Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 1, 2026
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number: 1-6140
DILLARD’S, INC.
(Exact name of registrant as specified in its charter)
TEXAS
71-0388071
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
1600 CANTRELL ROAD, LITTLE ROCK, ARKANSAS 72201
(Address of principal executive offices)
(Zip Code)
(501) 376-5200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock
DDS
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
CLASS A COMMON STOCK as of August 29, 2026 11,859,528
CLASS B COMMON STOCK as of August 29, 2026 3,759,923
Index
Page
Number
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of August 1, 2026, January 31, 2026 and August 2, 2025
3
Condensed Consolidated Statements of Income for the Three and Six Months Ended August 1, 2026 and August 2, 2025
4
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended August 1, 2026 and August 2, 2025
5
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended August 1, 2026 and August 2, 2025
6
Condensed Consolidated Statements of Cash Flows for the Six Months Ended August 1, 2026 and August 2, 2025
8
Notes to Condensed Consolidated Financial Statements
9
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
17
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
29
Item 4.
Controls and Procedures
PART II. OTHER INFORMATION
Legal Proceedings
30
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Item 5.
Other Information
31
Item 6.
Exhibits
32
SIGNATURES
33
2
Item 1. Financial Statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
August 1,
January 31,
August 2,
2026
2025
Assets
Current assets:
Cash and cash equivalents
$
763,077
861,460
1,012,011
Accounts receivable
45,414
39,724
52,212
Short-term investments
497,694
211,497
199,812
Merchandise inventories
1,283,251
1,201,098
1,219,765
Federal and state income taxes
11,504
—
Other current assets
80,366
72,792
88,280
Total current assets
2,681,306
2,386,571
2,572,080
Property and equipment (net of accumulated depreciation of $2,963,958, $2,878,784, and $2,847,558, respectively)
863,680
911,806
955,092
Operating lease assets
31,385
36,177
29,531
Deferred income taxes
79,854
77,386
67,714
Other assets
93,649
93,083
60,056
Total assets
3,749,874
3,505,023
3,684,473
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable and accrued expenses
794,691
772,398
761,226
Current portion of long-term debt
80,000
96,000
Current portion of operating lease liabilities
9,101
9,547
10,474
24,139
91,012
Total current liabilities
883,792
902,084
958,712
Long-term debt
145,727
225,674
225,621
Operating lease liabilities
22,007
26,341
19,035
Other liabilities
377,669
371,954
361,993
Subordinated debentures
200,000
Commitments and contingencies
Stockholders’ equity:
Common stock
1,241
Additional paid-in capital
976,760
975,349
972,855
Accumulated other comprehensive loss
(45,247)
(46,674)
(48,235)
Retained earnings
6,651,520
6,312,651
6,456,873
Less treasury stock, at cost
(5,463,595)
(5,463,597)
(5,463,622)
Total stockholders’ equity
2,120,679
1,778,970
1,919,112
Total liabilities and stockholders’ equity
See notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
Three Months Ended
Six Months Ended
Net sales
1,507,562
1,513,830
3,075,989
3,042,693
Service charges and other income
22,872
22,173
43,066
40,281
1,530,434
1,536,003
3,119,055
3,082,974
Cost of sales
909,348
959,306
1,779,716
1,816,997
Selling, general and administrative expenses
443,637
434,165
887,617
855,855
Depreciation and amortization
44,361
44,659
87,639
89,144
Rentals
3,818
4,551
7,707
9,147
Interest and debt (income) expense, net
(2,775)
(1,457)
(3,474)
(2,279)
Other expense
5,003
5,035
10,006
10,728
Gain on litigation settlement
(104,081)
Gain on disposal of assets
(97)
(4,841)
(249)
(4,900)
Income before income taxes and equity in earnings of joint ventures
127,139
94,585
454,174
308,282
Income taxes
29,760
21,750
106,540
71,630
Equity in earnings of joint ventures
308
606
Net income
97,687
72,835
348,240
236,652
Earnings per share:
Basic and diluted
6.25
4.66
22.30
15.08
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Other comprehensive income (loss):
Amortization of retirement plan and other retiree benefit adjustments (net of tax of $129, $121, $259 and $242, respectively)
714
808
1,427
1,616
Comprehensive income
98,401
73,643
349,667
238,268
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In Thousands, Except Share and Per Share Data)
Three Months Ended August 1, 2026
Accumulated
Additional
Other
Common
Paid-in
Comprehensive
Retained
Treasury
Stock
Capital
Loss
Earnings
Total
Balance, May 2, 2026
(45,961)
6,558,519
2,025,551
Other comprehensive income
Issuance of 2,400 shares under equity plans
1,423
Cancellation of 20 shares of treasury stock (see Note 12)
(12)
(10)
Cash dividends declared:
Common stock, $0.30 per share
(4,686)
Balance, August 1, 2026
Three Months Ended August 2, 2025
Balance, May 3, 2025
971,528
(49,043)
6,387,941
(5,453,782)
1,857,885
Issuance of 3,200 shares under equity plans
1,327
Purchase of 24,469 shares of treasury stock (including excise tax)
(9,840)
Common stock, $0.25 per share
(3,903)
Balance, August 2, 2025
Six Months Ended August 1, 2026
Balance, January 31, 2026
Common stock, $0.60 per share
(9,371)
Six Months Ended August 2, 2025
Balance, February 1, 2025
971,524
(49,851)
6,228,048
(5,354,802)
1,796,160
Issuance of 3,210 shares under equity plans
1,331
Purchase of 300,013 shares of treasury stock (including excise tax)
(108,820)
Common stock, $0.50 per share
(7,827)
7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and other deferred costs
88,440
89,889
Accrued interest on short-term investments
(5,592)
(5,610)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
(5,690)
3,488
Increase in merchandise inventories
(82,153)
(47,718)
(Increase) decrease in other current assets
(10,305)
7,434
(Increase) decrease in other assets
(736)
1,114
Increase (decrease) in trade accounts payable and accrued expenses and other liabilities
25,421
(24,522)
(Decrease) increase in income taxes
(30,576)
63,566
Net cash provided by operating activities
326,800
319,393
Investing activities:
Purchase of property and equipment and capitalized software
(39,483)
(43,527)
Proceeds from disposal of assets
274
6,029
Proceeds from insurance
1,521
Purchase of short-term investments
(641,510)
(273,497)
Proceeds from maturities of short-term investments
360,905
404,970
Investments related to joint ventures
(1,750)
Net cash (used in) provided by investing activities
(319,814)
93,746
Financing activities:
Principal payments on long-term debt
(96,000)
Cash dividends paid
(9,369)
(7,900)
Purchase of treasury stock
(107,756)
Issuance cost of line of credit
(3,326)
Net cash used in financing activities
(105,369)
(118,982)
(Decrease) increase in cash and cash equivalents
(98,383)
294,157
Cash and cash equivalents, beginning of period
717,854
Cash and cash equivalents, end of period
Non-cash transactions of investing and financing activities:
Accrued capital expenditures
7,749
5,083
Stock awards
1,411
Accrued purchases of treasury stock and excise taxes
1,064
Lease assets obtained in exchange for new operating lease liabilities
283
1,784
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements of Dillard’s, Inc. (the “Company”) have been prepared in accordance with the rules of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended August 1, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending January 30, 2027 due to, among other factors, the seasonal nature of the business.
These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026 filed with the SEC on March 27, 2026.
Note 2. Accounting Standards
Recently Adopted Accounting Pronouncements
There have been no recently adopted accounting pronouncements that had a material impact on the Company’s condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
Management has considered all recent accounting pronouncements, except as noted below, and believes there is no accounting guidance issued but not yet effective that would be material to the Company’s condensed consolidated financial statements.
Disaggregation of Income Statement Expenses
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The update requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in the update require that at each interim and annual reporting period an entity (i) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption; (ii) include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements; (iii) disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively; and (iv) disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and accompanying notes.
Accounting for Internal-Use Software
In September 2025, the FASB issued ASU No. 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The update requires an entity to start capitalizing software costs when specific conditions are met and removes all references to software development project stages so that the guidance is neutral to different software development methods, including methods that entities
may use to develop software in the future. ASU 2025-06 is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact this ASU will have on potential future capitalizable software costs.
Note 3. Business Segments
The Company operates in two reportable segments: the operation of retail department stores (“retail operations”) and a general contracting construction company (“construction”).
For the Company’s retail operations segment, the Company determined its operating segments on a store-by-store basis. Each store’s operating performance has been aggregated into one reportable segment for financial reporting purposes because stores are similar in each of the following areas: economic characteristics, class of consumer, nature of products and distribution methods. Revenues from external customers are derived from merchandise sales, and the Company does not rely on any major customers as a source of revenue. Across all stores, the Company operates one store format under the Dillard’s name where each store offers the same general mix of merchandise with similar categories and similar customers. The Company believes that disaggregating its retail operations segment would not provide meaningful additional information.
The Company’s chief operating decision maker is the Executive Committee of the Board of Directors, which is comprised of Dillard’s Chief Executive Officer and its President. The members of Dillard’s Executive Committee use their experience in the retail industry and extensive and specific knowledge of the Dillard’s businesses when assessing segment performance and deciding how to allocate resources.
The following table summarizes the percentage of net sales by segment and major product line:
Retail operations segment:
Cosmetics
15
%
Ladies’ apparel
21
22
Ladies’ accessories and lingerie
16
14
Juniors’ and children’s apparel
Men’s apparel and accessories
20
19
Shoes
13
Home and furniture
97
96
Construction segment
100
10
The following tables summarize certain segment information, including the reconciliation of those items to the Company’s consolidated operations:
(in thousands of dollars)
Retail Operations
Construction
Consolidated
Net sales from customers
1,455,011
56,051
1,511,062
1,446,843
74,073
1,520,916
Elimination of intersegment revenues
-
(3,500)
(7,086)
Net sales from external customers
52,551
66,987
Reconciliation of revenue
22,827
45
22,140
Total net sales and service charges and other income
1,477,838
52,596
1,468,983
67,020
Less: (a)
859,430
49,918
895,918
63,388
Payroll expense (b)
278,525
1,712
280,237
268,311
1,857
270,168
44,295
66
44,577
82
3,751
67
4,496
55
Interest and investment income
(12,654)
(111)
(12,765)
(11,298)
(233)
(11,531)
Interest and debt expense
9,990
10,074
Other segment items (c)
167,477
829
168,306
163,647
544
164,191
127,024
115
93,258
Gross margin (d)
595,581
2,633
598,214
550,925
3,599
554,524
Gross margin percentage
40.9
5.0
39.7
38.1
5.4
36.6
3,693,404
56,470
3,608,508
75,965
Capital expenditures
22,261
22,275
26,641
26,674
11
2,973,176
110,763
3,083,939
2,914,780
141,362
3,056,142
(7,950)
(13,449)
102,813
127,913
43,002
64
40,222
59
3,016,178
102,877
2,955,002
127,972
1,682,715
97,001
1,695,590
121,407
553,037
3,552
556,589
531,672
3,436
535,108
87,508
131
88,990
154
7,572
135
9,035
112
(23,629)
(331)
(23,960)
(22,248)
(443)
(22,691)
20,486
20,412
339,239
1,546
340,785
325,435
1,140
326,575
453,331
843
306,116
2,166
1,290,461
5,812
1,296,273
1,219,190
6,506
1,225,696
43.4
5.7
42.1
41.8
5.1
40.3
39,348
39,483
43,461
43,527
12
The retail operations segment gives rise to contract liabilities through the customer loyalty program associated with Dillard’s private label cards and through the issuances of gift cards. The customer loyalty program liability and a portion of the gift card liability are included in trade accounts payable and accrued expenses, and a portion of the gift card liability is included in other liabilities on the condensed consolidated balance sheets. Our retail operations segment contract liabilities are as follows:
Retail
February 1,
Contract liabilities
68,113
78,386
64,740
76,667
During the six months ended August 1, 2026 and August 2, 2025, the Company recorded $32.9 million and $32.7 million, respectively, in revenue that was previously included in the retail operations contract liability balances of $78.4 million and $76.7 million at January 31, 2026 and February 1, 2025, respectively.
Construction contracts give rise to accounts receivable, contract assets and contract liabilities. We record accounts receivable based on amounts expected to be collected from customers. We also record costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) in other current assets and trade accounts payable and accrued expenses, respectively, in the condensed consolidated balance sheets. The amounts included in the condensed consolidated balance sheets are as follows:
37,845
30,598
45,130
46,646
Costs and estimated earnings in excess of billings on uncompleted contracts
2,432
2,018
1,713
3,913
Billings in excess of costs and estimated earnings on uncompleted contracts
10,473
4,493
10,753
6,983
During the six months ended August 1, 2026 and August 2, 2025, the Company recorded $4.5 million and $6.6 million, respectively, in revenue that was previously included in billings in excess of costs and estimated earnings on uncompleted contracts of $4.5 million and $7.0 million at January 31, 2026 and February 1, 2025, respectively.
The remaining performance obligations related to executed construction contracts totaled $152.1 million, $140.8 million and $129.5 million at August 1, 2026, January 31, 2026 and August 2, 2025, respectively.
Note 4. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data).
Weighted average shares of common stock outstanding
15,619
15,622
15,618
15,698
Basic and diluted earnings per share
The Company maintains a capital structure in which common stock is the only equity security issued and outstanding, and there were no shares of preferred stock, stock options, other dilutive securities or potentially dilutive securities issued or outstanding during the three and six months ended August 1, 2026 and August 2, 2025.
Note 5. Commitments and Contingencies
Various legal proceedings, in the form of lawsuits and claims, which occur in the normal course of business, are pending against the Company and its subsidiaries. In the opinion of management, disposition of these matters, individually or in the aggregate, is not expected to materially affect the Company’s financial position, cash flows or results of operations.
At August 1, 2026, letters of credit totaling $23.3 million were issued under the Company’s revolving credit facility. See Note 7, Revolving Credit Agreement, for additional information.
Note 6. Benefit Plans
The Company has an unfunded, nonqualified defined benefit plan (“Pension Plan”) for its officers. The Pension Plan is noncontributory and provides benefits based on years of service and compensation during employment. Pension expense is determined using an actuarial cost method to estimate the total benefits ultimately payable to officers and allocates this cost to service periods. The actuarial assumptions used to calculate pension costs are reviewed annually. The Company contributed $2.1 million and $4.3 million to the Pension Plan during the three and six months ended August 1, 2026 and expects to make additional contributions to the Pension Plan of approximately $4.6 million during the remainder of fiscal 2026.
The components of net periodic benefit costs are as follows:
Components of net periodic benefit costs:
Service cost
1,531
1,439
3,063
2,878
Interest cost
4,158
4,106
8,318
8,212
Net actuarial loss
844
928
1,687
Net periodic benefit costs
6,533
6,473
13,068
12,947
The service cost component of net periodic benefit costs is included in selling, general and administrative expenses, and the interest costs and net actuarial loss components are included in other expense in the condensed consolidated statements of income.
Note 7. Revolving Credit Agreement
The Company maintains a credit facility (“credit agreement”) for general corporate purposes including, among other uses, working capital financing, the issuance of letters of credit, capital expenditures and, subject to certain restrictions, the repayment of existing indebtedness and share repurchases. The credit agreement, which is secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries, provides a borrowing capacity of $800 million, subject to certain limitations as outlined in the credit agreement, with a $200 million expansion option. The Company pays a variable rate of interest on borrowings under the credit agreement and a commitment fee to the participating banks. There are no financial covenant requirements under the credit agreement provided availability exceeds $80 million and no specified event of default has occurred or is continuing.
In March 2025, the Company amended and extended the credit agreement (the "2025 amendment"), replacing the Company’s previous amended credit agreement. The 2025 amendment continues to have the 0.10% per annum credit spread adjustment to the interest rate for term benchmark and RFR loans but reduced the applicable rate to (A) (x) 1.25% per annum in the case of term benchmark and RFR loans and (y) 0.25% per annum in the case of base rate loans when average quarterly availability is greater than or equal to 50% of the total commitments and (B) (x) 1.50% per annum in the case of term benchmark and RFR loans and (y) 0.50% per annum in the case of base rate loans when average quarterly availability is less than 50% of the total commitments. The 2025 amendment reduced the unused commitment fee to (A) 0.25% per annum when the average amount utilized is less than 50% of the total commitments and (B) 0.20%
per annum when the average amount utilized is greater than or equal to 50% of the total commitments. The facility was arranged by JPMorgan Chase Bank, N.A. The credit agreement, as amended by the 2025 amendment, matures on March 12, 2030.
No borrowings under the credit agreement were outstanding at August 1, 2026. Letters of credit totaling $23.3 million were issued under the credit agreement leaving unutilized availability under the facility of $776.7 million at August 1, 2026. The Company had no borrowings during the three months ended August 1, 2026.
Note 8. Stock Repurchase Programs
In May 2023, the Company’s Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $500 million of its Class A Common Stock (“May 2023 Stock Plan”). The May 2023 Stock Plan permits the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or through privately negotiated transactions. The May 2023 Stock Plan has no expiration date.
The following is a summary of share repurchase activity for the periods indicated (in thousands, except per share data):
Cost of shares repurchased
9,755
107,752
Number of shares repurchased
24
300
Average price per share
398.67
359.16
All repurchases of the Company’s Class A Common Stock above were made at the market price at the trade date, and all amounts paid to reacquire these shares were allocated to treasury stock. As of August 1, 2026, $165.2 million of authorization remained under the May 2023 Stock Plan.
Note 9. Gain on Litigation Settlement
During the six months ended August 1, 2026, the Company received a settlement related to credit card interchange fee litigation of $104.1 million, net of legal expenses, which was recorded in gain on litigation settlement.
Note 10. Income Taxes
During the three and six months ended August 1, 2026 and August 2, 2025, income tax expense differed from what would be computed using the statutory federal income tax rate primarily due to the effects of state and local income taxes.
Note 11. Fair Value Disclosures
The estimated fair values of financial instruments presented herein have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of amounts the Company could realize in a current market exchange.
The fair value of the Company’s long-term debt and subordinated debentures is based on market prices and are categorized as Level 1 in the fair value hierarchy.
The fair value of the Company’s cash and cash equivalents and trade accounts receivable approximates their carrying values at August 1, 2026 due to the short-term maturities of these instruments. The Company’s short-term investments are classified as held-to-maturity and are recorded at amortized cost, which approximated fair value. The
fair value of the Company’s long-term debt at August 1, 2026 was approximately $234 million. The carrying value of the Company’s long-term debt, including current portion, at August 1, 2026 was approximately $226 million. The fair value of the Company’s subordinated debentures at August 1, 2026 was approximately $211 million. The carrying value of the Company’s subordinated debentures at August 1, 2026 was $200 million.
Note 12. WDC Merger
On May 28, 2026, the Company’s shareholders approved an agreement and plan of merger with W.D. Company, Inc. (“WDC”), a privately held Arkansas corporation organized as a family holding company to own and hold shares of Dillard’s Common Stock primarily for the benefit of the Dillard family. WDC had no business operations and engaged in no business activities other than (a) owning, holding, and disposing of certain equity securities, including 41,496 shares of Dillard’s Class A Common Stock and 3,985,776 shares of Dillard’s Class B Common Stock and a de minimis amount of shares of another publicly-traded common stock, and (b) receiving cash dividends from Dillard’s and distributing such dividends directly to WDC’s shareholders.
On June 4, 2026, the merger was consummated and WDC merged with and into the Company, with the Company surviving the merger, and the separate corporate existence of WDC terminated. Each share of WDC common stock issued and outstanding was automatically canceled, and in exchange therefor, each WDC shareholder received such WDC shareholder’s pro rata share of the merger consideration, which included:
The shares of Dillard’s Common Stock held by WDC immediately prior to the merger automatically became treasury stock of the Company and, immediately thereafter, were canceled and returned to the status of authorized but unissued shares available for future reissuance.
Because the merger consideration received consisted of a number of shares of Dillard’s Class A Common Stock and Dillard’s Class B Common Stock which had been reduced by fractional shares from the number of shares of Dillard’s Class A Common Stock and Dillard’s Class B Common Stock held by WDC immediately prior to the merger, the WDC shareholders, collectively, had a slightly lower percentage interest in the voting power, liquidation value and aggregate book value of Dillard’s following the consummation of the merger as such shareholders held immediately prior to the merger. Accordingly, there was no dilution to current shareholders of Dillard’s as a result of the merger.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the condensed consolidated financial statements and the footnotes thereto included elsewhere in this report, as well as the financial and other information included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
EXECUTIVE OVERVIEW
Retail sales increased 1.0% for the second quarter of 2026 compared to the prior year period, reflecting a somewhat resilient customer. Net income increased for the quarter, primarily driven by higher retail gross margin of 40.9%, which benefited from tariff refunds received during the period, and growth in retail sales.
For the second quarter of 2026, the Company reported net income of $97.7 million ($6.25 per share) compared to net income of $72.8 million ($4.66 per share) for the second quarter of 2025. Net income for the second quarter of 2026 includes $37.2 million ($28.4 million after tax, or $1.82 per share) in refunds of International Emergency Economic Powers Act (IEEPA) tariffs. Prior year second quarter net income includes a pretax gain of $4.8 million ($3.7 million after tax or $0.24 per share) primarily related to the sale of three properties.
Compared to the prior year second quarter, both total retail sales (which exclude construction sales) and comparable store sales increased 1%.
Retail gross margin increased to 40.9% of sales from 38.1% of sales reported in the prior year second quarter. Retail gross margin was positively impacted (260 basis points of sales) by the aforementioned $37.2 million IEEPA tariff refunds. Ending inventory increased 5% at August 1, 2026 compared to August 2, 2025.
Selling, general and administrative expenses for the three months ended August 1, 2026 were $443.6 million (29.4% of sales) compared to $434.2 million (28.7% of sales) for the prior year second quarter. The increase of $9.4 million was primarily due to higher payroll and payroll-related expenses.
Net cash provided by operating activities was $326.8 million for the six months ended August 1, 2026 compared to $319.4 million for the six months ended August 2, 2025.
As of August 1, 2026, the Company had working capital of $1.798 billion (including cash and cash equivalents of $763.1 million and short-term investments of $497.7 million) and $425.7 million of total debt outstanding, including one scheduled debt maturity of $80.0 million due May 2027, $145.7 million of long-term debt and $200.0 million of subordinated debentures. The Company paid a scheduled debt maturity of $96 million during the second quarter of 2026.
The Company operated 272 Dillard’s stores, including 28 clearance centers, and an internet store as of August 1, 2026.
Key Performance Indicators
We use a number of key indicators of financial condition and operating performance to evaluate our business, including the following:
Net sales (in millions)
1,507.6
1,513.8
Retail stores sales trend
1
Comparable retail stores sales trend
Gross margin (in millions)
598.2
554.5
Gross margin as a percentage of net sales
Retail gross margin as a percentage of retail net sales
Selling, general and administrative expenses as a percentage of net sales
29.4
28.7
Cash flow provided by operations (in millions)*
326.8
319.4
Total retail store count at end of period
272
Retail sales per square foot
Retail store inventory trend
Annualized retail merchandise inventory turnover
2.3
2.5
* Cash flow from operations is for the six months ended August 1, 2026 and August 2, 2025.
General
Net sales. Net sales includes merchandise sales of comparable and non-comparable stores and revenue recognized on contracts of CDI Contractors, LLC (“CDI”), the Company’s general contracting construction company. Comparable store sales includes sales for those stores which were in operation for a full period in both the most recently completed quarter and the corresponding quarter for the prior fiscal year, including our internet store. Comparable store sales excludes changes in the allowance for sales returns. Non-comparable store sales includes: sales in the current fiscal year from stores opened during the previous fiscal year before they are considered comparable stores; sales from new stores opened during the current fiscal year; sales in the previous fiscal year for stores closed during the current or previous fiscal year that are no longer considered comparable stores; sales in clearance centers; and changes in the allowance for sales returns.
Sales occur as a result of interaction with customers across multiple points of contact, creating an interdependence between in-store and online sales. Online orders are fulfilled from both fulfillment centers and retail stores. Additionally, online customers have the ability to buy online and pick up in-store. Retail in-store customers have the ability to purchase items that may be ordered and fulfilled from either a fulfillment center or another retail store location. Online customers may return orders via mail, or customers may return orders placed online to retail store locations. Customers who earn reward points under the private label credit card program may earn and redeem rewards through in-store or online purchases.
Service charges and other income. Service charges and other income includes income generated through the Company’s long-term private label credit card marketing and servicing alliance with Citibank, N.A. (“Citibank Alliance”). Other income includes rental income, shipping and handling fees and gift card breakage.
Cost of sales. Cost of sales includes the cost of merchandise sold (net of purchase discounts, non-specific margin maintenance allowances and merchandise margin maintenance allowances), bankcard fees, freight to the distribution centers, employee and promotional discounts, shipping to customers and direct payroll for salon personnel. Cost of sales also includes CDI contract costs, which comprise all direct material and labor costs, subcontract costs and those indirect costs related to contract performance, such as indirect labor, employee benefits and insurance program costs.
Selling, general and administrative expenses. Selling, general and administrative expenses include buying, occupancy, selling, distribution, warehousing, store and corporate expenses (including payroll and employee benefits),
18
insurance, employment taxes, advertising, management information systems, legal and other corporate level expenses. Buying expenses consist of payroll, employee benefits and travel for design, buying and merchandising personnel.
Depreciation and amortization. Depreciation and amortization expenses include depreciation and amortization on property and equipment.
Rentals. Rentals includes expenses for store leases, including contingent rent, data processing and other equipment rentals and office space leases.
Interest and debt (income) expense, net. Interest and debt (income) expense includes interest, net of interest income from demand deposits and short-term investments and capitalized interest, relating to the Company’s unsecured notes, subordinated debentures and commitment fees and borrowings, if any, under the Company’s credit agreement. Interest and debt expense also includes the amortization of financing costs and interest on finance lease obligations, if any.
Other expense. Other expense includes the interest cost and net actuarial loss components of net periodic benefit costs related to the Company’s unfunded, nonqualified defined benefit plan and charges related to the write off of certain deferred financing fees in connection with the amendment and extension of the Company's secured revolving credit facility, if any.
Gain on litigation settlement. Gain on litigation settlement includes the proceeds received, net of legal expenses, from the settlement of credit card interchange fee litigation.
Gain on disposal of assets. Gain on disposal of assets includes the net gain or loss on the sale or disposal of property and equipment, as well as gains from insurance proceeds in excess of the cost basis of insured assets, if any.
Seasonality
Our business, like many other retailers, is subject to seasonal influences, with a significant portion of sales and income typically realized during the last quarter of our fiscal year due to the holiday season. Because of the seasonality of our business, results from any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.
RESULTS OF OPERATIONS
The following table sets forth the results of operations as a percentage of net sales for the periods indicated (percentages may not foot due to rounding):
100.0
1.5
1.4
1.3
101.5
101.4
101.3
60.3
63.4
57.9
59.7
28.9
28.1
2.9
3.0
2.8
0.3
(0.2)
(0.1)
0.4
0.0
(3.4)
(0.3)
8.4
6.2
14.8
10.1
2.0
3.5
2.4
6.5
4.8
11.3
7.8
Net Sales
$ Change
Net sales:
Retail operations segment
8,168
(14,436)
Total net sales
(6,268)
The percent change by segment and product category in the Company’s sales for the three months ended August 1, 2026 compared to the three months ended August 2, 2025 as well as the sales percentage by segment and product category to total net sales for the three months ended August 1, 2026 are as follows:
% Change
% of
2026 - 2025
(3.2)
(4.0)
0.6
1.2
3.8
(21.6)
Net sales from the retail operations segment increased $8.2 million, or approximately 1%, and sales in comparable stores increased approximately 1% during the three months ended August 1, 2026 compared to the three months ended August 2, 2025. Sales in ladies’ accessories and lingerie increased significantly. Sales in home and furniture increased moderately, while sales in men’s apparel and accessories and shoes increased slightly. Sales in cosmetics remained flat, while sales in juniors’ and children’s apparel and ladies’ apparel decreased moderately.
The number of sales transactions decreased 6% for the three months ended August 1, 2026 compared to the three months ended August 2, 2025, while the average dollars per sales transaction increased 7%.
We recorded a return asset of $11.2 million and $11.0 million and an allowance for sales returns of $19.4 million and $18.8 million as of August 1, 2026 and August 2, 2025, respectively.
During the three months ended August 1, 2026, net sales from the construction segment decreased $14.4 million, or approximately 22%, compared to the three months ended August 2, 2025 due to a decrease in construction activity. The remaining performance obligations related to executed construction contracts totaled $152.1 million as of August 1, 2026, increasing approximately 8% from January 31, 2026 and increasing approximately 17% from August 2, 2025. We expect these remaining performance obligations to be satisfied over the next nine to eighteen months.
58,396
(25,100)
33,296
The percent change by segment and product category in the Company’s sales for the six months ended August 1, 2026 compared to the six months ended August 2, 2025 as well as the sales percentage by segment and product category to total net sales for the six months ended August 1, 2026 are as follows:
(0.6)
7.2
3.2
6.0
(19.6)
Net sales from the retail operations segment increased $58.4 million, or approximately 2%, and sales in comparable stores increased approximately 2% during the six months ended August 1, 2026 compared to the six months ended August 2, 2025. Sales in ladies’ accessories and lingerie and home and furniture increased significantly. Sales in men’s apparel and accessories and shoes increased moderately, while sales in cosmetics increased slightly. Sales in juniors’ and children’s apparel remained flat, while sales in ladies’ apparel decreased slightly.
The number of sales transactions decreased 5% for the six months ended August 1, 2026 compared to the six months ended August 2, 2025, while the average dollars per sales transaction increased 7%.
Storewide sales penetration of exclusive brand merchandise for the six months ended August 1, 2026 and August 2, 2025 was 22.3% and 23.4%, respectively.
During the six months ended August 1, 2026, net sales from the construction segment decreased $25.1 million, or approximately 20%, compared to the six months ended August 2, 2025 due to a decrease in construction activity.
Service Charges and Other Income
Three
Six
Months
Service charges and other income:
Income from the Citibank Alliance
11,821
11,298
21,063
17,170
523
3,893
Shipping and handling income
7,945
8,265
15,710
16,326
(320)
(616)
3,061
2,577
6,229
6,726
484
(497)
687
2,780
Total service charges and other income
699
2,785
Service charges and other income includes the income from the Citibank Alliance. Income from the alliance increased $3.9 million for the six months ended August 1, 2026 compared to the six months ended August 2, 2025 primarily from decreases in credit losses.
Gross Margin
Gross margin:
Three months ended
44,656
8.1
(966)
(26.8)
Total gross margin
43,690
7.9
Six months ended
71,271
5.8
(694)
(10.7)
70,577
Gross margin as a percentage of segment net sales:
Total gross margin as a percentage of net sales
Gross margin, as a percentage of sales, increased to 39.7% from 36.6% during the three months ended August 1, 2026 compared to the three months ended August 2, 2025.
Gross margin from retail operations, as a percentage of sales, increased to 40.9% from 38.1% during the three months ended August 1, 2026 compared to the three months ended August 2, 2025. Gross margin from retail operations was positively impacted (260 basis points of sales) by $37.2 million in refunds of IEEPA tariffs. Compared to the prior year second quarter and without regard to the aforementioned IEEPA tariff refunds, gross margin during the three months ended August 1, 2026 (a) increased moderately in ladies’ apparel, (b) increased slightly in cosmetics and home and furniture, (c) was essentially unchanged in juniors’ and children’s apparel, (d) decreased slightly in men’s apparel and accessories and shoes and (e) decreased moderately in ladies’ accessories and lingerie.
Gross margin, as a percentage of sales, increased to 42.1% from 40.3% during the six months ended August 1, 2026 compared to the six months ended August 2, 2025.
Gross margin from retail operations, as a percentage of sales, increased to 43.4% from 41.8% during the six months ended August 1, 2026 compared to the six months ended August 2, 2025. Gross margin from retail operations was positively impacted (120 basis points of sales) by the aforementioned $37.2 million in refunds of IEEPA tariffs. Compared to the six months ended August 2, 2025 and without regard to the aforementioned IEEPA tariff refunds, gross margin during the six months ended August 1, 2026 (a) increased moderately in ladies’ apparel, (b) increased slightly in shoes and (c) was essentially unchanged in all other product categories.
Total inventory increased 5% at August 1, 2026 compared to August 2, 2025. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $2 million and $3 million for the three and six months ended August 1, 2026, respectively.
Inflation and changing trade restrictions, including tariffs, pose a risk to our operations. The extent to which our business will be affected by these factors depends on our customers’ continuing ability and willingness to accept higher prices and the effectiveness of our ongoing initiatives to manage these fluctuating costs.
23
Selling, General and Administrative Expenses (“SG&A”)
SG&A:
441,093
431,751
9,342
2.2
2,544
2,414
130
Total SG&A
9,472
882,502
851,266
31,236
3.7
5,115
4,589
526
11.5
31,762
SG&A as a percentage of segment net sales:
30.3
29.8
29.7
29.2
3.6
Total SG&A as a percentage of net sales
SG&A increased to 29.4% of sales during the three months ended August 1, 2026 from 28.7% of sales during the three months ended August 2, 2025, increasing $9.5 million in total dollars. During the three months ended August 1, 2026 and August 2, 2025, payroll and payroll-related expenses were $313.9 million and $303.5 million, respectively, increasing $10.4 million.
SG&A increased to 28.9% of sales during the six months ended August 1, 2026 from 28.1% of sales during the six months ended August 2, 2025, increasing $31.8 million in total dollars. During the six months ended August 1, 2026 and August 2, 2025, payroll and payroll-related expenses were $624.8 million and $601.4 million, respectively, increasing $23.4 million.
Inflation continues to be a concern for management, impacting many areas of our operating expenses.
Interest and Debt (Income) Expense, Net
Interest and debt (income) expense, net:
(2,664)
(1,224)
(1,440)
117.6
122
(52.4)
Total interest and debt (income) expense, net
(1,318)
90.5
(3,143)
(1,836)
(1,307)
71.2
(25.3)
(1,195)
52.4
Interest and debt (income) expense, net, includes interest income of $12.8 million and $11.5 million for the three months ended August 1, 2026 and August 2, 2025, respectively. Interest income was $24.0 million and $22.7 million for the six months ended August 1, 2026 and August 2, 2025, respectively.
Gain on Litigation Settlement
Gain on litigation settlement:
Total gain on litigation settlement
Gain on Disposal of Assets
Gain on disposal of assets:
(94)
(4,828)
4,734
(3)
(13)
Total gain on disposal of assets
4,744
(232)
(4,887)
4,655
(17)
(4)
4,651
During the three months ended August 2, 2025, the Company received proceeds of $6.0 million primarily from the sale of three properties, resulting in a gain of $4.8 million that was recorded in gain on disposal of assets.
Income Taxes
The Company’s estimated federal and state effective income tax rate was approximately 23.4% and 23.0% for the three months ended August 1, 2026 and August 2, 2025, respectively. The Company’s estimated federal and state effective income tax rate was approximately 23.4% and 23.2% for the six months ended August 1, 2026 and August 2, 2025, respectively. During the three and six months ended August 1, 2026 and August 2, 2025, income tax expense differed from what would be computed using the statutory federal income tax rate primarily due to the effects of state and local income taxes.
The Company expects the fiscal 2026 federal and state effective income tax rate to approximate 23%. This rate may change if results of operations for fiscal 2026 differ from management’s current expectations. Changes in the Company’s assumptions and judgments can materially affect amounts recognized in the condensed consolidated financial statements.
25
FINANCIAL CONDITION
A summary of net cash flows for the six months ended August 1, 2026 and August 2, 2025 follows:
Operating activities
7,407
Investing activities
(413,560)
Financing activities
13,613
Total (Decrease) Increase in Cash and Cash Equivalents
(392,540)
Net cash flows from operations increased $7.4 million during the six months ended August 1, 2026 compared to the six months ended August 2, 2025. This increase was primarily related to (a) proceeds of $104.1 million, net of legal expenses, received from a settlement agreement the Company entered into related to credit card interchange fee litigation and (b) IEEPA tariff refunds of approximately $37 million. These increases of operating cash were mostly offset by (a) increases in tax payments primarily due to the prior year Internal Revenue Service’s tax deadline postponement for taxpayers who resided or had a business in the disaster area declared by the Federal Emergency Management Agency for severe weather events that began on April 2, 2025 in the state of Arkansas as well as (b) increases in inventories.
Citibank, N.A. (“Citi”) establishes, owns and manages Dillard’s private label credit cards, including credit cards co-branded with Mastercard Incorporated (“Mastercard,” collectively the “private label cards”), under the Citibank Alliance, which began in fiscal 2024. The term of the Citibank Alliance is 10 years with automatic extensions for successive two-year terms unless the agreement is terminated by either party in accordance with the terms and conditions of the agreement.
Under the Citibank Alliance, Citi retains the benefits and risks associated with the ownership of the private label card accounts, provides key customer service functions, including new account openings, transaction authorization, billing adjustments and customer inquiries, receives the finance charge income and incurs the bad debts associated with those accounts.
Pursuant to the Citibank Alliance, we receive on-going cash compensation from Citi based upon the portfolio’s earnings. The compensation received from the portfolio is determined monthly and has no recourse provisions. The Company recognized income of $21.1 million and $17.2 million from the Citibank Alliance during the six months ended August 1, 2026 and August 2, 2025, respectively.
Capital expenditures were $39.5 million and $43.5 million for the six months ended August 1, 2026 and August 2, 2025, respectively. The capital expenditures were primarily related to equipment purchases, the continued construction of new stores and the remodeling of existing stores. During the six months ended August 1, 2026, the Company opened a new location at The Mall at Fairfield Commons in Beavercreek, Ohio (160,000 square feet).
We remain committed to closing stores where appropriate and may incur future closing costs related to such stores when they close.
During the six months ended August 2, 2025, the Company received proceeds of $6.0 million primarily from the sale of three properties, resulting in a gain of $4.9 million that was recorded in gain on disposal of assets.
During the six months ended August 1, 2026 and August 2, 2025, the Company purchased certain treasury bills for $641.5 million and $273.5 million, respectively, that are classified as short-term investments. During the six months ended August 1, 2026 and August 2, 2025, the Company received proceeds of $360.9 million and $405.0 million, respectively, related to maturities of these short-term investments.
During the six months ended August 1, 2026, the Company decreased its net level of outstanding debt by $96.0 million related to the maturity of unsecured notes bearing interest at 7.750%.
26
During the six months ended August 1, 2026, no share repurchases were made under the Company’s stock repurchase plan. During the six months ended August 2, 2025, the Company repurchased 0.3 million shares of Class A Common Stock at an average price of $359.16 per share for $107.8 million under the Company’s stock repurchase plan. As of August 1, 2026, $165.2 million of authorization remained under the Company’s open stock repurchase plan. The ultimate disposition of the repurchased stock has not been determined. See Note 8, Stock Repurchase Programs, in the “Notes to Condensed Consolidated Financial Statements,” in Part I, Item 1 hereof for additional information. During the six months ended August 2, 2025, the Company accrued $1.1 million of excise tax related to its share repurchase program as an additional cost of treasury shares.
The Company had cash and cash equivalents of $763.1 million as of August 1, 2026. The Company maintains a credit facility (“credit agreement”) for general corporate purposes including, among other uses, working capital financing, the issuance of letters of credit, capital expenditures and, subject to certain restrictions, the repayment of existing indebtedness and share repurchases. The credit agreement is secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries and provides a borrowing capacity of $800 million, subject to certain limitations as outlined in the credit agreement, with a $200 million expansion option.
In March 2025, the Company amended the credit agreement (the “2025 amendment”). See Note 7, Revolving Credit Agreement, in the “Notes to Condensed Consolidated Financial Statements,” in Part I, Item 1 hereof for additional information. During the six months ended August 2, 2025, the Company paid $3.3 million in issuance costs related to the 2025 amendment, which were recorded in other assets on the condensed consolidated balance sheet. At August 1, 2026, no borrowings were outstanding, and letters of credit totaling $23.3 million were issued under the credit agreement leaving unutilized availability of $776.7 million.
The Company expects to finance its operations in the short-term and long-term from cash on hand, cash flows generated from operations and, if necessary, utilization of the credit facility. Depending upon our actual and anticipated sources and uses of liquidity, the Company will from time to time consider other possible financing transactions, the proceeds of which could be used to fund working capital or for other corporate purposes.
There have been no material changes in the information set forth under the caption “Commercial Commitments” in Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
OFF-BALANCE-SHEET ARRANGEMENTS
The Company has not created, and is not party to, any special-purpose entities or off-balance-sheet arrangements for the purpose of raising capital, incurring debt or operating the Company’s business. The Company does not have any off-balance-sheet arrangements or relationships that are reasonably likely to materially affect the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or the availability of capital resources.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company evaluates its estimates and judgments on an ongoing basis and predicates those estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. Since future events and their effects cannot be determined with absolute certainty, actual results could differ from those estimates. For further information on our critical accounting policies and estimates, see “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the notes to our audited financial statements included in our Annual Report on Form 10-K for the year ended January 31, 2026. As of August 1, 2026, there have been no material changes to these critical accounting policies and estimates.
27
NEW ACCOUNTING STANDARDS
For information with respect to new accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, see Note 2, Accounting Standards, in the “Notes to Condensed Consolidated Financial Statements,” in Part I, Item 1 hereof.
FORWARD-LOOKING INFORMATION
This report contains certain forward-looking statements. The following are or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: (a) statements including words such as “may,” “will,” “could,” “should,” “believe,” “expect,” “future,” “potential,” “anticipate,” “intend,” “plan,” “estimate,” “continue,” or the negative or other variations thereof; (b) statements regarding matters that are not historical facts; and (c) statements about the Company’s future occurrences, plans and objectives, including statements regarding management’s expectations and forecasts for the remainder of fiscal 2026 and beyond, statements concerning the opening of new stores or the closing of existing stores, statements concerning sources of liquidity, statements concerning share repurchases, statements concerning pension contributions, statements regarding the impacts of inflation, wages, trade restrictions, including tariffs, and the effectiveness of our ongoing initiatives to manage such costs, statements regarding remaining performance obligations, statements regarding expense management and statements concerning estimated taxes. The Company cautions that forward-looking statements contained in this report are based on estimates, projections, beliefs and assumptions of management and information available to management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise. Forward-looking statements of the Company involve risks and uncertainties and are subject to change based on various important factors. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and assumptions. Representative examples of those factors include (without limitation) general retail industry conditions and macro-economic conditions including inflation, economic recession and changes in traffic at malls and shopping centers; economic and weather conditions for regions in which the Company’s stores are located and the effect of these factors on the buying patterns of the Company’s customers, including the effect of changes in prices and availability of oil and natural gas; the availability of and interest rates on consumer credit; the impact of competitive pressures in the department store industry and other retail channels including specialty, off-price, discount and Internet retailers; changes in the Company’s ability to meet labor needs amid nationwide labor shortages and an intense competition for talent; changes in consumer spending patterns, debt levels and their ability to meet credit obligations; high levels of unemployment; changes in tax legislation; trade disputes and changes in trade policies including the imposition (or threat) of new or increased duties, taxes, tariffs and other charges impacting our products or supply chain; changes in legislation and governmental regulations; adequate and stable availability and pricing of materials, production facilities and labor from which the Company sources its merchandise; changes in operating expenses, including employee wages, commission structures and related benefits; system failures or data security breaches; inability to effectively utilize advancements in technology, including artificial intelligence; possible future acquisitions of store properties from other department store operators; the continued availability of financing in amounts and at the terms necessary to support the Company’s future business; fluctuations in SOFR and other base borrowing rates; potential disruption from terrorist activity and the effect on ongoing consumer confidence; epidemic, pandemic or public health issues and their effects on public health, our supply chain, the health and well-being of our employees and customers and the retail industry in general; potential disruption of international trade and supply chain efficiencies; global conflicts (including the ongoing conflicts in the Middle East and Ukraine) and the possible impact on consumer spending patterns and other economic and demographic changes of similar or dissimilar nature, and other risks and uncertainties, including those detailed from time to time in our periodic reports filed with the Securities and Exchange Commission, particularly those set forth under the caption “Item 1A-Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
28
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in the information set forth under the caption “Item 7A-Quantitative and Qualitative Disclosures about Market Risk” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
Item 4. Controls and Procedures.
The Company has established and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). The Company’s management, with the participation of our Principal Executive Officer and Co-Principal Financial Officers, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the fiscal quarter covered by this quarterly report, and based on that evaluation, the Company’s Principal Executive Officer and Co-Principal Financial Officers have concluded that these disclosure controls and procedures were effective.
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended August 1, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 1. Legal Proceedings.
From time to time, the Company is involved in litigation relating to claims arising out of the Company’s operations in the normal course of business. This may include litigation with customers, employment related lawsuits, class action lawsuits, purported class action lawsuits and actions brought by governmental authorities. As of September 4, 2026, the Company is not a party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.
Item 1A. Risk Factors.
There have been no material changes in the information set forth under the caption “Item 1A-Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended August 1, 2026, the Company issued 184,442 shares of Class A Common Stock in exchange for 184,442 shares of Class B Common Stock tendered for conversion pursuant to the Certificate of Incorporation. The transactions were exempt from registration under Section 3(a)(9) of the Securities Act of 1933.
The following table summarizes the stock conversions by transaction date:
Transaction Date
Class A Common Stock Issued
Class B Common Stock Tendered
June 5, 2026
3,899
(3,899)
June 15, 2026
36,216
(36,216)
June 17, 2026
5,848
(5,848)
June 22, 2026
June 24, 2026
127,432
(127,432)
July 23, 2026
5,199
(5,199)
184,442
(184,442)
Subsequent to the quarter ended August 1, 2026, on August 19, 2026, the Company issued an additional 41,850 shares of Class A Common Stock in exchange for 41,850 shares of Class B Common Stock tendered for conversion pursuant to the Certificate of Incorporation. The transactions were exempt from registration under Section 3(a)(9) of the Securities Act of 1933.
Issuer Purchases of Equity Securities
(c) Total Number of Shares
(d) Approximate Dollar Value of
Purchased as Part
Shares that May
(a) Total Number
of Publicly
Yet Be Purchased
of Shares
(b) Average Price
Announced Plans
Under the Plans
Period
Purchased
Paid per Share
or Programs
May 3, 2026 through May 30, 2026
165,215,709
May 31, 2026 through July 4, 2026
July 5, 2026 through August 1, 2026
In May 2023, the Company’s Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $500 million of its Class A Common Stock under an open-ended plan (“May 2023 Stock Plan”). During the three and six months ended August 1, 2026, the Company repurchased no shares under its stock repurchase plan. As of August 1, 2026, $165.2 million of authorization remained under the May 2023 Stock Plan.
Reference is made to the discussion in Note 8, Stock Repurchase Programs, in the “Notes to Condensed Consolidated Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10-Q, which information is incorporated by reference herein.
Item 5. Other Information.
(a) The information set forth under Part II, Item 2(a), Unregistered Shares of Equity Securities, is incorporated by reference herein.
(c) During the three months ended August 1, 2026, none of the Company’s directors or officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).
Item 6. Exhibits.
Description
2.1*§
Agreement and Plan of Merger, dated as of March 20, 2026, by and among Dillard’s, Inc., W.D. Company, Inc., and Alex Dillard, solely in his capacity as the Shareholder Representative (Exhibit 2.1 to Form 8-K dated as of March 20, 2026, File No. 1-6140).
2.2*
Amendment No. 1 to Agreement and Plan of Merger, dated as of March 25, 2026, by and between Dillard’s Inc. and W.D. Company, Inc. (Exhibit 2(c) to Form 10-K for the fiscal year ended January 31, 2026, File No. 1-6140).
10.1*
Voting and Exchange Agreement, dated effective as of June 4, 2026, by and among Dillard’s Inc. and the shareholders named therein (Exhibit 10.1 to Form 10-Q for the quarter ended May 2, 2026, File No. 1-6140).
31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Co-Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3
32.1
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.2
Certification of Co-Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.3
101.INS
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Incorporated by reference as indicated.
§
Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish to the SEC a copy of any omitted schedule or exhibit upon request.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
Date:
September 4, 2026
/s/ Phillip R. Watts
Phillip R. Watts
Senior Vice President, Co-Principal Financial Officer and Principal Accounting Officer
/s/ Chris B. Johnson
Chris B. Johnson
Senior Vice President and Co-Principal Financial Officer