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DILLARD'S, INC. (DDS)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 was mixed: revenue declined year over year and margins compressed, while expenses were well controlled; EPS fell to $13.48 from $15.44 as retail gross margin contracted to 36.1% and consolidated gross margin to 34.9% .
  • Sales softness (-1% retail comps) and a 7% inventory increase weighed on profitability; management highlighted expense discipline but acknowledged margin pressure as the key headwind .
  • 2025 guidance items updated: capex raised to $120M (from $100M in Q3), interest and debt (income) expense outlook to $(8)M (from $(7)M); D&A $180M and rentals $20M maintained .
  • Catalyst for stock reaction: margin compression vs the continued SG&A control, higher capex plan for 2025, and tax-related EPS tailwinds tied to the ESOP dividend deduction that are non-operational in nature .

What Went Well and What Went Wrong

  • What Went Well

    • Expense control: SG&A held at 22.4% of sales; operating expenses fell ~$24.7M YoY primarily due to last year’s 53rd week, with continued focus on expense management .
    • Category strength: Home & furniture and cosmetics outperformed within Q4 retail sales mix .
    • Capital return flexibility intact: Repurchased ~$14.0M (≈36K shares at $391.04) with $273.0M still authorized at quarter-end .

  • What Went Wrong

    • Top-line and comps: Total retail sales decreased 1% and comparable store sales decreased 1% for the quarter .
    • Margin pressure: Retail gross margin fell to 36.1% from 37.7%; consolidated gross margin to 34.9% from 36.6% .
    • Inventory build: Ending inventory rose 7% YoY, elevating risk to near-term margin if demand slows .

Financial Results

MetricQ4 2024 (14 wks)Q3 2025 (13 wks)Q4 2025 (13 wks)
Net Sales ($USD Billions)$2.124 $1.469 $2.017
Total Retail Sales ($USD Billions)$2.057 $1.401 $1.943
Diluted EPS ($)$15.44 $8.31 $13.48
Consolidated Gross Margin (%)36.6% 43.4% 34.9%
Retail Gross Margin (%)37.7% 45.3% 36.1%
SG&A (% of Sales)22.4% 30.0% 22.4%
Income Before Taxes Margin (%)13.3% 11.5% 11.7%

Notes:

  • Q4 2025 EPS includes $30.8M ($1.94/sh) tax benefit from ESOP special dividend deduction; Q4 2024 included $26.1M ($1.61/sh) and a $7.3M ($0.45/sh) tax valuation allowance benefit .
  • Stronger categories: home & furniture, cosmetics; weaker: men’s apparel & accessories, shoes .

Segment-level view (reported):

  • Net Sales (includes CDI Contractors) vs Total Retail Sales (excludes CDI) are shown above; company does not separately disclose CDI contribution in the press release .

KPIs

KPIQ4 2024Q3 2025Q4 2025
Comparable Store Sales YoYn/a disclosed for Q4 2024 in PR+3% -1%
Ending Inventory YoYn/a+2% +7%
Stores272 272 272
Share Repurchasesn/a$107.8M YTD through Q3 $14.0M in Q4; $273.0M authorization remaining

Guidance Changes

MetricPeriodPrevious Guidance (as of Q3 2025)Current Guidance (as of Q4 2025)Change
Depreciation & Amortization ($M)FY 2025 (ending Jan 31, 2026)$180 $180 Maintained
Rentals ($M)FY 2025$20 $20 Maintained
Interest and debt (income) expense, net ($M)FY 2025$(7) $(8) Raised income (more net income/less expense)
Capital Expenditures ($M)FY 2025$100 $120 Raised

Other capital return:

  • Regular cash dividend declared $0.25/sh, payable May 5, 2025 (record date March 31, 2025) .

Earnings Call Themes & Trends

Note: A Q4 2025 earnings call transcript was not available in the document set; commentary below reflects reported press releases.

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
Sales trend/CompsRetail sales +1%; comps +1%; July strengthening noted Retail sales +3%; comps +3% Retail comps -1% Softening into holiday quarter
Gross marginRetail GM 38.1% (down YoY); weakness in ladies’ apparel; shoes up Retail GM 45.3% (up YoY) Retail GM 36.1% (down YoY); significant declines in home & furniture and ladies’ apparel Compression vs Q3
SG&A discipline28.7% of sales; payroll savings noted 30.0% of sales; payroll-driven increase 22.4% of sales; expense control emphasized Improved leverage seasonally
Inventory+2% YoY +2% YoY +7% YoY Rising
Capex outlookFY25 est. $120M (Q2 table) Management table showed $100M at Q3 Raised to $120M at Q4 Higher investment plan
Capital return$107.8M repurchased in 26 weeks YTD $107.8M repurchased YTD; $165.2M remaining $14.0M repurchased in Q4; $273.0M remaining authorization at FY-end Ongoing buybacks

Management Commentary

  • “With sales down 1%, we worked on controlling expenses but lost some steam in gross margin.” — William T. Dillard, II, CEO (Q4 release) .
  • “We were happy to see sales strength continue through the third quarter, ending up 3%.” — William T. Dillard, II (Q3 release) .
  • “We were happy to achieve a sales increase for the first time in a while and encouraged by strengthening sales trends in July. ... we focused on controlling inventory, ending up 2% compared to 6% at the end of first quarter.” — William T. Dillard, II (Q2 release) .

Q&A Highlights

  • An earnings call transcript for Q4 2025 was not available in the document set; therefore, Q&A themes and any clarifications provided during live remarks could not be reviewed [Search conducted; no transcript found].

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2025 EPS and revenue was unavailable due to a data access limit at query time, so we cannot explicitly score beats/misses versus consensus today. Values retrieved from S&P Global were unavailable at time of request (request limit exceeded).
  • Given the YoY pressure on consolidated and retail gross margin and negative comps, estimate revisions may skew lower on margin expectations and potentially SG&A leverage, while higher FY25 capex may trim free cash flow estimates at the margin .

Additional Detail and Cross-References

  • Tax items affecting comparability: Q4 2025 includes $30.8M ($1.94/sh) tax benefit from ESOP-related special dividend deduction; Q4 2024 included $26.1M ($1.61/sh) and $7.3M ($0.45/sh) tax benefits (valuation allowance release) .
  • Balance sheet/capital allocation: Cash & equivalents $717.9M at FY-end; short-term investments $325.7M; LT debt $321.6M; sub debentures $200.0M; equity $1,796.2M . Repurchases of ~$14.0M in Q4; $273.0M authorization remaining .
  • Store base: 272 stores including 28 clearance centers; 46.3M square feet .

Key Takeaways for Investors

  • Margin deterioration was the focal negative: retail GM down 160 bps YoY and consolidated GM down 170 bps despite expense discipline; this is likely to dominate near-term narrative .
  • Comps turned negative (-1%) into the holiday quarter and inventory rose 7% YoY; risk to markdowns and near-term GM if sell-through lags persists .
  • 2025 capex plan was raised to $120M from $100M at Q3, implying stepped-up investment despite margin pressure; interest and debt (income) expense outlook moved to $(8)M, modestly supportive to net income .
  • Ongoing buybacks and sizable remaining authorization provide downside support, but are unlikely to fully offset operating softness if margin pressure continues .
  • Non-operational tax benefits aided EPS this quarter; investors should normalize for these items when assessing underlying run-rate earnings power .
  • Near-term trading: watch inventory clearance cadence and full-price sell-through in early FY25; medium-term thesis hinges on stabilizing comps and re-expanding retail GM while maintaining SG&A discipline .