Dillard’s sold about as much and kept more of it.
Revenue was essentially flat at $1.5 billion in the six months ended August 1, while gross profit climbed 7.9% to $598.2 million. Net income rose 34.1% to $97.7 million, a sharp improvement built more on margin than on sales growth.
The important detail is sitting inside that margin expansion: tariff refunds. Dillard’s says second-quarter retail gross margin reached 40.9% and benefited from refunds received during the period, alongside higher retail sales.
"Net income increased for the quarter, primarily driven by higher retail gross margin of 40.9%, which benefited from tariff refunds received during the period, and growth in retail sales."
Dillard’s, 10-Q filed September 4, 2026.
The company does not disclose the size of the refunds in this passage. That leaves a straightforward question around the 3.0-percentage-point increase in consolidated gross margin: how much came from the store business, and how much came from refunds received during the period?
The cash figures add a second wrinkle. Operating cash flow edged up 2.3% to $326.8 million, but cash fell from $1.0 billion to $763.1 million. Dillard’s attributes the squeeze around operating cash to higher tax payments, tied partly to a prior-year disaster-related tax deadline postponement, and higher inventories.
"These increases of operating cash were mostly offset by (a) increases in tax payments primarily due to the prior year Internal Revenue Service’s tax deadline postponement for taxpayers who resided or had a business in the disaster area declared by the Federal Emergency Management Agency for severe weather events that began on April 2, 2025 in the state of Arkansas as well as (b) increases in inventories."
Dillard’s, 10-Q filed September 4, 2026.
Operating cash flow still increased. Capital spending declined 9.3%, accounts receivable fell 13.0%, and the company says free-cash-flow margin improved. But the cash balance moved in the opposite direction from earnings, with taxes and inventory absorbing much of the operating-cash increase.
The merchandise mix was not uniformly strong either. Exclusive-brand penetration slipped to 22.3% from 23.4%, while the construction segment’s six-month sales fell about 20% because of lower construction activity. Retail sales increased 1.0% in the second quarter, which management described as reflecting a “somewhat resilient customer.” The wording is modest, and the numbers are too: this is a margin-led improvement, not a broad sales acceleration.
Dillard’s longer record makes that distinction harder to ignore. Annual revenue was $6.5 billion in fiscal 2026, essentially unchanged from the prior year, while net margin declined to 8.8% from 9.2% in fiscal 2025. The latest six-month result improves the profit line without yet changing the company’s low-growth sales pattern.
At the latest close, Dillard’s shares were $653.57, and the stock trades at 17.9 times earnings. That valuation puts the emphasis on what portion of the earnings improvement can travel with the business rather than arrive through a refund.
Dillard’s reported retail gross margin of 40.9% for the latest quarter, with tariff refunds contributing to the result.