843 | $1,426,431 | $2,914,780 | $2,919,074 | | Construction Net Sales | $66,987 | $63,507 | $127,913 | $119,915 | | Retail Gross Margin | $550,925 | $557,198 | $1,219,190 | $1,246,383 | | Construction Gross Margin | $3,599 | $2,409 | $6,506 | $4,450 | - Remaining performance obligations for construction contracts totaled $129.5 million at August 2, 2025, a decrease of approximately 36% from February 1, 2025, and 45% from August 3, 2024, expected to be satisfied over the next 9 to 18 months[38] Note 4. Earnings Per Share Basic and diluted EPS increased to $4.66 for the three months ended August 2, 2025, despite lower net income, due to reduced shares outstanding, but decreased for the six months Earnings Per Share (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Net income | $72,835 | $74,483 | $236,652 | $254,521 | | Weighted average shares outstanding | 15,622 | 16,233 | 15,698 | 16,232 | | Basic and diluted earnings per share | $4.66 | $4.59 | $15.08 | $15.68 | - The Company's capital structure consists solely of common stock, with no preferred stock, stock options, or other dilutive securities outstanding during the reported periods[40] Note 5. Commitments and Contingencies The company is involved in routine legal proceedings not expected to materially impact financials, with $25.3 million in letters of credit issued under its revolving credit facility - Management believes that the disposition of pending legal proceedings will not materially affect the Company's financial position, cash flows, or results of operations[41] - Letters of credit totaling $25.3 million were issued under the Company's revolving credit facility as of August 2, 2025[42] Note 6. Benefit Plans The company's unfunded defined benefit pension plan saw decreased net periodic benefit costs due to lower actuarial losses, with $4.3 million contributed for six months and $4.4 million expected for fiscal 2025 Net Periodic Benefit Costs (in thousands) | Component | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Service cost | $1,439 | $1,588 | $2,878 | $3,177 | | Interest cost | $4,106 | $3,976 | $8,212 | $7,951 | | Net actuarial loss | $928 | $2,182 | $1,857 | $4,365 | | Total Net periodic benefit costs | $6,473 | $7,746 | $12,947 | $15,493 | - The Company contributed $4.3 million to its unfunded, nonqualified defined benefit Pension Plan during the six months ended August 2, 2025, and expects to make additional contributions of approximately $4.4 million during the remainder of fiscal 2025[43] Note 7. Revolving Credit Agreement The company maintains an $800 million revolving credit facility, amended in March 2025 to reduce rates and fees, with $774.7 million unutilized availability and no outstanding borrowings as of August 2, 2025 - The Company's revolving credit facility provides a borrowing capacity of $800 million, with a $200 million expansion option, secured by certain deposit accounts and inventory[45] - In March 2025, the credit agreement was amended, reducing applicable interest rates and unused commitment fees[46] - As of August 2, 2025, no borrowings were outstanding, and $774.7 million of unutilized availability remained under the facility[47] Note 8. Stock Repurchase Programs Under the May 2023 Stock Plan, the company repurchased 24,469 shares for $9.8 million in three months and 300,013 shares for $107.8 million in six months, with $165.2 million remaining authorization Share Repurchase Activity (in thousands, except per share data) | Metric | Three Months Ended Aug 2, 2025 | Six Months Ended Aug 2, 2025 | | :---------------------- | :----------------------------- | :--------------------------- | | Cost of shares repurchased | $9,755 | $107,752 | | Number of shares repurchased | 24 | 300 | | Average price per share | $398.67 | $359.16 | - As of August 2, 2025, $165.2 million of authorization remained under the May 2023 Stock Plan[49] Note 9. Income Taxes The company's effective income tax rate was approximately 23.0% for three months and 23.2% for six months ended August 2, 2025, primarily influenced by state and local income taxes Estimated Federal and State Effective Income Tax Rate | Period | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | Three Months Ended | 23.0% | 23.3% | | Six Months Ended | 23.2% | 23.3% | - The difference from the statutory federal income tax rate is primarily due to the effects of state and local income taxes[50] Note 10. Fair Value Disclosures Fair values of short-term assets approximate carrying values; long-term debt had a fair value of $335.3 million (carrying $321.6 million) and subordinated debentures $208.2 million (carrying $200 million) as of August 2, 2025 - The fair value of the Company's long-term debt and subordinated debentures are based on market prices and are categorized as Level 1 in the fair value hierarchy[52] Fair Value vs. Carrying Value (in millions) | Instrument | Carrying Value (Aug 2, 2025) | Fair Value (Aug 2, 2025) | | :-------------------- | :--------------------------- | :----------------------- | | Long-term debt | $321.6 | $335.3 | | Subordinated debentures | $200.0 | $208.2 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of the company's financial performance, condition, and outlook, covering operational results, financial trends, liquidity, critical accounting policies, and forward-looking statements Executive Overview Dillard's reported a 1% increase in Q2 2025 retail sales, with net income of $72.8 million and significantly increased operating cash flow of $319.4 million for the six months, maintaining $1.613 billion in working capital - Total retail sales increased 1% and comparable store sales increased 1% for the second quarter of 2025 compared to the prior year[56] Key Financial Highlights (in millions, except EPS) | Metric | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | | :---------------------- | :----------------------------- | :----------------------------- | | Net income | $72.8 | $74.5 | | EPS | $4.66 | $4.59 | | Pretax gain on disposal of assets | $4.8 | - | - Net cash provided by operating activities was $319.4 million for the six months ended August 2, 2025, up from $176.0 million in the prior year, primarily due to changes in income taxes payable[59] - As of August 2, 2025, the Company had working capital of $1.613 billion, including $1.012 billion in cash and cash equivalents[60] Key Performance Indicators The company utilizes key performance indicators such as net sales, comparable store sales, gross margin, SG&A as a percentage of sales, operating cash flow, store count, sales per square foot, and inventory turnover to assess performance Key Performance Indicators | Indicator | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Net sales (in millions) | $1,513.8 | $1,489.9 | | Retail stores sales trend | 1 % | (5)% | | Comparable retail stores sales trend | 1 % | (5)% | | Gross margin (in millions) | $554.5 | $559.6 | | Gross margin as a percentage of net sales | 36.6 % | 37.6 % | | Retail gross margin as a percentage of retail net sales | 38.1 % | 39.1 % | | Selling, general and administrative expenses as a percentage of net sales | 28.7 % | 29.1 % | | Cash flow provided by operations (in millions)* | $319.4 | $176.0 | | Total retail store count at end of period | 272 | 273 | | Retail sales per square foot | $32 | $31 | | Retail store inventory trend | 2 % | — % | | Annualized retail merchandise inventory turnover | 2.5 | 2.6 | * Cash flow from operations data is for the six months ended August 2, 2025 and August 3, 2024. General This section defines key financial statement line items, including net sales, service charges and other income, cost of sales, SG&A, depreciation, rentals, interest and debt expense, other expense, and gain on asset disposal Net Sales Net sales comprise merchandise sales from comparable and non-comparable stores, including online, and revenue from CDI Contractors, with sales integrated across in-store and online channels - Net sales include merchandise sales from comparable and non-comparable stores (including the internet store) and revenue from CDI Contractors, LLC[63] - Sales are interdependent between in-store and online channels, with fulfillment from both centers and stores, and flexible return options[64] Service Charges and Other Income This category includes income from private label credit card alliances (Citibank replacing Wells Fargo), rental income, shipping and handling fees, and gift card breakage - Service charges and other income are generated through private label credit card portfolio alliances, including the new Citibank Alliance which replaced the Wells Fargo Alliance in September 2024[65] - Other income components include rental income, shipping and handling fees, and gift card breakage[65] Cost of Sales Cost of sales includes merchandise costs, bankcard fees, freight, discounts, shipping, salon payroll, and CDI contract costs (materials, labor, subcontracts, and indirect costs) - Cost of sales includes merchandise costs (net of discounts), bankcard fees, freight, employee/promotional discounts, shipping, and direct payroll for salon personnel[66] - CDI contract costs, comprising direct material, labor, subcontract costs, and indirect costs, are also included in cost of sales[66] Selling, General and Administrative Expenses SG&A expenses cover operational costs including buying, occupancy, selling, distribution, warehousing, store and corporate expenses (payroll, benefits), insurance, employment taxes, advertising, management information systems, and legal fees - SG&A expenses include buying, occupancy, selling, distribution, warehousing, store and corporate expenses (including payroll and employee benefits), insurance, employment taxes, advertising, management information systems, and legal costs[67] Depreciation and Amortization This line item includes depreciation and amortization expenses related to property and equipment - Depreciation and amortization expenses are recognized on property and equipment[68] Rentals Rental expenses cover store leases (including contingent rent), data processing, other equipment, and office space leases - Rentals include expenses for store leases (contingent rent), data processing, other equipment, and office space leases[68] Interest and Debt (Income) Expense, Net This item includes interest expense on debt, net of interest income from deposits and short-term investments, capitalized interest, and amortization of financing costs - Net interest and debt (income) expense includes interest on debt, net of interest income from demand deposits and short-term investments, and amortization of financing costs[69] Other Expense Other expense primarily consists of interest cost and net actuarial loss components of net periodic benefit costs for the defined benefit plan, and deferred financing fee write-offs - Other expense includes interest cost and net actuarial loss components of net periodic benefit costs for the defined benefit plan, and charges for deferred financing fee write-offs[70] Gain on Disposal of Assets This line item reflects the net gain or loss from the sale or disposal of property and equipment, and gains from insurance proceeds exceeding cost basis - Gain on disposal of assets includes net gains or losses from the sale or disposal of property and equipment, and gains from insurance proceeds[71] Seasonality Dillard's business is seasonal, with a significant portion of sales and income realized in the fourth fiscal quarter due to holidays, making quarterly results not indicative of full-year performance - The Company's business is seasonal, with a significant portion of sales and income typically realized during the last quarter of the fiscal year due to the holiday season[72] - Quarterly results are not necessarily indicative of full fiscal year results due to seasonality[72] Results of Operations This section analyzes the company's operational performance, detailing changes in net sales, service charges, gross margin, SG&A, interest and debt expense, other expense, gain on asset disposal, and income taxes for the three and six months ended August 2, 2025 Results of Operations as a Percentage of Net Sales | Metric | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | | :---------------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Net sales | 100.0 % | 100.0 % | 100.0 % | 100.0 % | | Service charges and other income | 1.5 | 1.7 | 1.3 | 1.6 | | Cost of sales | 63.4 | 62.4 | 59.7 | 58.8 | | Selling, general and administrative expenses | 28.7 | 29.1 | 28.1 | 28.3 | | Depreciation and amortization | 3.0 | 3.1 | 2.9 | 3.0 | | Rentals | 0.3 | 0.3 | 0.3 | 0.3 | | Interest and debt (income) expense, net | (0.1) | (0.3) | (0.1) | (0.2) | | Other expense | 0.3 | 0.4 | 0.4 | 0.4 | | Gain on disposal of assets | (0.3) | 0.0 | (0.2) | 0.0 | | Income before income taxes | 6.2 | 6.5 | 10.1 | 10.9 | | Income taxes | 1.4 | 1.5 | 2.4 | 2.5 | | Net income | 4.8 % | 5.0 % | 7.8 % | 8.4 % | Net Sales Total net sales increased by $23.9 million (1.6%) for three months and $3.7 million (0.1%) for six months ended August 2, 2025, driven by mixed performance across retail and construction segments Net Sales by Segment (in thousands) | Segment | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | $ Change | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | $ Change | | :---------------------- | :----------------------------- | :----------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Retail operations segment | $1,446,843 | $1,426,431 | $20,412 | $2,914,780 | $2,919,074 | $(4,294) | | Construction segment | $66,987 | $63,507 | $3,480 | $127,913 | $119,915 | $7,998 | | Total net sales | $1,513,830 | $1,489,938 | $23,892| $3,042,693 | $3,038,989 | $3,704| Retail Operations Segment Sales % Change by Product Category (YoY) | Product Category | % Change (3 Months Ended Aug 2, 2025 vs Aug 3, 2024) | % Change (6 Months Ended Aug 2, 2025 vs Aug 3, 2024) | | :-------------------------- | :--------------------------------------------------- | :--------------------------------------------------- | | Cosmetics | (0.8)% | (1.7)% | | Ladies' apparel | 1.5 | (1.0) | | Ladies' accessories and lingerie | 3.2 | 1.6 | | Juniors' and children's apparel | 6.0 | 4.4 | | Men's apparel and accessories | 0.6 | 0.4 | | Shoes | 1.3 | (1.6) | | Home and furniture | (2.4) | (3.6) | - The number of sales transactions decreased 2% for both the three and six months ended August 2, 2025, while the average dollars per sales transaction increased 3% and 2% respectively[77][80] Service Charges and Other Income Total service charges and other income decreased by $2.5 million (10.2%) for three months and $8.2 million (16.9%) for six months ended August 2, 2025, primarily due to lower credit card alliance income and increased credit losses Service Charges and Other Income (in thousands) | Category | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | $ Change | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | $ Change | | :---------------------- | :----------------------------- | :----------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Income from alliances | $11,298 | $12,722 | $(1,424) | $17,170 | $24,357 | $(7,187) | | Shipping and handling income | $8,265 | $8,665 | $(400) | $16,326 | $17,633 | $(1,307) | | Other | $2,577 | $3,294 | $(717) | $6,726 | $6,350 | $376 | | Total | $22,173 | $24,708 | $(2,535)| $40,281 | $48,466 | $(8,185)| - Income from credit card alliances decreased primarily due to lower finance charges and late fees resulting from lower average net receivables, and for the six-month period, increased credit losses[82] - The Company expects income from the new Citibank Alliance to initially be less than historical earnings from the former Wells Fargo Alliance[83] Gross Margin Total gross margin as a percentage of sales decreased to 36.6% for three months and 40.3% for six months ended August 2, 2025, with retail operations declining but construction segment increasing significantly Gross Margin by Segment (in thousands) | Segment | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | $ Change | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | $ Change | | :---------------------- | :----------------------------- | :----------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Retail operations segment | $550,925 | $557,198 | $(6,273) | $1,219,190 | $1,246,383 | $(27,193) | | Construction segment | $3,599 | $2,409 | $1,190 | $6,506 | $4,450 | $2,056 | | Total gross margin | $554,524 | $559,607 | $(5,083)| $1,225,696 | $1,250,833 | $(25,137)| Gross Margin as a Percentage of Segment Net Sales | Segment | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | | :---------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Retail operations segment | 38.1 % | 39.1 % | 41.8 % | 42.7 % | | Construction segment | 5.4 | 3.8 | 5.1 | 3.7 | | Total gross margin | 36.6 % | 37.6 % | 40.3 % | 41.2 % | - Total inventory increased 2% at August 2, 2025, compared to August 3, 2024[89] - The Company is monitoring inflation and potential trade restrictions, including tariffs, which pose a risk to operations[90] Selling, General and Administrative Expenses ("SG&A") Total SG&A expenses slightly increased by $0.5 million (0.1%) for three months but decreased as a percentage of sales to 28.7%, while for six months, total SG&A decreased by $4.5 million (0.5%) and to 28.1% of sales SG&A Expenses (in thousands) | Segment | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | $ Change | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | $ Change | | :---------------------- | :----------------------------- | :----------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Retail operations segment | $431,751 | $430,850 | $901 | $851,266 | $854,856 | $(3,590) | | Construction segment | $2,414 | $2,809 | $(395) | $4,589 | $5,477 | $(888) | | Total SG&A | $434,165 | $433,659 | $506 | $855,855 | $860,333 | $(4,478)| SG&A as a Percentage of Segment Net Sales | Segment | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | | :---------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Retail operations segment | 29.8 % | 30.2 % | 29.2 % | 29.3 % | | Construction segment | 3.6 | 4.4 | 3.6 | 4.6 | | Total SG&A | 28.7 % | 29.1 % | 28.1 % | 28.3 % | - Payroll and payroll-related expenses decreased by $0.8 million for the three months and $5.1 million for the six months ended August 2, 2025, compared to the prior year periods[92][94] Interest and Debt (Income) Expense, Net Net interest and debt income decreased by $2.5 million for three months and $5.2 million for six months ended August 2, 2025, primarily due to lower interest income Net Interest and Debt (Income) Expense (in thousands) | Segment | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | $ Change | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | $ Change | | :---------------------- | :----------------------------- | :----------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Retail operations segment | $(1,224) | $(3,718) | $2,494 | $(1,836) | $(7,006) | $5,170 | | Construction segment | $(233) | $(216) | $(17) | $(443) | $(460) | $17 | | Total | $(1,457) | $(3,934) | $2,477| $(2,279) | $(7,466) | $5,187| - The decrease in net interest and debt income was primarily due to a decrease in interest income, which was $11.5 million for the three months and $22.7 million for the six months ended August 2, 2025[97] Other Expense Other expense decreased by $1.1 million (18.2%) for three months and $1.6 million (12.9%) for six months ended August 2, 2025, primarily due to lower amortization of net actuarial loss from the Pension Plan Other Expense (in thousands) | Segment | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | $ Change | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | $ Change | | :---------------------- | :----------------------------- | :----------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Retail operations segment | $5,035 | $6,158 | $(1,123) | $10,728 | $12,316 | $(1,588) | | Construction segment | — | — | — | — | — | — | | Total | $5,035 | $6,158 | $(1,123)| $10,728 | $12,316 | $(1,588)| - The decrease in other expense was primarily due to a decrease in the amortization of the net actuarial loss related to the Company's Pension Plan[98] Gain on Disposal of Assets The company recognized a significant gain on disposal of assets of $4.8 million for three months and $4.9 million for six months ended August 2, 2025, primarily from property sales Gain on Disposal of Assets (in thousands) | Segment | Three Months Ended Aug 2, 2025 | Three Months Ended Aug 3, 2024 | $ Change | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | $ Change | | :---------------------- | :----------------------------- | :----------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Retail operations segment | $(4,828) | $(4) | $(4,824) | $(4,887) | $(255) | $(4,632) | | Construction segment | $(13) | $(9) | $(4) | $(13) | $(25) | $12 | | Total | $(4,841) | $(13) | $(4,828)| $(4,900) | $(280) | $(4,620)| - The gain on disposal of assets for the three and six months ended August 2, 2025, was primarily due to proceeds of $6.0 million from the sale of three properties[100][111] Income Taxes The company's effective income tax rate was approximately 23.0% for three months and 23.2% for six months ended August 2, 2025, with new tax legislation not expected to have a material impact Estimated Federal and State Effective Income Tax Rate | Period | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | Three Months Ended | 23.0% | 23.3% | | Six Months Ended | 23.2% | 23.3% | - The H.R.1 - One Big Beautiful Bill Act, signed into law on July 4, 2025, including provisions for bonus depreciation and research expenditures, is not expected to have a material impact on the Company's financial results[103] Financial Condition Net cash from operations significantly increased by $143.4 million for six months ended August 2, 2025, due to postponed tax payments; the company transitioned its credit card program, decreased capital expenditures, and continued stock repurchases Summary of Net Cash Flows (in thousands) | Activity | Six Months Ended Aug 2, 2025 | Six Months Ended Aug 3, 2024 | $ Change | | :-------------------- | :--------------------------- | :--------------------------- | :------- | | Operating activities | $319,393 | $175,957 | $143,436 | | Investing activities | $93,746 | $(29,403) | $123,149 | | Financing activities | $(118,982) | $(8,113) | $(110,869)| | Total Increase in Cash and Cash Equivalents | $294,157 | $138,441 | $155,716| - The increase in operating cash flows was primarily due to changes in income taxes payable, following a federal disaster declaration that postponed tax payment deadlines[104] - The Company transitioned its private label credit card program from Wells Fargo to Citibank in September 2024, with Citi establishing, owning, and managing the cards and retaining associated benefits and risks[105][106][107] - Capital expenditures were $43.5 million for the six months ended August 2, 2025, a decrease from $61.1 million in the prior year, primarily for equipment, new store construction, and remodels[110] - The Company repurchased 0.3 million shares of Class A Common Stock for $107.8 million during the six months ended August 2, 2025, under its stock repurchase plan, with $165.2 million remaining authorization[115][116] OFF-BALANCE-SHEET ARRANGEMENTS The company has no special-purpose entities or off-balance-sheet arrangements likely to materially affect its financial condition, results of operations, liquidity, or capital resources - The Company is not party to any special-purpose entities or off-balance-sheet arrangements that are reasonably likely to materially affect its financial condition or results of operations[120] CRITICAL ACCOUNTING POLICIES AND ESTIMATES Financial statement preparation involves estimates and assumptions, with no material changes to critical accounting policies and estimates as of August 2, 2025, from those previously disclosed - The preparation of financial statements involves estimates and assumptions, but there have been no material changes to critical accounting policies and estimates as of August 2, 2025[121] NEW ACCOUNTING STANDARDS Information on new accounting pronouncements and their potential impact on condensed consolidated financial statements is detailed in Note 2 - For information on new accounting pronouncements and their impact, refer to Note 2, Accounting Standards, in the Notes to Condensed Consolidated Financial Statements[122] FORWARD-LOOKING INFORMATION This report contains forward-looking statements subject to risks and uncertainties, including economic conditions, competition, and regulatory changes, with actual results potentially differing materially, and the company disclaims any obligation to update them - Forward-looking statements are based on management's estimates and assumptions and are not guarantees of future performance[123][125] - Actual future performance may differ materially due to risks and uncertainties including general retail industry conditions, macroeconomic conditions (inflation, recession), competitive pressures, labor needs, consumer spending patterns, tax legislation, trade disputes, and global conflicts[125] - The Company disclaims any obligation to update or revise any forward-looking statements[125] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes have occurred in the company's quantitative and qualitative disclosures about market risk since its Annual Report on Form 10-K - No material changes have occurred in the Company's quantitative and qualitative disclosures about market risk since the last Annual Report on Form 10-K[126] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of August 2, 2025, with no material changes in internal control over financial reporting during the fiscal quarter - The Company's disclosure controls and procedures were evaluated and deemed effective as of August 2, 2025[127] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended August 2, 2025[128] PART II. OTHER INFORMATION This section provides other information, including legal proceedings, risk factors, equity security sales, other disclosures, and exhibits Item 1. Legal Proceedings As of September 5, 2025, the company is not involved in any legal proceedings expected to materially adversely affect its business or financial condition - The Company is not involved in any legal proceedings that are expected to have a material adverse effect on its business or financial condition[130] Item 1A. Risk Factors No material changes have occurred in the company's risk factors since its Annual Report on Form 10-K - No material changes have occurred in the Company's risk factors since the last Annual Report on Form 10-K[131] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the three months ended August 2, 2025, the company repurchased 24,469 shares for $9.8 million under its May 2023 Stock Plan, with $165.2 million remaining authorization Issuer Purchases of Equity Securities (Three Months Ended August 2, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :---------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | | May 4, 2025 through May 31, 2025 | — | $— | — | $174,970,857 | | June 1, 2025 through July 5, 2025 | 24,469 | $398.67 | 24,469 | $165,215,709 | | July 6, 2025 through August 2, 2025 | — | $— | — | $165,215,709 | | Total | 24,469 | $398.67 | 24,469 | $165,215,709 | - As of August 2, 2025, $165.2 million of authorization remained under the May 2023 Stock Plan[133] Item 5. Other Information No Rule 10b5-1 trading arrangements were adopted or terminated by the company's directors or officers during the three months ended August 2, 2025 - No Rule 10b5-1 trading arrangements were adopted or terminated by the Company's directors or officers during the three months ended August 2, 2025[135] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, Sarbanes-Oxley certifications, and XBRL-related documents - The exhibits include organizational documents (Plan of Conversion, Certificate of Elimination, Certificate of Formation, Bylaws), certifications (Section 302 and 906 of Sarbanes-Oxley Act), and XBRL instance and taxonomy documents[136] SIGNATURES The report is duly signed on behalf of Dillard's, Inc. by its Senior Vice President, Co-Principal Financial Officer, and Principal Accounting Officer, Phillip R. Watts, and Senior Vice President and Co-Principal Financial Officer, Chris B. Johnson - The report is signed by Phillip R. Watts, Senior Vice President, Co-Principal Financial Officer and Principal Accounting Officer, and Chris B. Johnson, Senior Vice President and Co-Principal Financial Officer[138]