Dillard's (DDS 0.57%), the department store operator with a focus on exclusive merchandise and a broad retail footprint, reported its fiscal second quarter 2025 results on August 14, 2025. The company delivered GAAP earnings per share of $4.66, ahead of the analyst estimate of $3.75 (GAAP), and posted total revenue (GAAP) of $1.51 billion, narrowly beating GAAP expectations of $1.50 billion. The period marked a return to sales growth, with comparable store sales up 1 % for Q2 FY2025, and showcased continued operating discipline. However, gross and retail margins slipped, and Net income (GAAP) declined year over year despite the per-share earnings increase. Overall, the quarter showed progress in sales trends and expense control.
| Metric | Q2 2025(13 weeks ended Aug 2, 2025) | Q2 2025 Estimate | Q2 2024(13 weeks ended Aug 3, 2024) | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $4.66 | $3.75 | $4.59 | 1.5 % |
| Revenue (GAAP) | $1.51 billion | N/A | $1.49 billion | 1.6 % |
| Gross Margin (GAAP) | 36.6 % | 37.6 % | (1.0) pp | |
| Operating Expenses (GAAP) | $434.2 million(28.7 % of sales) | $433.6 million(29.1 % of sales) | 0.1 % | |
| Retail Gross Margin | 38.1 % | 39.1 % | (1.0) pp |
Source: Analyst estimates for the quarter provided by FactSet.
Company Overview and Strategic Focus
Dillard's runs a network of 272 department stores across 30 states and offers both national brands and exclusive in-house lines such as Antonio Melani and Gianni Bini. Its business relies on apparel, accessories, cosmetics, home, and furniture, serving a broad customer base through its physical footprint and online sales at dillards.com.
Key to its business are its private label brands, which help differentiate it from competitors. The company has invested in exclusive merchandise, an extensive store network, and digital presence. It also depends heavily on fourth-quarter holiday sales, meaning inventory planning and cost control are central to its success. Another priority is its partnership with Citibank, supporting a co-branded credit card aimed at boosting customer loyalty and return visits.
Quarter Highlights: Financial and Operational Performance
This quarter, Dillard's reported GAAP revenue above analyst estimates, buoyed by a 1% year-over-year increase in retail sales to $1.447 billion. Comparable store sales, which measure growth at stores open for more than one year, also rose 1%—the first positive result after several flat or declining quarters. Net income (GAAP) was $72.8 million, a slight dip from the prior year's GAAP net income of $74.5 million for Q2 FY2024, but per-share earnings increased due to a lower share count from significant stock buybacks. The company attributed part of the net income to a $4.8 million pre-tax gain from selling three properties, which contributed $0.24 per share to EPS.
Sales trends improved notably in July according to management, with juniors' and children’s apparel and ladies’ accessories and lingerie outpacing other categories. Home and furniture continued to lag as the weakest area. On a year-to-date basis (26 weeks), retail sales were flat, indicating that growth in the period is recent.
Gross margin, a measure of how much sales revenue remains after accounting for the cost of merchandise sold, shrank from 37.6% to 36.6% for the company overall (GAAP). This decline was mainly due to a decrease in retail gross margin, which dropped to 38.1% from 39.1% for Q2 FY2024. Ladies' apparel experienced marked margin pressure, while categories like shoes and ladies’ accessories held up better or improved modestly. Expense control was a positive, with operating expenses nearly flat in total dollars and improving as a percentage of sales, coming in at 28.7% of sales versus 29.1% in Q2 FY2024.
The company maintained tight controls over inventory, reporting a 2% increase at quarter-end—well down from the 6% increase in ending inventory at the end of Q1. Cash and equivalents rose to $1.01 billion as of quarter-end.
Share repurchases were another notable feature. The company bought back $107.8 million of its shares in the first half of FY2025, reducing share count to 15.6 million from 16.2 million. This action contributed to the reduction in share count. The company also paid $7.9 million in cash dividends during the period. No change in the dividend was announced this quarter.
Looking Ahead: Guidance and Key Watch Points
Management offered only limited quantitative forward guidance, providing select estimates for capital expenditures ($120 million), depreciation ($180 million) (estimate), net interest expense (($7) million) (estimate), and rental costs ($20 million, estimated). It did not share forecasts on revenue, profit, or gross margin, reflecting uncertainty in the retail environment and the significant impact of the upcoming holiday season.
As the holiday quarter approaches, investors and analysts will watch for sustained sales gains, category recovery in soft areas like home and ladies' apparel, and signs of gross margin stabilization. Inventory levels and cash generation will also be under scrutiny, as strong expense control and liquidity give the company flexibility for investment or additional shareholder returns, though specific metrics have not been disclosed.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
