Dillard’s, Inc. (NYSE:DDS) shares edged lower after the department store chain reported first-quarter results ahead of Wall Street expectations, supported by strength across multiple merchandise categories and improved margins.

The company also highlighted continued customer demand, inventory discipline and a focus on refreshing its merchandise assortment heading into the rest of the year.

Quarterly Details

The company reported first-quarter earnings per share of $16.04, beating the analyst consensus estimate of $10.37. Quarterly sales of $1.568 billion outpaced the Street view of $1.555 billion.

The quarter included a pre-tax gain on litigation settlement of $104.1 million ($5.10 per share after tax) tied to the company’s favorable settlement of a payment card interchange fee lawsuit.

Total retail sales increased 3%, while comparable store sales increased 3%.

Consolidated gross margin was 44.5%, compared to 43.9% a year ago.

Retail gross margin was 45.8% of sales, compared to 45.5% of sales a year ago.

The company said sales increased significantly in home and furniture, ladies’ accessories, lingerie, and shoes, while men’s apparel and accessories, juniors’ and children’s apparel, and ladies’ apparel posted moderate growth, and cosmetics sales rose slightly.

Operating expenses increased to $444 million, or 28.3% of sales, from $421.7 million, or 27.6% of sales, in the prior-year quarter. Ending inventory rose 3% year over year.

As of May 2, 2026, the firm had cash and equivalents worth $1.157 billion, compared with $900.5 million a year ago.

Quarterly long-term debt reduced to $225.7 million, compared with $321.6 million.

Outlook

Dillard’s expects depreciation and amortization expense of approximately $175 million in 2026, compared to $179 million in 2025.

The company estimates rental expense at $18 million, down from $19 million last year.

Capital expenditures are expected to increase to $130 million from $93 million a year earlier.

Dillard’s CEO William T. Dillard, II said, “We continue to focus on motivating our customer with newness in our merchandise assortment.”

DDS Price Action: Dillard’s shares were down 0.57% at $529.89 at the time of publication on Thursday, according to Benzinga Pro data.

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