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DILLARD'S, INC.

DDS
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Business Summary

Dillard's, Inc. operates within the fashion apparel, cosmetics, and home furnishing retail industry, ranking among the nation's largest retailers in this space. The company also operates a general contracting construction company, CDI Contractors, LLC, a portion of whose business includes constructing and remodeling stores for the Company. The retail merchandise business is conducted under highly competitive conditions, with numerous competitors at the national and local level including specialty, off-price, discount and Internet retailers. Competition is characterized by many factors including location, reputation, merchandise assortment, advertising, price, quality, operating efficiency, service and credit availability.

The Company has numerous competitors nationally, locally and on the Internet, including conventional department stores, specialty retailers, off-price and discount stores, boutiques, mass merchants, and Internet and mail-order retailers. Some of its competitors are larger than it with greater financial resources. The Company believes its stores are in a strong competitive position with regard to location, reputation, merchandise assortment, advertising, price, quality, operating efficiency, service and credit availability. Its merchandise selections include lines of exclusive brand merchandise such as Antonio Melani, Gianni Bini, GB, Roundtree & Yorke and Daniel Cremieux, which provide a benefit by offering fashionable, higher quality product often at a savings compared to national brands, while minimizing costs and differentiating merchandise offerings from other retailers.

The Company generates revenue primarily through the sale of merchandise at its 271 Dillard's stores, including 28 clearance centers, and its Internet store at dillards.com. Revenue is transactional in nature, recognized at the point of sale. The Company also generates income through its long-term marketing and servicing alliance with Citibank, N.A. for the private label credit card program, receiving ongoing cash compensation based upon the portfolio's earnings. Additionally, the Company's construction segment, CDI Contractors, generates revenue from general contracting construction contracts, recognized using the cost-to-cost method. The Company's primary customer segments are individual consumers shopping for fashion apparel, cosmetics, and home furnishings.

The Company's retail operations segment offers a wide selection of merchandise including fashion apparel for women, men and children, accessories, cosmetics, home furnishings and other consumer goods. For fiscal 2025, the percentage of net sales by major product line within the retail operations segment was: cosmetics 16%, ladies' apparel 20%, ladies' accessories and lingerie 14%, juniors' and children's apparel 9%, men's apparel and accessories 19%, shoes 14%, and home and furniture 4% . The construction segment, CDI Contractors, contributed 4% of total net sales in fiscal 2025 . The Company's exclusive brand merchandise sales penetration for fiscal 2025 was 22.3% of total net sales .

During fiscal 2025, the Company closed its location at The Shops at Willow Bend in Plano, Texas (240,000 square feet). The Company received cash proceeds of $25.7 million and recorded a related gain of $20.4 million primarily from the sale of five properties: a 240,000 square foot location at The Shops at Willow Bend in Plano, Texas, a 150,000 square foot non-operating location at Crossroads Center in Waterloo, Iowa, a non-operating building at Towne West Square in Wichita, Kansas, a non-operating building at Golden Triangle Mall in Denton, Texas, and a parcel of land at Rivergate Mall in Goodlettsville, Tennessee. The Company repurchased 0.3 million shares of Class A Common Stock for $107.8 million at an average price of $359.16 per share . The Company paid $484.9 million in dividends, highlighted by the largest special dividend in its history. The Board of Directors declared a special dividend of $30.00 per share that was paid on the Class A Common Stock and Class B Common Stock. The Company also contributed $34.3 million to its mall joint ventures.

For fiscal 2025, the Company reported net income of $570.2 million compared to $593.5 million for fiscal 2024. Total retail sales for fiscal 2025 and fiscal 2024 were $6.232 billion and $6.219 billion , respectively, and were unchanged as a percentage. Sales in comparable stores for the same period were also unchanged. Consolidated gross margin for both fiscal 2025 and fiscal 2024 was 39.5% of sales . Retail gross margin for fiscal 2025 was 40.8% of sales compared to 41.0% of sales for fiscal 2024. Consolidated selling, general and administrative expenses for fiscal 2025 were $1,759.2 million (27.2% of sales ) compared to $1,731.2 million (26.7% of sales ) for fiscal 2024. Cash flow from operations was $717.0 million for fiscal 2025 and $714.1 million for fiscal 2024.

Business Outlook

The Company expects to finance its operations in the short-term and the long-term from cash on hand, cash flows generated from operations and, if necessary, utilization of its revolving credit facility. The Company expects the fiscal 2026 federal and state effective income tax rate to approximate 23% . The Company expects to make a contribution to the pension plan of approximately $8.5 million in fiscal 2026. The Company expects pension expense to be approximately $26.1 million in fiscal 2026. During fiscal 2026, the Company expects to accrue interest expense of $19.7 million on its long-term debt and $15.0 million on its subordinated debentures.

The Company and Citi remain focused on collaborative strategies to enhance customer awareness and acceptance of the program's product offerings in an effort to improve the financial performance of the Citibank Alliance. The Company expects to grow its private label merchandise program and has invested in its development and procurement resources and marketing efforts related to these exclusive brand offerings. The Company will continue to use existing technology and research to edit merchandise assortments by store to meet the specific preference, taste and size requirements of each local operating area.

The Company's current non-operating priorities for its use of cash are strategic investments to enhance the value of existing properties, stock repurchases and dividend payments to stockholders. While the Company currently expects to continue paying quarterly cash dividends during fiscal 2026, all prospective dividends are subject to and conditional upon the review and approval of and declaration by the Board of Directors. As of January 31, 2026, authorization of $165.2 million remained under the May 2023 Stock Plan share repurchase program. The Company expects to finance its operations in the short-term and the long-term from cash on hand, cash flows generated from operations and, if necessary, utilization of our revolving credit facility.

Inflation continues to be a concern for management, impacting many areas of the Company's operating expenses. The Company was affected by inflation during fiscal 2025 and 2024, and its business will likely be affected by inflation in fiscal 2026, the extent of which depends on its customers' continuing ability and willingness to accept price increases. Inflation and changing trade restrictions, including tariffs, pose a risk to the Company's operations. A number of economic and geopolitical factors are affecting the U.S. and world economies, including war and other armed conflicts, fluctuating energy prices, trade restrictions (including tariffs), inflation and the continuing impact of elevated United States wages.

Risk Factors

The retail merchandise business is highly competitive, and if the Company is unable to maintain its competitive position, it could experience downward pressure on prices, lower demand for products, reduced margins, and the loss of market share. The Company's business is seasonal, with a significant portion of sales and income typically realized during the last quarter of its fiscal year due to the holiday season, and fluctuations during this period can have a disproportionate effect on results of operations. The Company has approximately 71 stores along the Gulf and Atlantic coasts that are self-insured for property and merchandise losses related to named storms, meaning repair and replacement costs will be borne by the Company for damage to these stores. The income and cash flow from the Citibank Alliance is dependent upon factors including the level of sales on Citi accounts, the level of balances carried, payment rates, finance charge rates, and the level of credit losses, all of which can vary based on changes in federal and state banking and consumer protection laws and economic factors the Company cannot control. A significant disruption in the Company's information technology systems and network, including from cyberattacks and ransomware, could materially adversely affect its operations and financial condition.

Management Priorities

Management's message in the Executive Overview characterized fiscal 2025 as a respectable performance, noting net income of $570.2 million and a focus on maintaining gross margin performance in a rapidly changing merchandising environment characterized by unpredictable costs. Management emphasized that shareholder return remained a priority, highlighted by paying $484.9 million in dividends, including the largest special dividend in the Company's history, and repurchasing $107.8 million of stock. Management stated that the Company held approximately $1.1 billion in cash and cash equivalents and short-term investments at year end and remained in a strong financial position. The Company expects the fiscal 2026 federal and state effective income tax rate to approximate 23% .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Percentage of Net Sales by Segment and Major Product Line
  2. [2] Item 1, Business — Percentage of Net Sales by Segment and Major Product Line
  3. [3] Item 7, MD&A — Exclusive Brand Merchandise
  4. [4] Item 7, MD&A — Investing Activities
  5. [5] Item 7, MD&A — Gain on Disposal of Assets
  6. [6] Item 7, MD&A — Stock Repurchase
  7. [7] Item 7, MD&A — Stock Repurchase
  8. [8] Item 7, MD&A — Stock Repurchase
  9. [9] Item 7, MD&A — Executive Overview
  10. [10] Item 7, MD&A — Dividends
  11. [11] Item 7, MD&A — Investing Activities
  12. [12] Item 7, MD&A — Executive Overview
  13. [13] Item 7, MD&A — Executive Overview
  14. [14] Item 7, MD&A — Executive Overview
  15. [15] Item 7, MD&A — Executive Overview
  16. [16] Item 7, MD&A — Key Performance Indicators
  17. [17] Item 7, MD&A — Executive Overview
  18. [18] Item 7, MD&A — Executive Overview
  19. [19] Item 7, MD&A — Executive Overview
  20. [20] Item 7, MD&A — Executive Overview
  21. [21] Item 7, MD&A — Executive Overview
  22. [22] Item 7, MD&A — Executive Overview
  23. [23] Item 7, MD&A — Executive Overview
  24. [24] Item 7, MD&A — Executive Overview
  25. [25] Item 7, MD&A — Income Taxes
  26. [26] Item 7, MD&A — Pension obligations
  27. [27] Item 7, MD&A — Pension obligations
  28. [28] Item 7, MD&A — Long-term Debt
  29. [29] Item 7, MD&A — Subordinated Debentures
  30. [30] Item 5, Market for Registrant's Common Equity — Repurchase of Common Stock
  31. [31] Item 7, MD&A — Executive Overview
  32. [32] Item 7, MD&A — Executive Overview
  33. [33] Item 7, MD&A — Executive Overview
  34. [34] Item 7, MD&A — Executive Overview
  35. [35] Item 7, MD&A — Income Taxes
  36. [36] Item 8, Consolidated Statements of Income
  37. [37] Item 8, Consolidated Statements of Income
  38. [38] Item 8, Consolidated Statements of Income
  39. [39] Item 8, Consolidated Statements of Income
  40. [40] Item 8, Consolidated Statements of Income
  41. [41] Item 8, Consolidated Statements of Income
  42. [42] Item 8, Consolidated Statements of Income
  43. [43] Item 8, Consolidated Statements of Income
  44. [44] Item 8, Consolidated Statements of Income
  45. [45] Item 8, Consolidated Statements of Income
  46. [46] Item 8, Consolidated Statements of Income
  47. [47] Item 8, Consolidated Statements of Income
  48. [48] Item 7, MD&A — Key Performance Indicators
  49. [49] Item 7, MD&A — Key Performance Indicators
  50. [50] Item 8, Consolidated Statements of Cash Flows
  51. [51] Item 8, Consolidated Statements of Cash Flows
  52. [52] Item 8, Consolidated Statements of Cash Flows
  53. [53] Item 7, MD&A — Executive Overview
  54. [54] Item 7, MD&A — Executive Overview
  55. [55] Item 7, MD&A — Executive Overview
  56. [56] Item 7, MD&A — Executive Overview
  57. [57] Item 7, MD&A — Executive Overview
  58. [58] Item 7, MD&A — Executive Overview
  59. [59] Item 7, MD&A — Executive Overview
  60. [60] Item 7, MD&A — Dividends
  61. [61] Item 7, MD&A — Executive Overview
  62. [62] Item 7, MD&A — Executive Overview
  63. [63] Item 7, MD&A — Dividends

Analysis on 6/8/2026