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DDS Q1 earnings jumped 54.4% as sales rose 2.6% and comparable-store sales increased 3%.
Dillard's gross margin improved to 44.5% as all merchandise categories posted year-over-year gains.
DDS operating cash flow climbed to $364M as the company raised fiscal 2026 capital spending plans.
Dillard's Inc. (DDS - Free Report) posted first-quarter fiscal 2026 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Also, the company’s sales and earnings increased year over year. Results reflected higher store productivity, with comparable store sales (comps) increasing 3% and management pointing to newness in the merchandise assortment as a key catalyst for demand. Our model had anticipated comps to rise 1.2% for the first quarter.
The company reported first-quarter fiscal 2026 earnings of $16.04 per share, which grew 54.4% from $10.39 in the year-ago quarter and beat the Zacks Consensus Estimate of $10.13. Net sales rose 2.6% year over year to $1.57 billion and surpassed the consensus mark of $1.54 billion. Dillard’s recorded a pre-tax gain of $104.1 million, net of legal fees, associated with the settlement of a long-standing lawsuit related to payment card interchange fees.
Retail sales improved 3% year over year, with the company noting that all merchandise categories posted gains compared with the prior-year period. The strongest momentum was seen in home and furniture, ladies’ accessories and lingerie, and shoes, while sales in men’s apparel and accessories, juniors’ and children’s apparel and ladies’ apparel rose moderately. Sales in cosmetics grew slightly in the quarter.
During the quarter, Dillard’s introduced a 160,000-square-foot location at The Mall at Fairfield Commons in Beavercreek, OH, expanding its presence in that market. Overall, the company operated 272 Dillard’s stores, including 28 clearance centers, across 30 states.
Profitability improved on the merchandise side, with consolidated gross margin rising 60 basis points (bps) to 44.5% from 43.9% in the year-ago period. The retail gross margin rate increased 30 bps to 45.8% from 45.5%, signaling modest improvement in merchandise margin and pricing dynamics. We anticipated a 60-bps contraction in consolidated gross margin.
By category, Dillard’s indicated that retail gross margin rose moderately in shoes and slightly in ladies’ accessories and lingerie. Margin rates were unchanged in juniors’ and children’s apparel, cosmetics, and men’s apparel and accessories, while ladies’ apparel and home and furniture posted slight to moderate declines.
Consolidated selling, general and administrative expenses (operating expenses) were $444 million, rising 5.3% from $421.7 million in the prior-year quarter, with the increase largely attributed to higher payroll and payroll-related expenses. As a percentage of sales, operating expenses rose 70 bps to 28.3% compared with 27.6% a year ago. We had expected a 150-bps increase in operating expenses, as a percentage of sales.
Dillard’s Financial Details
Dillard’s ended the quarter with cash and cash equivalents of $1.16 billion, up from $900.5 million a year ago, while short-term investments were essentially flat at $259.7 million. Merchandise inventories increased to $1.51 billion from $1.47 billion, consistent with management’s comment that ending inventory was up 3%.
On the liability side, the company carried $96 million in current maturities of long-term debt and $225.7 million in long-term debt. Stockholders’ equity increased to $2.03 billion from $1.86 billion a year ago.
Cash generation strengthened during the quarter. Net cash provided by operating activities rose to $364 million from $232.6 million in the prior-year period.
Dillard’s Outlook for FY26
Looking ahead, Dillard’s reiterated its fiscal 2026 outlook. The company still expects depreciation and amortization of $175 million, rentals of $18 million, and net interest and debt income of $5 million for the 52-week period ending Jan. 30, 2027. Capital expenditures are projected at $130 million, up from $93 million in the prior year.
Shares of the Zacks Rank #3 (Hold) company have lost 17.6% in the past three months compared with the industry's 5.1% decline.
LEVI delivered a trailing four-quarter earnings surprise of 9.8%, on average. The Zacks Consensus Estimate for Levi Strauss’ current financial-year sales indicates growth of 10.3% from the year-ago number.
Kohl's Corporation (KSS - Free Report) , which is a department store chain, currently carries a Zacks Rank of 2.
KSS delivered a trailing four-quarter earnings surprise of 72.3%, on average. The Zacks Consensus Estimate for KSS’ current financial-year sales indicates a drop of 1% from the year-ago number.
American Eagle Outfitters (AEO - Free Report) , which is a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for AEO’s current financial-year sales is expected to rise 5.1% from the corresponding year-ago reported figure. AEO delivered a trailing four-quarter earnings surprise of 37.6%, on average.
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Dillard's Q1 Earnings & Sales Beat Estimates, Retail Sales Up 3%
Key Takeaways
Dillard's Inc. (DDS - Free Report) posted first-quarter fiscal 2026 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Also, the company’s sales and earnings increased year over year. Results reflected higher store productivity, with comparable store sales (comps) increasing 3% and management pointing to newness in the merchandise assortment as a key catalyst for demand. Our model had anticipated comps to rise 1.2% for the first quarter.
The company reported first-quarter fiscal 2026 earnings of $16.04 per share, which grew 54.4% from $10.39 in the year-ago quarter and beat the Zacks Consensus Estimate of $10.13. Net sales rose 2.6% year over year to $1.57 billion and surpassed the consensus mark of $1.54 billion. Dillard’s recorded a pre-tax gain of $104.1 million, net of legal fees, associated with the settlement of a long-standing lawsuit related to payment card interchange fees.
Retail sales improved 3% year over year, with the company noting that all merchandise categories posted gains compared with the prior-year period. The strongest momentum was seen in home and furniture, ladies’ accessories and lingerie, and shoes, while sales in men’s apparel and accessories, juniors’ and children’s apparel and ladies’ apparel rose moderately. Sales in cosmetics grew slightly in the quarter.
During the quarter, Dillard’s introduced a 160,000-square-foot location at The Mall at Fairfield Commons in Beavercreek, OH, expanding its presence in that market. Overall, the company operated 272 Dillard’s stores, including 28 clearance centers, across 30 states.
Dillard's, Inc. Price, Consensus and EPS Surprise
Dillard's, Inc. price-consensus-eps-surprise-chart | Dillard's, Inc. Quote
DDS’ Margins and Expenses
Profitability improved on the merchandise side, with consolidated gross margin rising 60 basis points (bps) to 44.5% from 43.9% in the year-ago period. The retail gross margin rate increased 30 bps to 45.8% from 45.5%, signaling modest improvement in merchandise margin and pricing dynamics. We anticipated a 60-bps contraction in consolidated gross margin.
By category, Dillard’s indicated that retail gross margin rose moderately in shoes and slightly in ladies’ accessories and lingerie. Margin rates were unchanged in juniors’ and children’s apparel, cosmetics, and men’s apparel and accessories, while ladies’ apparel and home and furniture posted slight to moderate declines.
Consolidated selling, general and administrative expenses (operating expenses) were $444 million, rising 5.3% from $421.7 million in the prior-year quarter, with the increase largely attributed to higher payroll and payroll-related expenses. As a percentage of sales, operating expenses rose 70 bps to 28.3% compared with 27.6% a year ago. We had expected a 150-bps increase in operating expenses, as a percentage of sales.
Dillard’s Financial Details
Dillard’s ended the quarter with cash and cash equivalents of $1.16 billion, up from $900.5 million a year ago, while short-term investments were essentially flat at $259.7 million. Merchandise inventories increased to $1.51 billion from $1.47 billion, consistent with management’s comment that ending inventory was up 3%.
On the liability side, the company carried $96 million in current maturities of long-term debt and $225.7 million in long-term debt. Stockholders’ equity increased to $2.03 billion from $1.86 billion a year ago.
Cash generation strengthened during the quarter. Net cash provided by operating activities rose to $364 million from $232.6 million in the prior-year period.
Dillard’s Outlook for FY26
Looking ahead, Dillard’s reiterated its fiscal 2026 outlook. The company still expects depreciation and amortization of $175 million, rentals of $18 million, and net interest and debt income of $5 million for the 52-week period ending Jan. 30, 2027. Capital expenditures are projected at $130 million, up from $93 million in the prior year.
Shares of the Zacks Rank #3 (Hold) company have lost 17.6% in the past three months compared with the industry's 5.1% decline.
Key Picks in the Retail Space
Levi Strauss & Co. (LEVI - Free Report) , which is a designer and marketer of jeans, casual wear and related accessories, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
LEVI delivered a trailing four-quarter earnings surprise of 9.8%, on average. The Zacks Consensus Estimate for Levi Strauss’ current financial-year sales indicates growth of 10.3% from the year-ago number.
Kohl's Corporation (KSS - Free Report) , which is a department store chain, currently carries a Zacks Rank of 2.
KSS delivered a trailing four-quarter earnings surprise of 72.3%, on average. The Zacks Consensus Estimate for KSS’ current financial-year sales indicates a drop of 1% from the year-ago number.
American Eagle Outfitters (AEO - Free Report) , which is a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for AEO’s current financial-year sales is expected to rise 5.1% from the corresponding year-ago reported figure. AEO delivered a trailing four-quarter earnings surprise of 37.6%, on average.