Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Exhibits and Financial Statement Schedules
Form 10-K Summary
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PART I
ITEM 1. BUSINESS.
Dillard’s, Inc. (“Dillard’s”, the “Company”, “we”, “us”, “our” or “Registrant”) ranks among the nation’s largest fashion apparel, cosmetics and home furnishing retailers. The Company, originally founded in 1938 by William T. Dillard, was incorporated in Delaware in 1964 (and was reincorporated in Texas in 2025). As of January 31, 2026, we operated 271 Dillard’s stores, including 28 clearance centers, and an Internet store at dillards.com offering a wide selection of merchandise including fashion apparel for women, men and children, accessories, cosmetics, home furnishings and other consumer goods. The Company also operates a general contracting construction company, CDI Contractors, LLC (“CDI”), a portion of whose business includes constructing and remodeling stores for the Company.
The following table summarizes the percentage of net sales by segment and major product line:
Percentage of Net Sales
Fiscal 2025
Fiscal 2024
Fiscal 2023
Retail operations segment:
Cosmetics
Ladies' apparel
Ladies' accessories and lingerie
Juniors' and children's apparel
Men's apparel and accessories
Shoes
Home and furniture
Construction segment
Total
Additional information regarding our business, results of operations and financial condition, including information pertaining to our reporting segments, can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 hereof and in Note 2 in the “Notes to Consolidated Financial Statements” in Item 8 hereof.
Customers may visit us in person at any of our retail stores located primarily in shopping malls and open-air centers throughout the southwest, southeast and midwest regions of the United States. Our customers may also visit us online at our e-Commerce site, dillards.com, gaining company-wide access to in-store merchandise selections across 30 states as well as in our fulfillment and distribution centers. Customers also have the option to buy online and pickup in store or have their orders shipped directly to their desired location. Dillards.com also serves as a key customer engagement tool with continually updated style and trend content to both educate and inspire our customers.
Our retail merchandise business is conducted under highly competitive conditions. Although we are a large regional department store, we have numerous competitors at the national and local level that compete with our individual stores, 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. We believe that our stores are in a strong competitive position with regard to each of these factors. Other retailers may compete for customers on some or all of these factors, or on other factors, and may be perceived by some potential customers as being better aligned with their particular preferences.
Our merchandise selections include, but are not limited to, our lines of exclusive brand merchandise such as Antonio Melani, Gianni Bini, GB, Roundtree & Yorke and Daniel Cremieux. Our exclusive brands/private label merchandise program provides benefits for Dillard’s and our customers. Our customers receive fashionable, higher quality product often at a savings compared to national brands. Our private label merchandise program allows us to ensure the Company’s high standards are achieved, while minimizing costs and differentiating our merchandise offerings from other retailers.
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We have made a significant investment in our trademark and license portfolio, in terms of design function, advertising, quality control and quick response to market trends in a quality manufacturing environment. Dillard’s trademark registrations are maintained for as long as Dillard’s holds the exclusive right to use the trademarks on the listed products.
Our merchandising, sales promotion and store operating support functions are conducted primarily at our corporate headquarters. Our back office sales support functions, such as accounting, product development, store planning and information technology, are also centralized.
We have developed a knowledge of each of our trade areas and customer bases for our stores. This knowledge is enhanced through regular store visits by senior management and merchandising personnel and through the use of online merchandise information and is supported by our regional merchandising offices. We 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.
Wells Fargo Bank, N.A. (“Wells Fargo”) previously owned and managed Dillard’s private label credit cards, including credit cards co-branded with American Express under a long-term marketing and servicing alliance (“Wells Fargo Alliance”). In January 2024, the Company announced that it entered into a new agreement with Citibank, N.A. (“Citi”) to provide the private label credit card program for Dillard’s customers under a new alliance (“Citibank Alliance”), replacing the existing credit card program under the Wells Fargo Alliance upon its termination in September 2024. The new program launched on August 19, 2024 for new Dillard’s credit applicants. Existing accounts transferred from Wells Fargo to Citi on September 16, 2024. The term of the new Citi agreement 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 establishes, owns and manages Dillard’s private label credit cards, including a new co-branded Mastercard Incorporated card (“Mastercard,” collectively, the “private label cards”). The new co-branded Mastercard replaced the previous co-branded card. 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.
We participate in the marketing of the private label cards, which includes the cost of customer reward programs. Citi supports certain Dillard’s marketing and loyalty program activities related to the new program. We seek to expand the number and use of the private label cards by, among other things, providing incentives to sales associates to encourage customers to make applications for new accounts, which generally can be opened while a customer is visiting one of our stores or online. Customers who open accounts are rewarded with discounts on future purchases. Private label card customers are sometimes offered advance notice of sale events.
Our earnings depend to a significant extent on the results of operations for the last quarter of our fiscal year. Due to holiday buying patterns, sales for that period average approximately one-third of annual sales. Additionally, working capital requirements fluctuate during the year, increasing during the second half of the year in anticipation of the holiday season.
We purchase merchandise from many sources and do not believe that we are dependent on any one supplier. We have no long-term purchase commitments or arrangements with any of our suppliers, but we consider our relationships to be strong and mutually beneficial.
Our fiscal year ends on the Saturday nearest January 31 of each year. Fiscal year 2025 ended on January 31, 2026 and contained 52 weeks. Fiscal year 2024 ended on February 1, 2025 and contained 52 weeks. Fiscal year 2023 ended on February 3, 2024 and contained 53 weeks.
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Human Capital
As of December 20, 2025, the Company employed approximately 29,100 associates. Approximately 20,400 were full-time associates (greater than 35 hours per week), 6,400 were part-time associates (20-35 hours per week) and 2,300 were limited status associates (less than 20 hours per week). 1 None of our associates are represented by a union.
As a department store chain, the Company employs a wide range of associates, including sales associates, management professionals, maintenance professionals, call center associates, distribution center associates, buyers, advertising and back office personnel. Given the breadth of our employee base, we tailor our human capital management efforts with a view to specific associate populations.
Of the Company’s full-time associates, approximately 87% work in the retail stores. We focus on attracting and retaining excellent associates at the store level by providing compensation and benefits packages that are competitive within the applicable market.
Training and talent development . The Company develops talent by investing in formalized classroom training, specialized training for our sales management team, ongoing mentorship programs and on-the-job experience. We seek to create an engaged workforce through open door policies and promotion opportunities. The Company’s philosophy is to develop talent and promote from within our organization, thus providing a better customer service model due to a deeper understanding of the overall business and our customers’ expectations. Career paths and opportunities for promotion are discussed with associates from the first day of training and on an ongoing basis. In order to ensure that qualified candidates are aware of store promotion opportunities, each store is directed to post promotion opportunities for supervisory positions.
As of December 20, 2025, approximately 75% of the salaried managers at our stores were promoted from hourly store positions.
Available Information
The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K (this “Annual Report”) and should not be considered to be a part of this Annual Report. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, statements of changes in beneficial ownership of securities on Form 4 and Form 5 and amendments to those reports filed or furnished with the SEC pursuant to Sections 13(a), 15(d) or 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as applicable, are available free of charge (as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC) on the Dillard’s, Inc. investor relations website: investor.dillards.com. Copies may also be obtained through the SEC’s EDGAR website: sec.gov.
We have adopted a Code of Conduct and Corporate Governance Guidelines, as required by the listing standards of the New York Stock Exchange and the rules of the SEC. We have posted on our investor relations website our Code of Conduct, Corporate Governance Guidelines, Social Accountability Policy, our most recent Social Accountability Report, our most recent report on climate change mitigation efforts and committee charters for the Audit Committee of the Board of Directors and the Stock Option and Executive Compensation Committee of the Board of Directors.
Our corporate offices are located at 1600 Cantrell Road, Little Rock, Arkansas 72201, telephone: 501-376-5200.
1 For purposes of this section, all figures are based on calendar year 2025.
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ITEM 1A. RISK FACTORS.
The risks described in this Item 1A, Risk Factors, of this Annual Report could materially and adversely affect our business, financial condition and results of operations.
The Company cautions that forward-looking statements, as such term is defined in the Private Securities Litigation Reform Act of 1995, contained in this Annual Report are based on estimates, projections, beliefs and assumptions of 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.
Risks Related to Retail Operations
The retail merchandise business is highly competitive, and that competition could lower our revenues, margins and market share.
We conduct our retail merchandise business under highly competitive conditions. Competition is characterized by many factors including location, reputation, fashion, merchandise assortment, advertising, operating efficiency, price, quality, customer service and credit availability. We have 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. Although we are a large regional department store, some of our competitors are larger than us with greater financial resources and, as a result, may be able to devote greater resources to sourcing, promoting and selling their products. Additionally, we compete in certain markets with a substantial number of retailers that specialize in one or more types of merchandise that we sell. Also, online retail shopping continues to rapidly evolve, and we continue to expect competition in the e-commerce market to intensify in the future as the Internet facilitates competitive entry and comparison shopping. We anticipate that intense competition will continue from both existing competitors and new entrants. If we are unable to maintain our competitive position, we could experience downward pressure on prices, lower demand for products, reduced margins, the to take of new business and the of market share.
Our business is seasonal, and fluctuations in our revenues during the last quarter of our fiscal year can have a disproportionate effect on our results of operations.
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. Our fiscal fourth-quarter results may fluctuate significantly, based on many factors, including holiday spending patterns and weather conditions, and any such fluctuation could have a disproportionate effect on our results of operations for the entire fiscal year. Because of the seasonality of our business, our operating results vary considerably from quarter to quarter, and results from any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.
A shutdown of, or disruption in, any of the Company’s distribution or fulfillment centers would have an adverse effect on the Company’s business and operations.
Our business depends on the orderly operation of the process of receiving and distributing merchandise, which relies on adherence to shipping schedules and effective management of distribution or fulfillment centers. Although we believe that our receiving and distribution process is efficient and that we have appropriate contingency plans, unforeseen disruptions in operations due to fire, severe weather conditions, natural disasters or other catastrophic events, labor disagreements or other shipping problems may result in the loss of inventory and/or delays in the delivery of merchandise to our stores and customers, which could have an adverse effect on our financial condition or results of operations.
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Current store locations may become less desirable, and desirable new locations may not be available for a reasonable price, if at all, either of which could adversely affect our results of operations.
In order to generate customer traffic and for convenience of our customers, we attempt to locate our stores in desirable locations within shopping malls and open air centers. Our stores benefit from the abilities that our Company, other anchor tenants and other area attractions have to generate consumer traffic. Adverse changes in the development of new shopping malls in the United States, the availability or cost of appropriate locations within existing or new shopping malls, competition with other retailers for prominent locations, the success of individual shopping malls and the success or failure of other anchor tenants, the continued proper management and development of existing malls, or the continued popularity of shopping malls may continue to impact our ability to maintain or grow our sales in our existing stores, as well as our ability to open new stores, which could have an adverse effect on our financial condition or results of operations.
Ownership and leasing of significant amounts of real estate exposes us to possible liabilities and losses.
We own the land and building, or lease the land and/or the building, for all of our stores. Accordingly, we are subject to all of the risks associated with owning and leasing real estate. In particular, the value of our real estate assets could decrease, and their operating costs could increase, because of changes in the investment climate for real estate, demographic trends and supply or demand for the use of the store, which may result from competition from similar stores in the area. Additionally, we are subject to potential liability for environmental conditions on the property that we own or lease.
Furthermore, we are subject to risks related to poor management of shopping malls, including those malls that may be in financial distress or are currently under receivership. Some malls may be unable or unwilling to refinance debt maturities in the current credit market, leading to further risks related to temporary or new management by financial institutions or others. Such successors may be unable to effectively manage the shopping malls in which we operate.
If an existing owned store is not profitable, and we decide to close it, we may be required to record an impairment charge and/or exit costs associated with the disposal of the store. We generally cannot cancel our leases. If an existing or future store is not profitable, and we decide to close it, we may be committed to perform certain obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. In addition, as each of the leases expires, we may be unable to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to close stores in desirable locations. We may not be able to close an unprofitable owned store due to an existing operating covenant which may cause us to operate the location at a loss and prevent us from finding a more desirable location. We have approximately 71 stores along the Gulf and Atlantic coasts that are covered by third-party insurance but are self-insured for property and merchandise related to “named storms.” As a result, the repair and replacement costs will be borne by us for to any of these stores from “named storms,” which could have an effect on our financial condition or results of operations.
Variations in the amount of vendor allowances received could adversely impact our operating results.
We receive vendor allowances for advertising, payroll and margin maintenance that are a strategic part of our operations. Decreased payroll reimbursements would either cause payroll costs to rise, negatively impacting operating income, or cause us to reduce the number of employees, which may cause a decline in sales. A decline in the amount of margin maintenance allowances would either increase cost of sales, which would negatively impact gross margin and operating income, or cause us to reduce merchandise purchases, which may cause a decline in sales.
A decrease in cash flows from our operations and constraints to accessing other financing sources could limit our ability to fund our operations, capital projects, interest and debt repayments, stock repurchases and dividends.
Our business depends upon our operations to generate strong cash flow and to some extent upon the availability of financing sources to supply capital to fund our general operating activities, capital projects, interest and debt repayments, stock repurchases and dividends. Our inability to continue to generate sufficient cash flows to support these activities or
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the lack of available financing in adequate amounts and on appropriate terms when needed could adversely affect our financial performance including our earnings per share.
Our profitability may be adversely impacted by weather conditions.
Our merchandise assortments reflect assumptions regarding expected weather patterns and our profitability depends on our ability to timely deliver seasonally appropriate inventory. Unexpected or unseasonable weather conditions could render a portion of our inventory incompatible with consumer needs. For example, extended periods of unseasonably warm temperatures during the winter season or cool weather during the summer season could render a portion of the Company’s inventory incompatible with those unseasonable conditions. Additionally, extreme weather or natural disasters, particularly in the areas in which our stores are located, could also severely hinder our ability to timely deliver seasonally appropriate merchandise. For example, frequent or unusually heavy snowfall, ice storms, rainstorms, hurricanes or other extreme weather conditions over a prolonged period could make it difficult for the Company’s customers to travel to its stores and thereby reduce the Company’s sales and profitability. A reduction in the demand for or supply of our seasonal merchandise or reduced sales due to reduced customer traffic in our stores could have an effect on our inventory levels, gross margins and results of operations.
Natural disasters, climate change, war, acts of violence, acts of terrorism, other armed conflicts, and public health issues may adversely impact our business.
The occurrence of, or threat of, a natural disaster, climate change, war (including the ongoing conflict with Iran and/or Iranian-sponsored actors, other conflicts in the Middle East, and the ongoing conflict in Ukraine and the resulting sanctions imposed on Russia by the U.S. and other countries), acts of violence, acts of terrorism, other armed conflicts, and public health issues could disrupt our operations, disrupt international trade and supply chain efficiencies, suppliers or customers, or result in political or economic instability. If commercial transportation is curtailed or substantially delayed, our business may be adversely impacted, as we may have difficulty shipping merchandise to our distribution centers, fulfillment centers, stores or directly to customers. In addition, about climate change and greenhouse gases may result in new or additional legal, legislative and/or regulatory requirements to reduce or mitigate the effects of climate change on the environment. Any such new requirements could increase our operating costs for things like energy or packaging, as well as our product supply chain and distribution costs.
As a result of the occurrence of, or threat of, a natural disaster, climate change, war, acts of violence or acts of terrorism, other armed conflicts, and public health issues in the United States, we may be required to suspend operations in some or all of our stores, which could have a material adverse impact on our business, financial condition and results of operations.
Risks Related to Consumer Demand
Changes in economic, financial and political conditions, and the resulting impact on consumer confidence and consumer spending, could have an adverse effect on our business and results of operations .
The retail merchandise business is highly sensitive to changes in overall economic and political conditions that impact consumer confidence and spending. Various economic conditions affect the level of disposable income consumers have available to spend on the merchandise we offer, including unemployment rates, inflation, interest rates, taxation, energy costs, the availability of consumer credit, the price of gasoline, consumer confidence in future economic conditions and general business conditions. Due to the Company’s concentration of stores in energy producing regions, volatile conditions in these regions could adversely affect the Company’s sales. Consumer purchases of discretionary items and other retail products generally decline during recessionary periods, and also may decline at other times when changes in consumer spending patterns affect us unfavorably. In addition, any significant decreases in shopping mall traffic could also have an adverse effect on our results of operations.
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Our business is dependent upon our ability to accurately predict rapidly changing fashion trends, customer preferences and other fashion-related factors.
Our sales and operating results depend in part on our ability to effectively predict and quickly respond to changes in fashion trends and customer preferences. We continuously assess emerging styles and trends and focus on developing a merchandise assortment to meet customer preferences at competitive prices. Even with these efforts, we cannot be certain that we will be able to successfully meet constantly changing fashion trends and customer preferences. If we are unable to successfully predict or respond to changing styles or preferences, we may be faced with lower sales, increased inventories, additional markdowns or promotional sales to dispose of excess or slow-moving inventory and lower gross margins, all of which would have an adverse effect on our business, financial condition and results of operations.
Risks Related to our Brand and Product Offerings
Our failure to protect our reputation could have an adverse effect on our business.
We offer our customers quality products at competitive prices and a high level of customer service, resulting in a well-recognized brand and customer loyalty. As discussed in the immediately preceding risk factor, our brand and customer loyalty depend, in part, on our ability to predict or respond to changes in fashion trends and consumer preferences in a timely manner. Failure to respond rapidly to changing trends could diminish brand and customer loyalty and impact our reputation with customers.
Additionally, the value of our reputation is based, in part, on subjective perceptions of the quality of our merchandise selections. Isolated incidents involving us or persons currently or formerly associated with us (including employees, celebrities, social media influencers, brand affiliates and partners or others who speak publicly about our brand or our products, whether authorized or not) or our merchandise that erode trust or confidence could adversely affect our reputation and our business, particularly if the incidents result in significant adverse publicity or governmental investigation or inquiry. Similarly, information posted about us, including our lines of exclusive brand merchandise, on the Internet, including social media platforms that allow individuals access to a wide audience of consumers and other interested persons, may adversely affect our reputation, even if the information is inaccurate.
Any significant damage to our brand or reputation could negatively impact sales, diminish customer trust and generate negative sentiment, any of which would harm our business and results of operation.
Risks associated with our private label merchandise program could adversely affect our business.
Our merchandise selections include our lines of exclusive brand merchandise, such as Antonio Melani, Gianni Bini, GB, Roundtree & Yorke and Daniel Cremieux. We expect to grow our private label merchandise program and have invested in our development and procurement resources and marketing efforts related to these exclusive brand offerings. The expansion of our private label merchandise subjects us to certain additional risks. These include, among others, risks related to: our failure to comply with government and industry safety standards; our ability to successfully protect our trademark and license portfolio and our other proprietary rights in our exclusive brands/private label merchandise program; and risks associated with overseas sourcing and manufacturing. In addition, damage to the reputation of our private label trade names may generate negative customer sentiment. Our failure to adequately address some or all of these risks could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Material Sourcing and Supply
Fluctuations in the price of merchandise, raw materials, fuel and labor or their reduced availability could increase our cost of goods and negatively impact our financial results.
Fluctuations in the price and availability of fuel, labor and raw materials as a result of inflation and other factors, combined with the inability to mitigate or to pass cost increases on to our customers or to change our merchandise mix as a result of such cost increases, could have an adverse impact on our profitability. Vendors and other suppliers of the Company may experience similar fluctuations, which may subject us to the effects of their price increases. We may or
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may not be able to pass such costs along to our customers. Even when successful, attempts to pass such costs along to our customers might cause a decline in our sales volume. Additionally, any decrease in the availability of raw materials could impair our ability and the ability of our branded vendors to meet purchasing requirements in a timely manner. A decrease in domestic transportation capacity could impair our ability and the ability of our branded vendors to timely deliver merchandise to our distribution centers and stores. Both the increased cost and lower availability of merchandise, raw materials, fuel and labor may also have an adverse impact on our cash and working capital needs.
Third party suppliers on whom we rely to obtain materials and provide production facilities and other third parties with whom we do business may experience financial difficulties due to current and future economic conditions, which may subject them to insolvency risk or may result in their inability or unwillingness to perform the obligations they owe us.
Our suppliers may experience financial difficulties due to a downturn in the industry or in other macroeconomic environments. Our suppliers’ cash and working capital needs can be adversely impacted by the increased cost and lower availability of merchandise, raw materials, fuel and labor as a result of inflation and other factors. Current and future economic conditions may prevent our suppliers from obtaining financing on favorable terms, which could impact their ability to supply us with merchandise on a timely basis.
We are also party to contractual and business relationships with various other parties, including vendors and service providers, pursuant to which such parties owe performance, payment and other obligations to us. In some cases, we depend upon such third parties to provide essential products, services or other benefits, such as advertising, software development and support, logistics and other goods and services necessary to operate our business. Economic, industry and market conditions could result in increased risks to us associated with the potential financial distress of such third parties.
If any of the third parties with which we do business become subject to insolvency, bankruptcy, receivership or similar proceedings, our rights and benefits in relation to, contractual and business relationships with such third parties could be terminated, modified in a manner adverse to us or otherwise materially impaired. There can be no assurances that we would be able to arrange for alternate or replacement contractual or business relationships on terms as favorable as our existing ones, if at all. Any inability on our part to do so could negatively affect our cash flows, financial condition and results of operations.
The Company and third-party suppliers on whom we rely source a significant portion of the merchandise we sell from foreign countries, which exposes us to certain risks that include political and economic conditions and supply chain disruptions.
Political discourse in the United States continues to focus on ways to discourage corporations in the United States from outsourcing manufacturing and production activities to foreign jurisdictions. Since 2018, the United States has imposed additional tariffs on certain items sourced from foreign countries, including China, and has modified, withdrawn from and renegotiated some of its trade agreements with foreign countries. Additional actions, including the imposition or increase of tariffs, could negatively impact our ability and the ability of our third-party vendors and suppliers to source products from foreign jurisdictions and could lead to an increase in the cost of goods and adversely affect our profitability.
Other trade restrictions imposed by the United States Government, including increased tariffs or quotas, embargoes, safeguards, and customs restrictions against apparel items, (such as the Uyghur Forced Labor Prevention Act), as well as United States or foreign labor strikes, work stoppages, or boycotts, could increase the cost or reduce the supply of merchandise available to us or may require us to modify our current business practices, any of which could adversely affect our profitability.
Our timely receipt of merchandise in the United States is dependent on an efficient global supply chain. Disruptions in the supply chain could adversely impact our ability to obtain adequate inventory on a timely basis and result in lost sales, increased costs and an overall decrease in our profits. For example, many disruptions in the global transportation network have occurred recently, including attacks on shipping vessels in the Red Sea and on the Strait of Hormuz,
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causing changes to vessel routings, extending transit times, decreasing global vessel capacity and increasing the cost of fuel. Global port congestion related to weather and geopolitical events may also continue to impact the supply chain, and imports may continue to face delayed transit times, longer wait times at transshipment ports and schedule changes at origin ports.
Moreover, our third-party suppliers in foreign jurisdictions are subject to political and economic uncertainty. As a result, we are subject to risks and uncertainties associated with changing economic and political conditions in foreign countries where our suppliers are located, including increased import duties, tariffs, trade restrictions and quotas; human rights concerns; working conditions and other labor rights and conditions; the environmental impact in foreign countries where merchandise is produced and raw materials or products are sourced; adverse foreign government regulations; wars, fears of war, terrorist attacks and organizing activities; inflation and adverse fluctuations of foreign currencies; and political unrest. We cannot predict when, or the extent to which, the countries in which our products are manufactured will experience any of the foregoing events. Any event causing a disruption or delay of imports from foreign locations would likely increase the cost or reduce the supply of merchandise available to us and would adversely affect our operating results.
Failure by third party suppliers to comply with our supplier compliance programs or applicable laws could have a material adverse effect on our business.
All of our suppliers must comply with our supplier compliance programs and applicable laws, including consumer and product safety laws, but we do not control our vendors or their labor and business practices. The violation of labor or other laws by one or more of our vendors could have an adverse effect on our business. Additionally, although we diversify our sourcing and production, the failure of any supplier to produce and deliver our goods on time, to meet our quality standards and adhere to our product safety requirements or to meet the requirements of our supplier compliance program or applicable laws, could impact our ability to flow merchandise to our stores or directly to consumers in the right quantities at the right time, which could adversely affect our profitability and could result in damage to our reputation and translate into sales losses.
Risks Related to our Long-Term Marketing and Servicing Alliance
Reductions in the income and cash flow from our long-term marketing and servicing alliance related to the private label credit cards could impact operating results and cash flows.
In January 2024, the Company announced that it entered into a new agreement with Citibank, N.A. (“Citi”) to provide a credit card program for Dillard’s customers (the “Citibank Alliance”), replacing the existing Wells Fargo Alliance. The Dillard’s credit card program offered by Citi includes a new co-branded Mastercard, replacing the existing co-branded card, as well as a private label credit card. Additionally, Citi will provide customer service functions and support certain Dillard’s marketing and loyalty program activities related to the new program. The term of the agreement is 10 years with automatic extensions for successive two-year terms unless the agreement is terminated by a party in accordance with the terms and conditions of the agreement.
The Citibank Alliance provides for certain payments to be made by Citi to the Company, including the Company’s share of earnings under this alliance. The income and cash flow that the Company receives from the Citibank Alliance is dependent upon a number of factors including the level of sales on Citi accounts, the level of balances carried on the Citi accounts by Citi customers, payment rates on Citi accounts, finance charge rates and other fees on Citi accounts, the level of credit losses for the Citi accounts, Citi’s ability to extend credit to our customers as well as the cost of customer rewards programs, all of which can vary based on changes in federal and state banking and consumer protection laws and from a variety of economic, legal, social and other factors that we cannot control. While future cash flows under the Citibank Alliance are difficult to predict, 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 the financial performance of this ; however, there can be no assurance that these efforts will significantly impact the performance. If the income or cash flow that the Company receives from the Citibank decreases, our operating results and cash flows could be affected.
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Credit card operations are subject to numerous federal and state laws that impose disclosure and other requirements upon the origination, servicing, and enforcement of credit accounts, and limitations on the amount of finance charges and fees (including late fees) that may be charged by a credit card provider. Citi may be subject to regulations that may adversely impact its operation of the private label credit card program. To the extent that such limitations or regulations materially limit the availability of credit or increase the cost of credit to the cardholders or negatively impact provisions which affect our earnings associated with the private label credit card, our results of operations could be adversely affected. In addition, changes in credit card use, payment patterns, or default rates could be affected by a variety of economic, legal, social, or other factors over which we have no control and cannot predict with certainty. Such changes could also negatively impact Citi’s ability to facilitate consumer credit or increase the cost of credit to the cardholders.
The income and cash flow that the Company will receive from the new program with Citi will depend on the same factors that impacted the Wells Fargo Alliance. Any material decrease could adversely affect our operating results and cash flows.
We are subject to customer payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to potential liability and potentially disrupt our business operations.
We accept payments using a variety of methods, including cash, checks, debit cards, credit cards (including the private label credit cards), gift cards and other alternative payment channels. As a result, we are subject to rules, regulations, contractual obligations and compliance requirements, including payment network rules and operating guidelines, data security standards and certification requirements, and rules governing electronic funds transfers. The payment methods that we offer also subject us to potential fraud and theft by persons who seek to obtain unauthorized access to or exploit any weaknesses that may exist in the payment systems.
The regulatory environment related to information security and privacy is increasingly rigorous, with new and constantly changing requirements applicable to our business, and compliance with those requirements could result in additional costs or accelerate these costs. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which could increase over time and raise our operating costs. We rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, and other forms of electronic payment. If these companies become unable to provide these services to us, or if their systems are compromised, it could disrupt our business.
Risks Related to Information Technology and Information Security Risks
A significant disruption in our information technology systems and network and our inability to adequately maintain and update those systems could materially adversely affect our operations and financial condition.
Our operations are largely dependent upon the integrity, security and consistent operation of various systems and data centers, including the point-of-sale systems in the stores, our Internet website, data centers that process transactions, communication systems and various software applications used throughout our Company to order merchandise, track inventory flow, process transactions and generate performance and financial reports.
Our information technology systems are also subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, cyberattacks and ransomware attacks, usage errors by our employees and other items discussed previously in this Item 1A, catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and acts of war or terrorism. We rely on third-party service providers to provide hardware, software and services necessary to operate our information technology systems. Outages, failures, viruses, attacks, catastrophic events, acts of war or terrorism, and usage errors by third-party service providers (or their vendors) could also affect our information technology systems. If our information technology systems are damaged or cease to function properly, we may have to make a significant investment to repair or replace them, and we may of data and or in our operations in the interim, which could affect our business and operating results.
Additionally, to keep pace with changing technology (including artificial intelligence), we must continuously provide for the design and implementation of new information technology systems and enhancements of our existing
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systems. We could encounter difficulties in developing new systems or maintaining and upgrading existing systems. Such difficulties could lead to significant expenses or to losses due to disruption in our business.
Any failure to maintain the security of the information related to our Company, customers, employees and vendors or the information technology systems on which we rely for our operations could adversely affect our operations, damage our reputation, result in litigation or other legal actions against us, increase our operating costs and materially adversely affect our business and operating results.
We receive and store certain personal information about our employees and our customers, including information permitting cashless payments, both in our stores and through our online operations at dillards.com. In addition, our operations depend upon the secure transmission of confidential information over public networks. Further, our ability to supply merchandise to and operate our stores, process transactions and generate performance and financial reports are largely dependent on the security and integrity of our information technology network.
We, like other companies, face a risk of unauthorized access to devices and technology assets, as well as computer viruses, worms, bot attacks, ransomware and other destructive or disruptive software and attempts to misappropriate customer or employee information and cause system failures and disruptions. Such events can result in theft, alteration, deletion or encryption of data, or disruption of services provided by the devices and assets, as well as demands to pay a third party to regain access to encrypted files and prevent publication of stolen data. In addition, employee error, malfeasance or security lapses could result in exposure of confidential information or otherwise adversely disrupt or affect our operations. We rely on third-party service providers to provide hardware, software and services necessary to operate our information technology systems, and the same issues could occur at those third parties and have an effect on our operational technology or data. Such attacks, if , have the potential for creating a of sales, business , reputational impact, , liability to consumers, regulatory , or otherwise affect our ability to operate our business.
We have a longstanding Information Security program committed to regular risk assessment and risk mitigation practices surrounding the protection of confidential data and our information technology systems and network. Our security controls include network segmentation, firewalls, identity and access controls, endpoint protection solutions, as well as specific measures like point-to-point encryption and tokenization solutions for payment card data. We also maintain data breach preparedness plans, conduct exercises to test response plans, and employ other methods to protect our data and networks, and promote security awareness. Our Senior Management and Board of Directors exercise oversight of our security measures through various methods, including participation in response preparedness discussions and discussions regarding assessments, expenditures related to security and security controls.
It is possible that unauthorized persons might defeat our security measures, those of third-party service providers or vendors, and obtain personal information of customers, employees or others, or compromise our information technology systems. A breach, whether in our information technology systems or those of our third-party service providers or vendors, resulting in personal information being obtained by or exposed to unauthorized persons, could adversely affect our operations, results of operations, financial condition and liquidity, and could result in litigation against us or the imposition of penalties. Our reputation and our ability to attract new customers could be adversely impacted if we fail, or are perceived to have failed, to properly prevent and respond to these incidents. In addition, a security could require that we expend significant additional resources related to our information security systems and could result in a of our operations, including our online sales operations. A ransomware attack may also result in exposure to business and sales, ransom payments, costs associated with recovery of data and replacement of systems, exposure to customer and employee from disclosure of confidential information, and .
A security breach also could result in a violation attributable to the Company of applicable privacy and other laws, and subject us to litigation by private customers, business partners, or securities litigation and regulatory investigations and proceedings, any of which could result in our exposure to civil or criminal liability. The regulatory environment surrounding information security, cybersecurity, and privacy is increasingly demanding, with new and changing requirements, such as the California Consumer Privacy Act. Security breaches, cyber incidents or allegations that we used personal information in violation of applicable privacy and other laws could result in significant legal and financial exposure.
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Legal and Compliance Risks
Litigation with customers, employees and others could harm our reputation and impact operating results.
In the ordinary course of business, we may be involved in lawsuits and regulatory actions. We are impacted by trends in litigation, including, but not limited to, class-action allegations brought under various consumer protection, employment and privacy and information security laws. Additionally, we may be subject to employment-related claims alleging discrimination, harassment, wrongful termination and wage issues, including those relating to overtime compensation. We are susceptible to claims filed by customers alleging responsibility for injury suffered during a visit to a store or from product defects and to lawsuits filed by patent holders alleging patent infringement. We are also subject to filed under our employee stock ownership plan to properly manage the plan. These types of , as well as other types of lawsuits to which we are subject from time to time, can management’s attention from core business operations and impact operating results, particularly if a lawsuit results in an outcome.
Risks Related to Construction Operations
The cost-to-cost method of accounting that we use to recognize contract revenues for our construction segment may result in material adjustments, which could result in a credit or a charge against our earnings.
Our construction segment recognizes contract revenues based on the cost-to-cost method. Under this method, estimated contract revenues are measured based on the ratio of costs incurred to total estimated contract costs. Estimated contract losses are recognized in full when determined. Total contract revenues and cost estimates are reviewed and revised at a minimum on a quarterly basis as the work progresses and as change orders are approved. Adjustments are reflected in contract revenues in the period when these estimates are revised. To the extent that these adjustments result in an increase, a reduction or an elimination of previously reported contract profit, we are required to recognize a credit or a charge against current earnings, which could be material.
Risks Related to Employees
The Company depends on its ability to attract and retain quality employees, and failure to do so could adversely affect our ability to execute our business strategy and our operating results.
The Company’s business is dependent upon attracting and retaining quality employees. The Company has a large number of employees, many of whom are in positions with historically high rates of turnover. The Company’s ability to meet its labor needs while controlling the costs associated with hiring and training new employees is subject to external factors such as unemployment levels, changing demographics, prevailing wage rates and current or future minimum wage and healthcare reform legislation. In addition, as a complex enterprise operating in a highly competitive and challenging business environment, the Company is highly dependent upon management personnel to develop and effectively execute successful business strategies and tactics. Any circumstances that adversely impact the Company’s ability to attract, train, develop and retain quality employees throughout the organization could adversely affect the Company’s business and results of operations.
Increases in employee wages and the cost of employee benefits could impact the Company’s financial results and cash flows.
The Company’s expenses relating to employee wages and health benefits are significant. Increases in employee wages, including the minimum wage, or unfavorable changes in the cost of healthcare benefits could impact the Company’s financial results and cash flows. Healthcare costs have risen significantly in recent years, and recent legislative and private sector initiatives regarding healthcare reform have resulted and could continue to result in significant changes to the U.S. healthcare system. Due to the breadth and complexity of the U.S. healthcare system, and uncertainty regarding legislative or regulatory changes, the Company is not able to fully determine the impact that future healthcare reform will have on our company sponsored medical plans.
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ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 1C. CYBERSECURITY.
Risk Management and Strategy . The Company has developed an information security program to assess, identify, and manage material risks from cybersecurity threats, which is included in our overall risk management system and processes through a layered governance structure. The program includes policies and procedures that identify how security measures and controls are developed, implemented, and maintained. An internal cyber risk assessment is conducted annually. The risk assessment is used by management to consider implementing and augmenting cybersecurity controls where feasible and appropriate with the intent of mitigating cybersecurity risk exposure. The Company employs a broad array of cybersecurity tools and controls to manage exposure to cybersecurity risks.
In addition, the Company retains third-party security firms in different capacities to provide some of these controls or monitor cybersecurity threats to our technology systems. For example, third parties are used to conduct independent assessments, such as vulnerability scans and penetration testing, and to confirm PCI DSS compliance. Additionally, third parties are also used to monitor security alert systems.
The Company engages with a number of service providers in connection with normal business operations. The Company uses a variety of processes to address cybersecurity threats related to third-party service providers, including, where appropriate, pre-acquisition diligence, and imposition of contractual data security and privacy obligations. In addition, the Company is a member of an industry cybersecurity intelligence and risk sharing organization and participates in other information sharing groups and trade organizations to stay abreast of ongoing cyber risks, cyber incidents, and newly disclosed vulnerabilities and attack vectors.
The Company utilizes multiple training methodologies to ensure associate awareness of cybersecurity risks and practices. Associates are required to undergo security awareness training when hired and annually thereafter. In addition, the Company conducts tabletop exercises and other readiness exercises to enhance incident response preparedness. Disaster recovery plans have been put in place, and are tested, to prepare for potential disruptions in technology on which we rely.
The Company has an Information Technology Governance, Risk, and Compliance function to address information technology risks, including cybersecurity risks. Additionally, a working committee of management meets periodically to review, assess, and manage material risks from cybersecurity threats.
The Company has written cybersecurity incident response plans that are reviewed, and updated if necessary, at least annually. The plans identify cross-functional incident response teams which are comprised of representatives from management, including the Chief Information Security Officer (CISO) and General Counsel. The plans provide for notification to the Executive Committee of the Board of Directors and the full Board of Directors, as appropriate, of any actual or suspected significant cybersecurity incidents and require regular updates to these parties during the investigation of such incidents.
The Company is currently unaware of any risks from cybersecurity threats, including those from publicly disclosed incidents with respect to other companies, that have materially affected, or are reasonably likely to materially affect the Company , including strategies, results of operations, or financial condition.
Governance . The CISO , who reports to the Senior Director of Technology, is the management position with primary responsibility for the development, operation, and maintenance of our information security program. The CISO has been with the Company for over 40 years, is a certified CISSP, CRISC, and CIPM and oversees a team of experienced individuals.
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In addition to the working committee meetings described above, the CISO and Senior Director of Technology meet regularly with the Company’s President and with other members of senior management to review the current state of the cybersecurity program and emerging threats to the Company.
Oversight of the information security program sits with the Company’s President and ultimately with the full Board of Directors. The full Board of Directors is briefed as appropriate but not less than annually on cybersecurity risks and the Company’s efforts to mitigate exposure from those risks.
Cyber threats are constantly evolving, and those threats and the means for obtaining access to information systems are becoming increasingly sophisticated. Cyber threats can come from unauthorized access, computer hackers, computer viruses, malicious code, ransomware, phishing, organized cyber-attacks and other security problems and system disruptions. The Company faces numerous attempts to access the information stored in its information systems. If successful, cyber incidents could expose the Company to loss or misuse of confidential information, including customer information, or disruptions of business operations. In addition, third-party service providers can experience breaches of their systems and products that impact the security of the Company’s information technology systems and proprietary or confidential information. The Company (or third parties it relies on) may not be to fully, continuously, and effectively implement security controls as intended. We utilize a risk-based approach and judgment to determine the security controls to implement and it is possible we may not implement appropriate controls if we do not recognize or exposure to a particular cybersecurity risk, or if the control is not feasible or may have an impact on operations. In addition, cybersecurity controls, no matter how well designed or implemented, may only mitigate and not fully eliminate risks. Events, when detected by security tools or third parties, may not always be immediately understood or acted upon.
ITEM 2. PROPERTIES.
All of our stores are owned by us or leased from third parties. At January 31, 2026, we operated 271 stores in 30 states totaling approximately 46.0 million square feet of which we owned approximately 43.0 million square feet. Our third-party store leases typically provide for rental payments based on a percentage of net sales with a guaranteed minimum annual rent. In general, the Company pays the cost of insurance, maintenance and real estate taxes related to the leases.
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The following table summarizes by state of operation the number of retail stores we operate and the corresponding owned and leased footprint at January 31, 2026:
Partially
Owned
Owned
Building
and
Number
Owned
Leased
on Leased
Partially
Location
of Stores
Stores
Stores
Land
Leased
Alabama
Arkansas
Arizona
California
Colorado
Florida
Georgia
Iowa
Idaho
Illinois
Indiana
Kansas
Kentucky
Louisiana
Missouri
Mississippi
Montana
North Carolina
Nebraska
New Mexico
Nevada
Ohio
Oklahoma
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
Wyoming
Total
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At January 31, 2026, we operated the following additional facilities:
Owned /
Facility
Location
Square Feet
Leased
Distribution Centers:
Mabelvale, Arkansas
Owned
Gilbert, Arizona
Owned
Valdosta, Georgia
Owned
Olathe, Kansas
Owned
Salisbury, North Carolina
Owned
Ft. Worth, Texas
Owned
Internet Fulfillment Center
Maumelle, Arkansas
Owned
Dillard's Executive Offices
Little Rock, Arkansas
Owned
CDI Contractors, LLC Executive Office
Little Rock, Arkansas
Owned
CDI Storage Facilities
Maumelle, Arkansas
Owned
Total
Additional property information is contained in Notes 1, 12, 13 and 14 in the “Notes to Consolidated Financial Statements,” in Item 8 hereof.
ITEM 3. 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 March 27, 2026, neither the Company nor any of its subsidiaries is a party to, nor is any of their property the subject of, any material legal proceedings.
ITEM 4. MINE SAFETY DISCLOSURES .
Not applicable.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following table lists the names and ages of all executive officers of the Company, the nature of any family relationship between them and the Company’s CEO and all positions and offices with the Company presently held by each person named. Each is elected to serve a one-year term. There are no other persons chosen to become executive officers.
Held Present
Name
Age
Position & Office
Office Since
Family Relationship to CEO
William Dillard, II
Director; Chief Executive Officer
Not applicable
Alex Dillard
Director; President
Brother of William Dillard, II
Mike Dillard
Director; Executive Vice President
Brother of William Dillard, II
Drue Matheny
Director; Executive Vice President
Sister of William Dillard, II
William Dillard, III
Director; Senior Vice President
Son of William Dillard, II
Denise Mahaffy
Director; Senior Vice President
Sister of William Dillard, II
Chris B. Johnson
Senior Vice President; Co-Principal Financial Officer
None
Phillip R. Watts
Senior Vice President; Co-Principal Financial Officer and Principal Accounting Officer
None
Dean L. Worley
Vice President; General Counsel
None
Brant Musgrave
Vice President
None
Mike Litchford
Vice President
None
Tom Bolin
Vice President
None
Annemarie Jazic (1)
Vice President
Niece of William Dillard, II
Alexandra Lucie
Vice President
Niece of William Dillard, II
James D. Stockman
Vice President
None
Mrs. Jazic served as Vice President of Online Experience from 2017 to 2024. In 2024, she added the role of Vice President of Information Technology.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market and Dividend Information for Common Stock
The Company’s Class A Common Stock trades on the New York Stock Exchange under the Ticker Symbol “DDS”. No public market currently exists for the Company’s Class B Common Stock.
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.
Stockholders
As of February 28, 2026, there were 2,079 holders of record of the Company’s Class A Common Stock and 4 holders of record of the Company’s Class B Common Stock.
Repurchase of Common Stock
(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
or Programs
November 2, 2025 through November 29, 2025
November 30, 2025 through January 3, 2026
January 4, 2026 through January 31, 2026
Total
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”).
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 Exchange Act or through privately negotiated transactions. The May 2023 Stock Plan has no expiration date.
All repurchases of the Company’s Class A Common Stock in fiscal 2025 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 January 31, 2026, $165.2 million of authorization remained under the May 2023 Stock Plan.
Reference is made to the discussion in Note 9 in the “Notes to Consolidated Financial Statements” in Item 8 of this Annual Report, which information is incorporated by reference herein.
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Securities Authorized for Issuance under Equity Compensation Plans
The information concerning the Company’s equity compensation plans is incorporated herein by reference from Item 12 of this Annual Report under the heading “Equity Compensation Plan Information”.
Company Performance
The graph below compares the cumulative total returns on the Company’s Class A Common Stock, the Standard & Poor’s 500 Index and the Dow Jones U.S. Apparel Retailers Index for each of the last five fiscal years. The cumulative total return assumes $100 invested in the Company’s Class A Common Stock and each of the indices at market close on January 29, 2021 (the last trading day prior to the start of fiscal 2021) and assumes reinvestment of dividends.
The table below the graph shows the dollar value of the respective $100 investments, with the assumptions noted above, in each of the Company’s Class A Common Stock, the Standard & Poor’s 500 Index and the Dow Jones U.S. Apparel Retailers Index as of the last day of each of the Company’s last five fiscal years.
Dillard's, Inc.
DJ US Apparel Retailers
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .
At January 31, 2026, Dillard’s, Inc. operates 271 retail department stores spanning 30 states and an Internet store at dillards.com. The Company also operates a general contracting construction company, CDI Contractors, LLC (“CDI”), a portion of whose business includes constructing and remodeling stores for the Company, which is a reportable segment separate from our retail operations.
In accordance with the National Retail Federation fiscal reporting calendar and our bylaws, the fiscal 2025 reporting period presented and discussed below ended January 31, 2026 and contained 52 weeks. The fiscal 2024 reporting period presented and discussed below ended February 1, 2025 and contained 52 weeks. The fiscal 2023 reporting period presented and discussed below ended February 3, 2024 and contained 53 weeks. For comparability purposes, where noted, some of the information discussed below is based upon comparison of the 52 weeks ended February 1, 2025 to the 52 weeks ended February 3, 2024. Additionally, some of the information discussed below is based upon comparison of the 52 weeks ended January 27, 2024 to the 52 weeks ended January 28, 2023.
A discussion regarding results of operations and analysis of financial condition for the year ended February 1, 2025 as compared to the year ended February 3, 2024 is included in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended February 1, 2025.
EXECUTIVE OVERVIEW
Fiscal 2025
We achieved a respectable performance for fiscal year 2025, reporting net income of $570.2 million. In a rapidly changing merchandising environment characterized by unpredictable costs, we focused on maintaining gross margin performance. Our retail gross margin stood at 40.8% while sales remained unchanged (as a percentage) compared to fiscal 2024. We kept shareholder return a priority. We paid $484.9 million in dividends, highlighted by the largest special dividend in our history. Additionally, we repurchased $107.8 million of stock. Following these efforts, we held approximately $1.1 billion in cash and cash equivalents and short-term investments at year end and remained in a strong financial position.
Total retail sales for fiscal 2025 and fiscal 2024 were $6.232 billion and $6.219 billion, respectively. Total retail sales were unchanged as a percentage for fiscal 2025 compared to fiscal 2024. 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. Inventory increased 2% at January 31, 2026 compared to February 1, 2025.
Consolidated selling, general and administrative expenses (“operating 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. The increase in operating expenses is primarily due to increased payroll and payroll-related expenses.
We reported net income for fiscal 2025 of $570.2 million, or $36.42 per share, compared to $593.5 million, or $36.82 per share, for fiscal 2024. Included in net income for fiscal 2025 are the following items:
a pretax gain of $20.4 million ($15.7 million after tax or $1.00 per share) primarily related to the sale of five properties
federal and state income tax benefits of $35.0 million ($2.24 per share) due to a deduction related to that portion of the special dividend of $30.00 per share that was paid to the Dillard's, Inc. Investment and Employee Stock Ownership Plan during the year
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Included in net income for fiscal 2024 are federal and state income tax benefits of $30.8 million ($1.91 per share) due to a deduction related to that portion of the special dividend of $25.00 per share that was paid to the Dillard's, Inc. Investment and Employee Stock Ownership Plan during the year.
Cash flow from operations was $717.0 million for fiscal 2025 and $714.1 million for fiscal 2024. During fiscal 2025, we returned a record $592.6 million of cash to stockholders in the form of dividends and share repurchases. At January 31, 2026, authorization of $165.2 million remained under the share repurchase program.
At January 31, 2026, we had working capital of $1,484.5 million (including cash and cash equivalents and short-term investments totaling $1,073.0 million) and total debt outstanding of $521.7 million excluding operating lease liabilities.
Key Performance Indicators
We use a number of key indicators of financial condition and operating performance to evaluate our business, including the following:
Fiscal 2025
Fiscal 2024
Fiscal 2023
Net sales (in millions)
Gross margin (in millions)
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
Cash flow provided by operations (in millions)
Total retail store count at end of period
Retail sales per square foot
Retail stores sales trend
Comparable retail store sales trend
Retail store inventory trend
Retail merchandise inventory turnover
Based upon the 52 weeks ended February 1, 2025 and the 52 weeks ended February 3, 2024.
Based upon the 52 weeks ended January 27, 2024 and the 52 weeks ended January 28, 2023.
Trends and Uncertainties
Fluctuations in the following key trends and uncertainties may have a material effect on our operating results.
Cash flow—Cash from operating activities is a primary source of our liquidity that is adversely affected when the retail industry faces economic challenges. Furthermore, operating cash flow can be negatively affected by competitive factors.
Pricing—If our customers do not purchase our merchandise offerings in sufficient quantities, we respond by taking markdowns. If we have to reduce our retail selling prices, the gross margin on our consolidated statement of operations will correspondingly decrease, thus reducing our net income and cash flow.
Success of brand—The success of our exclusive brand merchandise as well as merchandise we source from national vendors is dependent upon customer fashion preferences and how well we can predict and anticipate trends.
Sourcing—Our store merchandise selection is dependent upon our ability to acquire appealing products from a number of sources. Our ability to attract and retain compelling vendors as well as in-house design talent, the adequacy and stable availability of materials and production facilities from which we source our
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merchandise and the speed at which we can respond to customer trends and preferences all have a significant impact on our merchandise mix and, thus, our ability to sell merchandise at profitable prices.
Store growth—Our ability to open new stores is dependent upon a number of factors, such as the identification of suitable markets and locations and the availability of shopping developments, especially in a weak economic environment. Store growth can be further hindered by mall attrition and subsequent closure of underperforming properties.
At present, a number of economic and geopolitical factors are affecting the U.S. and world economies (including countries from which we source some of our merchandise): war and other armed conflicts (including the ongoing conflict with Iran and/or Iranian sponsored actors, other conflicts in the Middle East and the ongoing conflict in Ukraine and the resulting sanctions imposed on Russia by the U.S. and other countries), fluctuating energy prices, trade restrictions (including tariffs), inflation and the continuing impact of elevated United States wages. The extent to which our business will be affected by these factors depends on our customer’s continuing ability and willingness to accept price increases. Accordingly, the related financial impact to fiscal 2026 from these factors cannot be reasonably estimated at this time.
Seasonality and Inflation
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.
The Company was affected by inflation during fiscal 2025 and 2024. Our business will likely be affected by inflation in fiscal 2026, the extent of which depends on our customers’ continuing ability and willingness to accept price increases.
General
Net sales . Net sales includes merchandise sales of comparable and non-comparable stores and revenue recognized on contracts of 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 private label credit card portfolio alliances. These alliances include the former marketing and servicing alliance with Wells Fargo Bank, N.A. (“Wells Fargo Alliance”), which terminated in September 2024, and the Company’s new long-term marketing and servicing alliance with Citibank, N.A (“Citibank Alliance”), which replaced the Wells Fargo Alliance upon its termination. Other income includes rental income, shipping and handling fees and gift card breakage.
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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), 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, net 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 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.
Critical Accounting Policies and Estimates
The Company’s significant accounting policies are also described in Note 1 in the “Notes to Consolidated Financial Statements” in Item 8 hereof. As disclosed in that note, the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) 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.
Management of the Company believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in preparation of the Company’s consolidated financial statements.
Merchandise inventory . All of the Company’s inventories are valued at the lower of cost or market using the last-in, first-out (“LIFO”) inventory method. Approximately 95% of the Company’s inventories are valued using the LIFO retail inventory method. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are calculated by applying a cost to retail ratio to the retail value of inventories. The retail inventory method is an averaging method that is widely used in the retail industry due to its practicality. Inherent in the retail inventory method calculation are certain significant management judgments including, among others, merchandise markon, markups and markdowns, which significantly impact the ending inventory valuation at cost as well as the resulting gross margins. During periods of deflation, inventory values on the first-in, first-out (“FIFO”) retail inventory method may be lower than the LIFO retail inventory method. Additionally, inventory values at LIFO cost may be in excess of net
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realizable value. At January 31, 2026 and February 1, 2025, merchandise inventories valued at LIFO, including adjustments as necessary to record inventory at the lower of cost or market, approximated the cost of such inventories using the FIFO retail inventory method. The application of the LIFO retail inventory method did not result in the recognition of any LIFO charges or credits affecting cost of sales for fiscal 2025, 2024 or 2023. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $8 million for fiscal 2025.
The Company regularly records a provision for estimated shrinkage, thereby reducing the carrying value of merchandise inventory. Complete physical inventories of the Company’s stores and warehouses are generally performed no less frequently than annually, with the recorded amount of merchandise inventory being adjusted to coincide with these physical counts. The differences between the estimated amounts of shrinkage and the actual amounts realized during the past three years have not been material.
Revenue recognition . The Company’s retail operations segment recognizes revenue upon the sale of merchandise to its customers, net of anticipated returns of merchandise. The asset and liability for sales returns are based on historical evidence of our return rate. We recorded an allowance for sales returns of $20.1 million and $21.5 million and return assets of $12.1 million and $13.0 million as of January 31, 2026 and February 1, 2025, respectively. The return asset and the allowance for sales returns are recorded in the consolidated balance sheets in other current assets and trade accounts payable and accrued expenses, respectively. Adjustments to earnings resulting from revisions to estimates on our sales return provision were not material for fiscal 2025, 2024 and 2023.
The Company’s share of income under the Citibank Alliance and the former Wells Fargo Alliance involving the Dillard’s branded private label credit cards is included as a component of service charges and other income. The Company recognized income of $39.6 million, $54.1 million and $67.2 million from the alliances in fiscal 2025, 2024 and 2023, respectively. The Company participates in the marketing of the private label credit cards, which includes the cost of customer reward programs. Through the reward programs, customers earn points that are redeemable for discounts on future purchases. The Company defers a portion of its net sales upon the sale of merchandise to its customer reward program members that is recognized in net sales when the reward is redeemed or expired at a future date.
Revenues from CDI construction contracts are generally measured based on the ratio of costs incurred to total estimated contract costs (the “cost-to-cost method”). Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations based on stand-alone selling prices. Construction contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of our contract modifications are for goods and services that are not distinct from the existing contracts; therefore, the modifications are accounted for as if they were part of the existing contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation for which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. The length of each contract varies but is typically nine to eighteen months. The progress towards completion is determined by relating the actual costs of work performed to date to the current estimated total costs of the respective contracts. Estimated contract losses are recognized in full when determined.
Construction contracts give rise to accounts receivable, contract assets and contract liabilities. We record accounts receivable based on amounts billed to 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, on the consolidated balance sheets.
Vendor allowances . The Company receives concessions from vendors through a variety of programs and arrangements, including cooperative advertising, payroll reimbursements and margin maintenance programs.
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Cooperative advertising allowances are reported as a reduction of advertising expense in the period in which the advertising occurred. We are not able to assess the impact of vendor advertising allowances on creating additional revenues, as such allowances do not directly generate revenues for our stores.
Payroll reimbursements are reported as a reduction of payroll expense in the period in which the reimbursement occurred.
Amounts of margin maintenance allowances are recorded only when an agreement has been reached with the vendor and the collection of the concession is deemed probable. All such merchandise margin maintenance allowances are recognized as a reduction of cost purchases. Under the retail inventory method, a portion of these allowances reduces cost of goods sold and a portion reduces the carrying value of merchandise inventory.
Insurance accruals . The Company’s consolidated balance sheets include liabilities with respect to claims for self-insured workers’ compensation (with a self-insured retention of $4 million per claim) and general liability (with a self-insured retention of $2 million per claim). The Company’s retentions are insured through a wholly-owned captive insurance subsidiary. The Company estimates the required liability of such claims, utilizing an actuarial method, based upon various assumptions, which include, but are not limited to, our historical loss experience, projected loss development factors, actual payroll and other data. The required liability is also subject to adjustment in the future based upon the changes in claims experience, including changes in the number of incidents (frequency) and changes in the ultimate cost per incident (severity). As of January 31, 2026 and February 1, 2025, insurance accruals of $40.3 million and $40.1 million, respectively, were recorded in trade accounts payable and accrued expenses and other liabilities. A 10% change in our self-insurance reserve would have affected net income by approximately $3 million for fiscal 2025.
Long-lived assets . The Company’s judgment regarding the existence of impairment indicators is based on market and operational performance. We assess the impairment of long-lived assets, primarily fixed assets and operating lease assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:
Significant changes in the manner of our use of assets or the strategy for the overall business;
Significant negative industry or economic trends;
A current-period operating or cash flow loss combined with a history of operating or cash flow losses; and
Store closings.
If impairment indicators are identified, the Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the fair value, the carrying value is reduced to its fair value. Various factors including future sales growth, profit margins and real estate values are included in this analysis. To the extent these future projections, the Company’s strategies or market conditions change, the conclusion regarding impairment may differ from the current estimates.
Income taxes . Temporary differences arising from differing treatment of income and expense items for tax and financial reporting purposes result in deferred tax assets and liabilities that are recorded on the balance sheet. These balances, as well as income tax expense, are determined through management’s estimations, interpretation of tax law for multiple jurisdictions and tax planning. If the Company’s actual results differ from estimated results due to changes in tax laws, changes in store locations, settlements of tax audits or tax planning, the Company’s effective tax rate and tax balances could be affected.
As such, these estimates may require adjustment in the future as additional information becomes available or as circumstances change. Changes in the Company’s assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets and statements of income.
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The total amount of unrecognized tax benefits as of January 31, 2026 was $7.5 million, of which, $6.2 million would, if recognized, affect the Company’s effective tax rate. The total amount of unrecognized tax benefits as of February 1, 2025 was $8.0 million, of which $5.8 million would, if recognized, affect the Company’s effective tax rate. The Company classifies accrued interest expense and penalties relating to income tax in the consolidated financial statements as income tax expense. The total amounts of interest and penalties were not material.
The fiscal tax years that remain subject to examination for the federal tax jurisdiction and major state tax jurisdictions are 2022 and forward. At this time, the Company does not expect the results from any income tax audit to have a material impact on the Company’s consolidated financial statements.
Pension obligations . The discount rate that the Company utilizes for determining future pension obligations is based on the FTSE Above Median Pension yield curve on its annual measurement date as of the end of each fiscal year and is matched to the future expected cash flows of the benefit plans by semi-annual periods. The discount rate decreased to 5.4% as of January 31, 2026 from 5.6% as of February 1, 2025. We believe that these assumptions have been appropriate and that, based on these assumptions, the pension liability of $314.0 million is appropriately stated as of January 31, 2026; however, actual results may differ materially from those estimated and could have a material impact on our consolidated financial statements. A 50 basis point change in the discount rate would increase or decrease the pension liability by approximately $16 million. 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.
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RESULTS OF OPERATIONS
The following table sets forth the results of operations and percentage of net sales, for the periods indicated (percentages may not foot due to rounding):
For the years ended
January 31, 2026
February 1, 2025
February 3, 2024
(in thousands of dollars)
Amount
% of Net Sales
Amount
% of Net Sales
Amount
% of Net Sales
Net sales
Service charges and other income
Cost of sales
Selling, general and administrative expenses
Depreciation and amortization
Rentals
Interest and debt (income) expense, net
Other expense
Gain on disposal of assets
Income before income taxes and equity in earnings of joint ventures
Income taxes
Equity in earnings of joint ventures
Net income
Sales
(in thousands of dollars)
Fiscal 2025
Fiscal 2024
Fiscal 2023
Net sales:
Retail operations segment
Construction segment
Total net sales
The percent change by segment and product category in the Company’s sales for the past two years is as follows:
Percent Change
Fiscal 2025 - 2024
Fiscal 2024 - 2023
Fiscal 2024 - 2023*
Retail operations segment
Cosmetics
Ladies’ apparel
Ladies’ accessories and lingerie
Juniors’ and children’s apparel
Men’s apparel and accessories
Shoes
Home and furniture
Construction segment
Based upon the 52 weeks ended February 1, 2025 and 52 weeks ended February 3, 2024.
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2025 Compared to 2024
Net sales from the retail operations segment increased $13.0 million during fiscal 2025 compared to fiscal 2024, remaining flat as a percentage in total store sales. Sales in comparable stores remained flat for fiscal 2025 compared to fiscal 2024. During the same periods, sales of ladies’ accessories and lingerie and juniors’ and children’s apparel increased moderately. Sales of cosmetics decreased slightly, while sales of home and furniture decreased moderately. Sales were essentially unchanged in all other product categories.
The number of sales transactions during fiscal 2025 decreased 4% over fiscal 2024, while the average dollars per sales transaction increased 4%.
Net sales from the construction segment decreased $22.0 million or 8.3% during fiscal 2025 compared to fiscal 2024 due to a decrease in construction activity. The remaining performance obligations related to executed construction contracts totaled $140.8 million at January 31, 2026, decreasing approximately 31% from February 1, 2025.
Exclusive Brand Merchandise
Sales penetration of exclusive brand merchandise for fiscal 2025, 2024 and 2023 was 22.3%, 22.7% and 23.5% of total net sales, respectively.
Service Charges and Other Income
(in thousands of dollars)
Fiscal 2025
Fiscal 2024
Fiscal 2023
Service charges and other income:
Retail operations segment
Income from the Citibank Alliance and former Wells Fargo Alliance
Shipping and handling income
Other
Construction segment
Total service charges and other income
Service charges and other income includes the income from the Citibank Alliance and former Wells Fargo Alliance. During the third quarter of fiscal 2024, the Company transitioned to its new agreement with Citi to provide a credit card program for Dillard’s customers, replacing the existing Wells Fargo Alliance. Income from the alliances decreased $14.5 million in fiscal 2025 compared to fiscal 2024, primarily from decreases in finance charges and late fees mainly resulting from lower average net receivables. While future cash flows under the Citibank Alliance are difficult to predict, 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 this alliance; however, there can be no assurance that these efforts will significantly impact the performance.
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Gross Margin
(in thousands of dollars)
Fiscal 2025
Fiscal 2024
Fiscal 2023
Gross margin:
Retail operations segment
Construction segment
Total gross margin
Gross margin as a percentage of segment net sales:
Retail operations segment
Construction segment
Total gross margin as a percentage of net sales
2025 Compared to 2024
Consolidated gross margin was essentially unchanged while gross margin from retail operations decreased 20 basis points of sales during fiscal 2025 compared to fiscal 2024. During fiscal 2025, gross margin decreased slightly in ladies’ apparel and men’s apparel and accessories, while gross margin increased slightly in ladies’ accessories and lingerie and shoes. Gross margin was essentially flat in all other product categories. Retail store inventory increased 2% at January 31, 2026 compared to February 1, 2025.
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.
Selling, General and Administrative Expenses (“SG&A”)
(in thousands of dollars)
Fiscal 2025
Fiscal 2024
Fiscal 2023
Retail operations segment
Construction segment
Total SG&A
SG&A as a percentage of segment net sales:
Retail operations segment
Construction segment
Total SG&A as a percentage of net sales
2025 Compared to 2024
SG&A increased $28.0 million and 50 basis points of sales during fiscal 2025 compared to fiscal 2024. The increase in SG&A during fiscal 2025 was primarily attributable to a $13.1 million increase in payroll and payroll-related expenses (increasing to $1,244.5 million for fiscal 2025 from $1,231.4 million for fiscal 2024) and an $8.7 million increase in services purchased. Inflation continues to be a concern for management, impacting many areas of our operating expenses.
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Interest and Debt (Income) Expense, Net
(in thousands of dollars)
Fiscal 2025
Fiscal 2024
Fiscal 2023
Interest and debt (income) expense, net:
Retail operations segment
Construction segment
Total interest and debt (income) expense, net
2025 Compared to 2024
Net interest and debt (income) expense decreased $7.5 million in fiscal 2025 compared to fiscal 2024 primarily due to a decrease in interest income, mainly from lower interest rates, and capitalized interest. Interest income was $47.2 million and $53.6 million in fiscal 2025 and fiscal 2024, respectively.
Other Expense
(in thousands of dollars)
Fiscal 2025
Fiscal 2024
Fiscal 2023
Other expense:
Retail operations segment
Construction segment
Total other expense
2025 Compared to 2024
Other expense decreased $3.8 million in fiscal 2025 compared to fiscal 2024 primarily due to a decrease in the amortization of the net actuarial loss related to the Company’s pension plan.
Gain on Disposal of Assets
(in thousands of dollars)
Fiscal 2025
Fiscal 2024
Fiscal 2023
Gain on disposal of assets:
Retail operations segment
Construction segment
Total gain on disposal of assets
Fiscal 2025
During fiscal 2025, the Company received proceeds of $25.7 million primarily from the sale of five properties, resulting in a gain of $20.4 million that was recorded in gain on disposal of assets.
Income Taxes
The Company’s estimated federal and state effective income tax rate was 17.9% in fiscal 2025, 18.7% in fiscal 2024 and 19.4% in fiscal 2023. The Company expects the fiscal 2026 federal and state effective income tax rate to approximate 23%.
Fiscal 2025
During fiscal 2025, income taxes included federal and state tax benefits of $35.0 million due to the deduction related to that portion of the special dividend of $30.00 per share that was paid to the Dillard’s, Inc. Investment and Employee Stock Ownership Plan on January 5, 2026.
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On July 4, 2025, H.R.1 – One Big Beautiful Bill Act (Public Law No. 119-21) was signed into law. Notable provisions include restoration of 100% bonus depreciation, full expensing of domestic research expenditures, and modifications to interest expense limitations and charitable contribution deduction thresholds. Accounting Standards Codification §740, Accounting for Income Taxes , requires recognition of the effects of changes in tax law during the period of enactment. The effects of these provisions did not have, and are not expected to have, a material impact on the Company’s financial results.
Fiscal 2024
During fiscal 2024, income taxes included federal and state tax benefits of $30.8 million due to the deduction related to that portion of the special dividend of $25.00 per share that was paid to the Dillard’s, Inc. Investment and Employee Stock Ownership Plan on January 6, 2025.
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LIQUIDITY AND CAPITAL RESOURCES
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.
Cash flows for the Company’s most recent three fiscal years were as follows:
Dollar Change
(in thousands of dollars)
Fiscal 2025
Fiscal 2024
Fiscal 2023
Operating activities
Investing activities
Financing activities
Total Increase (Decrease) in Cash and Cash Equivalents
Operating Activities
The primary source of the Company’s liquidity is, and historically has been, cash flows from operations. Due to the seasonality of the Company’s business, we have historically realized a significant portion of the cash flows from operating activities during the second half of the fiscal year. Retail operations sales are the key operating cash component, providing 94.9%, 94.4% and 94.3% of total revenues in fiscal 2025, 2024 and 2023, respectively.
Net cash flows from operations increased $2.9 million during fiscal 2025 compared to fiscal 2024.
Operating cash inflows also include the Company’s income from the Citibank Alliance, former Wells Fargo Alliance and cash distributions from joint ventures (excluding returns of investments), if any. Operating cash outflows include net payments to vendors for inventory, services and supplies, payments to employees and payments of interest and taxes.
Wells Fargo Bank, N.A. (“Wells Fargo”) previously owned and managed Dillard’s private label credit cards, including credit cards co-branded with American Express under a long-term marketing and servicing alliance (“Wells Fargo Alliance”). In January 2024, the Company announced that it entered into a new agreement with Citibank, N.A. (“Citi”) to provide the private label credit card program for Dillard’s customers under a new alliance (“Citibank Alliance”), replacing the existing credit card program under the Wells Fargo Alliance upon its termination in September 2024. The new program launched on August 19, 2024 for new Dillard’s credit applicants. Existing accounts transferred from Wells Fargo to Citi on September 16, 2024. The term of the new Citi agreement 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 establishes, owns and manages Dillard’s private label credit cards, including a new co-branded Mastercard Incorporated card (“Mastercard,” collectively, the “private label cards”). The new co-branded Mastercard replaced the previous co-branded card. 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 $39.6 million, $54.1 million and $67.2 million from the Citibank Alliance and the former Wells Fargo Alliance during fiscal 2025, 2024 and 2023, respectively.
While future cash flows under the Citibank Alliance are difficult to predict, the Company and Citi remain focused on collaborative strategies to enhance customer awareness and acceptance of the program’s product offerings in an effort
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to improve the financial performance of this alliance; however, there can be no assurance that these efforts will significantly impact the performance. Any material decrease could adversely affect our operating results and cash flows.
At January 31, 2026, the Company had purchase obligations of $1,254.8 million outstanding for merchandise and store construction commitments, all of which are expected to be paid during fiscal 2026.
Investing Activities
Cash inflows from investing activities generally include proceeds from sales of property and equipment and maturities of short-term investments. Cash outflows from investing activities generally include payments for capital expenditures such as property and equipment and other investments.
Cash from investing activities increased $292.3 million during fiscal 2025 compared to fiscal 2024 primarily due to a net decrease in short-term investments.
Capital expenditures decreased $11.2 million for fiscal 2025 compared to fiscal 2024. There were no new locations opened during fiscal 2025. During fiscal 2024, the Company opened a new location at The Empire Mall in Sioux Falls, South Dakota (140,000 square feet) marking its 30 th state of operation.
During fiscal 2025, the Company closed its location at The Shops at Willow Bend in Plano, Texas (240,000 square feet). There were no material costs associated or expected with this store closure. We remain committed to closing stores where appropriate and may incur future closing costs related to such stores when they close.
During fiscal 2025, 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: (1) a 240,000 square foot location at The Shops at Willow Bend in Plano, Texas, (2) a 150,000 square foot non-operating location at Crossroads Center in Waterloo, Iowa, (3) a non-operating building at Towne West Square in Wichita, Kansas, (4) a non-operating building at Golden Triangle Mall in Denton, Texas, and (5) a parcel of land at Rivergate Mall in Goodlettsville, Tennessee.
During fiscal 2024, the Company also closed (1) its Eastwood Mall Clearance Center in Niles, Ohio (120,000 square feet) and (2) its leased facility at Stones River Town Centre in Murfreesboro, Tennessee (145,000 square feet).
During fiscal 2025 and 2024, the Company purchased certain treasury bills for $534.6 million and $696.7 million, respectively, that are classified as short-term investments. During fiscal 2025 and 2024, the Company received proceeds of $657.6 million and $530.9 million, respectively, related to maturities of its short-term investments.
During fiscal 2025, the Company contributed $34.3 million to its mall joint ventures, recording the investments in other assets on the Company’s consolidated balance sheet.
Financing Activities
Our primary source of cash inflows from financing activities is generally borrowings from our $800 million senior secured revolving credit facility. Financing cash outflows generally include the repayment of borrowings under the revolving credit facility, the repayment of long-term debt, the payment of dividends and the purchase of treasury stock.
Cash used in financing activities increased to $595.9 million in fiscal 2025 from $534.8 million in fiscal 2024 due to increase in cash dividends paid during 2025.
Stock Repurchase . In February 2022, the Company’s Board of Directors authorized the Company to repurchase up to $500 million of the Company’s Class A Common Stock under an open-ended plan (“February 2022 Stock Plan”). In May 2023, the Company’s Board of Directors authorized the Company to repurchase up to $500 million of the Company’s Class A Common Stock under an open-ended plan (“May 2023 Stock Plan”). As of January 31, 2026, the Company had completed the authorized purchases under the February 2022 Stock Plan, and $165.2 million of authorization remained under the May 2023 Stock Plan.
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During fiscal 2025, 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. During fiscal 2024, the Company repurchased 0.3 million shares of Class A Common Stock for $121.0 million at an average price of $367.33 per share. The ultimate disposition of the repurchased stock has not been determined.
On August 16, 2022, the Inflation Reduction Act of 2022 ("the Act") was signed into law. Under the Act share repurchases after December 31, 2022 are subject to a 1% excise tax. At January 31, 2026, the Company had accrued $1.0 million of excise tax related to its share repurchase program.
Revolving Credit Agreement . The Company maintains a revolving 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 June 2023, the Company amended the credit agreement (the "2023 amendment") to reflect the changes necessary for the phaseout of LIBOR. Pursuant to the 2023 amendment, borrowings under the credit agreement bore interest, at our option, at a rate per annum equal to (1) the then alternative base rate plus the applicable rate or (2) adjusted term or daily simple SOFR, in each case plus 0.10% per annum, plus the applicable rate. The applicable rate was defined as (A) (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 greater than or equal to 50% of the total commitments and (B) (x) 1.75% per annum in the case of term benchmark and RFR loans and (y) 0.75% per annum in the case of base rate loans when average quarterly availability is less than 50% of the total commitments. The commitment fee for unused borrowings was 0.30% per annum if average borrowings were less than 35% of the total commitments and 0.25% per annum if average borrowings were greater than or equal to 35% of the total commitments. The credit agreement, as amended by the 2023 amendment, was scheduled to mature on April 28, 2026.
In March 2025, the Company amended and extended its revolving credit facility (the "2025 amendment") replacing the Company's previous amended credit agreement. The Company paid $3.3 million in issuance costs related to the 2025 amendment which was recorded in other assets on the consolidated balance sheet. 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 also reduced the unused commitment fee to (A) 0.25% per annum when the average amount utilized is less than 50% of the total commitment and (B) 0.20% per annum when the average amount utilized is greater than or equal to 50% of the total commitment. The facility was arranged by JPMorgan Chase Bank, N.A. The credit agreement, as amended by the 2025 amendment, matures March 12, 2030.
No borrowings under the credit agreement were outstanding at January 31, 2026. Letters of credit totaling $25.3 million were issued under the credit agreement leaving unutilized availability under the facility of $774.7 million at January 31, 2026. The Company had no borrowings during fiscal 2025, 2024 and 2023.
Long-term Debt . At January 31, 2026, the Company had $321.7 million of long-term debt, including current portion, comprised of unsecured notes. The unsecured notes bear interest at rates ranging from 7.000% to 7.750% with due dates from fiscal 2026 through fiscal 2028.
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Long-term debt maturities over the next five years are (in millions):
Fiscal Year
Long-Term Debt
Maturities
During fiscal 2026, the Company expects to accrue interest expense of $19.7 million on its long-term debt.
Subordinated Debentures . As of January 31, 2026, the Company had $200 million outstanding of its 7.5% subordinated debentures due August 1, 2038. All of these subordinated debentures were held by Dillard’s Capital Trust I, a 100% owned, unconsolidated finance subsidiary of the Company. The Company has the right to defer the payment of interest on the subordinated debentures at any time for a period not to exceed 20 consecutive quarters; however, the Company has no present intention of exercising this right to defer interest payments.
During fiscal 2026, the Company expects to accrue interest expense of $15.0 million on its subordinated debentures.
Dividends . During fiscal 2025 and 2024, in addition to our typical quarterly dividends, the Board of Directors declared a special dividend of $30.00 per share and $25.00 per share, respectively, that was paid on the Class A Common Stock and Class B Common Stock of the Company.
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 our revolving 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.
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.
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COMMERCIAL COMMITMENTS
AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
(in thousands of dollars)
Total Amounts
After
Other Commercial Commitments
Committed
Within 1 year
2 - 3 years
4 - 5 years
5 years
$800 million line of credit, none outstanding (1)
Standby letters of credit
Import letters of credit
Total commercial commitments
At January 31, 2026, letters of credit totaling $25.3 million were issued under the credit agreement.
NEW ACCOUNTING PRONOUNCEMENTS
For information with respect to new accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 1 in the “Notes to Consolidated Financial Statements” in Item 8 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 those statements included under the heading “Outlook” included in this Management’s Discussion and Analysis and other statements regarding management’s expectations and forecasts for the remainder of fiscal 2026 and beyond, statements regarding future income and cash flows from the Citibank Alliance, statements concerning the opening of new stores or the closing of existing stores, statements concerning capital expenditures and sources of liquidity, statements concerning share repurchases, statements concerning pension contributions, statements concerning changes in loss trends, settlements and other costs related to our self-insurance programs, statements concerning expectations regarding the payment of dividends, statements regarding the impacts of inflation, wages, trade restrictions, including tariffs, and the effectiveness of our ongoing initiatives to manage such costs, statements regarding expense management and statements concerning estimated taxes. The Company 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 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 ) general retail industry conditions and macro-economic conditions including inflation, economic 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 and an intense competition for talent; changes in consumer spending patterns, debt levels and their ability to meet credit obligations; high levels of ; changes in tax legislation; trade and changes in trade policies including the imposition (or ) of new or increased duties, taxes, tariffs and other charges impacting our products or supply chain; changes in legislation and governmental regulations; adequate and 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 or data security ; to effectively utilize in technology, including artificial intelligence; possible future acquisitions of store properties from other
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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 this Annual Report on Form 10-K.
