Executive Summary

Q2 2026 delivered modest top-line growth with comparable store sales up 1% and total retail sales up 1%; EPS of $4.66 rose slightly year over year despite gross margin pressure, aided by a $4.8M pretax gain on property sales .
Revenue (net sales plus service charges) was $1.536B, a slight beat versus Wall Street consensus of $1.524B*, and EPS of $4.66 significantly exceeded the $3.30* consensus; estimate breadth was limited (EPS: 1 estimate; revenue: 2 estimates)* . Values retrieved from S&P Global.
Retail gross margin contracted 100 bps YoY to 38.1% (consolidated GM -100 bps to 36.6%), with category mix headwinds in ladies’ apparel offset by improvements in shoes and accessories; SG&A leveraged 40 bps YoY to 28.7% of sales .
Management highlighted improving sales momentum in July and tighter inventory control (ending inventory +2% YoY vs +6% at Q1), pointing to disciplined execution heading into holiday .
Catalysts: continued sales strength into Q3 (reported subsequently at +3% comps), inventory discipline, and a cash dividend of $0.30 payable Nov 3, 2025, supporting shareholder returns .

What Went Well and What Went Wrong

What Went Well

Comparable store sales increased 1% and total retail sales rose 1%; CEO noted “strengthening sales trends in July,” indicating momentum late in the quarter .
SG&A ratio improved to 28.7% from 29.1%, reflecting cost control and payroll savings; EPS held at $4.66 versus $4.59 in the prior year despite margin pressure .
Category strength in juniors’ and children’s apparel and ladies’ accessories/lingerie; retail gross margin improved moderately in shoes and slightly in accessories/lingerie .

What Went Wrong

Retail gross margin fell 100 bps YoY (38.1% vs 39.1%) and consolidated GM fell 100 bps (36.6% vs 37.6%), driven notably by a significant margin decline in ladies’ apparel .
Service charges and other income declined to $22.2M from $24.7M YoY, modestly pressuring total revenue metrics .
Inventory increased 2% YoY, still elevated versus the +6% in Q1; while improved, it underscores ongoing merchandising balance efforts .

Financial Results

Metric	Q2 2025 (Aug 3, 2024)	Q1 2026 (May 3, 2025)	Q2 2026 (Aug 2, 2025)
Net Sales ($USD Billions)	$1.490	$1.529	$1.514
Total Revenue (Net Sales + Service Charges) ($USD Billions)	$1.515	$1.547	$1.536
EPS ($USD)	$4.59	$10.39	$4.66
Net Income ($USD Millions)	$74.5	$163.8	$72.8
Consolidated Gross Margin %	37.6%	43.9%	36.6%
Retail Gross Margin %	39.1%	45.5%	38.1%
SG&A ($USD Millions)	$433.6	$421.7	$434.2
SG&A % of Sales	29.1%	27.6%	28.7%
Service Charges & Other Income ($USD Millions)	$24.7	$18.1	$22.2

Sales Mix	Q2 2025	Q1 2026	Q2 2026
Total Retail Sales ($USD Billions)	$1.426	$1.468	$1.447
Net Sales ($USD Billions)	$1.490	$1.529	$1.514

KPIs	Q2 2025	Q1 2026	Q2 2026
Comparable Store Sales YoY	+1%	-1%	+1%
Inventory YoY	n/a	+6%	+2%
Share Repurchases ($USD Millions; shares; avg price)	n/a	$98.0; ~276,000; $355.65	$9.8; ~24,500; $398.67
Store Count	272	272	272

Actual vs Estimates (Q2 2026)	Actual	Consensus*	Surprise
Revenue ($USD Billions)	$1.536	$1.524*	Beat
EPS ($USD)	$4.66	$3.30*	Beat
EPS – # of Estimates	—	1*	—
Revenue – # of Estimates	—	2*	—
Values retrieved from S&P Global.

Drivers/notes:

EPS includes a pretax gain of $4.8M ($0.24 per share after tax) from the sale of three properties .
Category margin pressure in ladies’ apparel weighed on retail gross margin, partially offset by shoes and accessories .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Depreciation & Amortization ($M)	FY2025 (52 weeks ending Jan 31, 2026)	$180	$180	Maintained
Rentals ($M)	FY2025	$20	$20	Maintained
Interest and Debt (Income) Expense, net ($M)	FY2025	$(8)	$(7)	Lower income (reduced)
Capital Expenditures ($M)	FY2025	$120	$100	Lowered
Dividend per Share ($)	Q4 calendar 2025 (payable Nov 3, 2025)	$0.25 (prior declared Feb 27)	$0.30	Raised

Earnings Call Themes & Trends

Note: A Q2 2026 earnings call transcript was not available in our document set or via our search, so this section references management commentary from press releases instead.

Topic	Previous Mentions (Q2 2025 and Q1 2026)	Current Period (Q2 2026)	Trend
Sales Momentum	Q1: “Relatively good first quarter… prevailing economic uncertainty”; comps -1% . Q2 2025: comps +1% .	“Strengthening sales trends in July”; comps +1% .	Improving through summer; continued into Q3 (+3% comps)
Inventory Discipline	Q1: Ending inventory +6% YoY .	Ending inventory +2% YoY; “focused on controlling inventory” .	Improving control
Margin Mix	Q1: Retail GM 45.5%; weakness across most categories, esp. ladies’ apparel .	Retail GM 38.1%; margin down sharply in ladies’ apparel; strength in shoes/accessories .	Pressure in ladies’ apparel persists
Cost Management (SG&A)	Q1 SG&A $421.7M (27.6%) with payroll savings .	Q2 SG&A $434.2M (28.7%); payroll savings offset by other expenses .	SG&A leverage YoY; $ up slightly
Shareholder Returns	Q1: $98M buybacks .	Q2: $9.8M buybacks; Dividend raised to $0.30 (post-quarter) .	Continued buybacks; dividend increase
Store/Brand Initiatives	Pandora expansion milestones (100th Dillard’s location) .	Ongoing brand partnerships and store footprint focus .	Enhancing premium accessories

Management Commentary

“We were happy to achieve a sales increase for the first time in a while and encouraged by strengthening sales trends in July. In an operating environment that changes daily, we focused on controlling inventory, ending up 2% compared to 6% at the end of first quarter.” — William T. Dillard, II (CEO) .
“We turned in a relatively good first quarter in light of the prevailing economic uncertainty. We kept expenses under control and reported a healthy gross margin. After repurchasing $98 million in stock, we had $1.2 billion in cash and short-term investments remaining.” — William T. Dillard, II (CEO) .
“We were happy to see sales strength continue through the third quarter, ending up 3%. We look forward to seeing and serving our customers this holiday season.” — William T. Dillard, II (CEO) .

Q&A Highlights

The Q2 2026 earnings call transcript was not available in our repository or via our search; therefore, Q&A specifics and any intra-quarter guidance clarifications could not be reviewed.

Estimates Context

Revenue came in at $1.536B vs consensus of $1.524B*; EPS of $4.66 vs $3.30* consensus, reflecting an across-the-board beat despite fewer estimates underpinning the consensus (EPS: 1 estimate; revenue: 2 estimates)* . Values retrieved from S&P Global.
Estimate revisions likely focus on: sustained comps improvement (+1% Q2, then +3% in Q3), SG&A discipline (28.7% in Q2), and category margin mix headwinds in ladies’ apparel; capex guidance reduced to $100M in Q3 may support FCF expectations .

Key Takeaways for Investors

Solid execution: modest sales growth and EPS outperformance against consensus despite margin pressure; SG&A leverage helped absorb category mix headwinds .
Inventory trajectory improved to +2% YoY (from +6% in Q1), supporting better in-season flexibility and potentially fewer markdowns into holiday .
Margin watch: ladies’ apparel margin weakness is the primary drag; continued strength in shoes and accessories partially offsets .
Shareholder returns: ongoing buybacks and a raised dividend ($0.30 payable Nov 3) bolster capital return narrative .
Guidance discipline: capex trimmed to $100M in Q3, signaling tighter investment spending and potential FCF preservation .
Near-term trading: evidence of improving sales trends (late Q2, then Q3 comps +3%) is a positive momentum signal; monitor holiday conversion vs margin mix risk .
Medium-term thesis: normalized margins vs pandemic-era highs, disciplined SG&A and inventory management, selective brand partnerships (e.g., Pandora) to drive traffic and accessories mix .

DILLARD'S, INC. (DDS)·Q2 2026 Earnings Summary