Financial Analysis

12. Commitments and Contingencies At January 31, 2026, the Company is committed to incur costs of approximately $1.1 million to acquire, complete and furnish certain stores and equipment. At January 31, 2026, letters of credit totaling $25.3 million were issued under the Companys $800 million revolving credit facility. Various legal proceedings, in the form of lawsuits and claims, which occur in the normal course of business, are pending against the Company and its subsidiaries. In the opinion of management, disposition of these matters is not expected to materially affect the Companys financial position, cash flows or results of operations. …

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14. Fair Value Disclosures The estimated fair values of financial instruments which are presented herein have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of amounts the Company could realize in a current market exchange. The fair value of the Companys long-term debt and subordinated debentures is based on market prices and are categorized as Level 1 in the fair value hierarchy. The fair value of the Companys cash and cash equivalents, restricted cash, if any, and trade accounts receivable approximates their carrying values at January 31, 2026 and February 1, 2025 due to the short-term maturities of these instruments. The Companys short-term investments are recorded at amortized cost, which is consistent with the Companys held-to-maturity classification. The fair values of the Companys long-term debt at both January 31, 2026 and February 1, 2025 were approximately $336 million. The carrying values of the Companys long-term debt at both January 31, 2026 and February 1, 2025 were approximately $322 million. The fair values of the subordinated debentures at January 31, 2026 and February 1, 2025 were approximately $209 million and $206 million, respectively. The carrying values of the subordinated debentures at both January 31, 2026 and Feb …

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6. Income Taxes The provision for federal and state income taxes from continuing operations is summarized as follows: (in thousands of dollars) Fiscal 2025 Fiscal 2024 Fiscal 2023 Current: Federal $ 123,528 $ 136,281 $ 185,082 State and local 8,480 8,936 10,412 Total current income tax expense (benefit) 132,008 145,217 195,494 Deferred: Federal (5,198) (7,382) (12,621) State and local (2,110) (1,610) (5,103) Total deferred income tax expense (benefit) (7,308) (8,992) (17,724) Total income tax expense (benefit) $ 124,700 $ 136,225 $ 177,770 A reconciliation between the Companys income tax provision and income tax using the U.S. federal statutory income tax rate of 21% is presented below: (in thousands of dollars) Fiscal 2025 Fiscal 2024 Fiscal 2023 Income tax at the U.S. federal statutory income tax rate $ 145,926 21.0 % $ 153,237 21.0 % $ 192,490 21.0 % State and local income taxes, net of federal effect (a) 5,437 0.8 6,499 0.9 3,986 0.4 Tax credits (1,586) (0.2) (1,850) (0.3) (2,145) (0.2) Nontaxable or nondeductible items: Dividends paid to ESOP (29,854) (4.3) (26,630) (3.6) (21,990) (2.4) Other 3,573 0.5 4,963 0.7 4,480 0.5 Changes in unrecognized tax benefits 1,204 0.1 6 949 0.1 Total income tax expense (benefit) $ 124,700 17.9 % $ 136,225 18.7 % $ 177,770 19.4 % (a) States that contribute to the majority ( greater than 50% ) of the tax effect in this category include Texas and Tennessee for fiscal 2025, Texas, Tennessee, and Arizona for fiscal 2024, and Tennessee, Texas, …

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13. Leases The Company leases retail stores, office space and equipment under operating leases. As of January 31, 2026, right-of-use operating lease assets, which are recorded in operating lease assets in the consolidated balance sheets, totaled $36.2 million, and operating lease liabilities, which are recorded in current portion of operating lease liabilities and operating lease liabilities, totaled $35.9 million. In determining our operating lease assets and operating lease liabilities, we apply an incremental borrowing rate to the minimum lease payments within each lease agreement. GAAP requires the use of the rate implicit in the lease whenever that rate is readily determinable; furthermore, if the implicit rate is not readily determinable, a lessee may use its incremental borrowing rate. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. To estimate our specific incremental borrowing rates that align with applicable lease terms, we utilized a model consistent with the credit quality of our outstanding debt instruments. Renewal options of five to 10 years exist on the majority of leased properties. The Company has sole discretion in exercising the lease renewal options. We do not recognize operating lease assets or operating lease liabilities at lease inception for renewal periods unless it has been determined …

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4. Long-Term Debt Long-term debt, including any current portion, of $321.7 million and $321.6 million was outstanding at January 31, 2026 and February 1, 2025, respectively. The debt outstanding at January 31, 2026 consisted of unsecured notes, bearing interest rates ranging from 7.000% to 7.750% and maturing during fiscal 2026 through fiscal 2028. There are no financial covenants under any of the debt agreements. Long-term debt maturities over the next five years are (in millions): Long-Term Debt Fiscal Year Maturities 2026 $ 96.0 2027 80.0 2028 145.8 2029 2030 Net interest and debt (income) expense consists of the following: (in thousands of dollars) Fiscal 2025 Fiscal 2024 Fiscal 2023 Interest on long-term debt and subordinated debentures $ 38,119 $ 36,655 $ 37,308 Revolving credit facility expenses 2,149 2,500 2,564 Amortization of debt expense 763 714 712 Interest income (47,212) (53,569) (45,240) Other interest (49) 5 56 $ (6,230) $ (13,695) $ (4,600) Interest paid during fiscal 2025, 2024 and 2023 was approximately $40.9 million, $37.5 million and $45.0 million, respectively. …

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Recently Adopted Accounting Pronouncements Improvements to Income Tax Disclosures In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The update requires increased transparency in tax disclosures, specifically by expanding requirements for rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 during the fiscal year ended January 31, 2026, and applied the amendments retrospectively to all periods presented in the Companys consolidated financial statements. (see Note 6, Income Taxes ). Recently Issued Accounting Pronouncements Management has considered all recent accounting pronouncements and, except as noted below, believes there is no accounting guidance issued but not yet effective that would be relevant to the Companys consolidated financial statements. Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU No. 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40) . The update requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in the update require that at each interim and annual reporting period an entity (i) disclose the amounts of (a) purchases of inventory, (b) employee …

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8. Benefit Plans The Company has a retirement plan with a 401(k)-salary deferral feature for eligible employees. Under the terms of the plan, eligible employees could contribute up to the lesser of $23,500 ($31,000 if at least 50 years of age) or 75% of eligible pay. Eligible employees with 1 year of service, who elect to participate in the plan or are auto-enrolled, receive a Company matching contribution. Company matching contributions are calculated on the eligible employees first 6% of elective deferrals with the first 1% being matched 100% and the next 5% being matched 50%. The Company matching contributions are used to purchase Class A Common Stock of the Company for the benefit of the employee. This stock may be immediately diversified into any of the other funds within the plan at the election of the employee. The terms of the plan provide a two -year vesting schedule for the Company matching contribution portion of the plan. The Company incurred benefit plan expense of approximately $24 million, $22 million and $24 million for fiscal 2025, 2024 and 2023, respectively. Benefit plan expenses are included in selling, general and administrative expenses. The Company has an unfunded, nonqualified defined benefit plan (Pension Plan) for its officers. The Pension Plan is noncontributory and provides benefits based on years of service and compensation during employment. Pension expense is determined using an actuarial cost method to estimate the total benefits ultimately pay …

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2. Business Segments The Company operates in two reportable segments: the operation of retail department stores and a general contracting construction company. For the Companys retail operations reportable segment, the Company determined its operating segments on a store by store basis. Each stores operating performance has been aggregated into one reportable segment. The Companys operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas: economic characteristics, class of consumer, nature of products and distribution methods. Revenues from external customers are derived from merchandise sales, and the Company does not rely on any major customers as a source of revenue. Across all stores, the Company operates one store format under the Dillards name where each store offers the same general mix of merchandise with similar categories and similar customers. The Company believes that disaggregating its operating segments would not provide meaningful additional information. The Companys chief operating decision maker is the Executive Committee of the Board of Directors, which is comprised of Dillards Chief Executive Officer and its President. The members of Dillards Executive Committee use their experience in the retail industry and extensive and specific knowledge of the Dillards businesses when assessing segment performance and deciding how to allocate resources. The following table summarizes the percentage of net …

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"9. Stockholders Equity Capital stock is comprised of the following: Par Shares Type Value Authorized Preferred $ 0.01 10,000,000 Class A, common $ 0.01 289,000,000 Class B, common $ 0.01 11,000,000 During fiscal 2025, the Company reincorporated from the state of Delaware to the state of Texas and eliminated all 5,000 shares of its 5% Cumulative Preferred Stock with a par value of $100.00 previously authorized under the Companys Certificate of Incorporation in Delaware. None of the 5% Cumulative Preferred Stock was outstanding at any time during fiscal 2025. Holders of Class A Common Stock are empowered as a class to elect one -third of the members of the Board of Directors, and the holders of Class B Common Stock are empowered as a class to elect two -thirds of the members of the Board of Directors. Shares of Class B Common Stock are convertible at the option of any holder thereof into shares of Class A Common Stock at the rate of one share of Class B Common Stock for one share of Class A Common Stock. During fiscal 2025 and 2024, no shares of Class B Common Stock were converted to shares of Class A Common Stock. Stock Repurchase Programs In February 2022, the Companys Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $500 million of its Class A Common Stock (February 2022 Stock Plan). In May 2023, the Companys Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $500 million of it …

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15. Subsequent Events Credit card litigation settlement In February 2026, the Company entered into a settlement agreement related to credit card interchange fee litigation. As a result, the Company received $104.1 million, net of legal expenses, which will be recorded as a pretax gain in the Companys consolidated financial statements in the first quarter of fiscal 2026. In addition, the Company expects to receive a reduction in interchange rates on certain transactions over the next 10 years. Merger Proposal On March 19, 2026, the Companys Board of Directors approved a proposed merger with W.D. Company, Inc. (WDC), a privately held Arkansas corporation organized as a family holding company to own and hold shares of Dillards Common Stock primarily for the benefit of the Dillard family. WDC has no business operations and engages in no business activities other than (a) owning, holding, and disposing of certain equity securities, including 41,496 shares of Dillards Class A Common Stock and 3,985,776 shares of Dillards Class B Common Stock and a de minimis amount of shares of another publicly-traded common stock, and (b) receiving cash dividends from Dillards and distributing such dividends directly to WDCs shareholders. On March 20, 2026, the Company entered into an agreement and plan of merger with WDC. Upon shareholder approval and consummation of the merger, WDC will merge with and into the Company, with the Company surviving the merger, and the separate corporate existence o …

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Note 5. Commitments and Contingencies Various legal proceedings, in the form of lawsuits and claims, which occur in the normal course of business, are pending against the Company and its subsidiaries. In the opinion of management, disposition of these matters, individually or in the aggregate, is not expected to materially affect the Companys financial position, cash flows or results of operations. At May 2, 2026, letters of credit totaling $25.3 million were issued under the Companys revolving credit facility. See Note 7, Revolving Credit Agreement , for additional information. …

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Note 11. Fair Value Disclosures The estimated fair values of financial instruments presented herein have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of amounts the Company could realize in a current market exchange. The fair value of the Companys long-term debt and subordinated debentures are based on market prices and are categorized as Level 1 in the fair value hierarchy. The fair value of the Companys cash and cash equivalents and trade accounts receivable approximates their carrying values at May 2, 2026 due to the short-term maturities of these instruments. The Companys short-term investments are classified as held-to-maturity and are recorded at amortized cost, which approximated fair value. The fair value of the Companys long-term debt at May 2, 2026 was approximately $330 million. The carrying value of the Companys long-term debt, including current portion, at May 2, 2026 was approximately $322 million. The fair value of the Companys subordinated debentures at May 2, 2026 was approximately $208 million. The carrying value of the Companys subordinated debentures at May 2, 2026 was $200 million. …

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Note 10. Income Taxes During the three months ended May 2, 2026 and May 3, 2025, income tax expense differed from what would be computed using the statutory federal income tax rate primarily due to the effects of state and local income taxes.

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Recently Adopted Accounting Pronouncements There have been no recently adopted accounting pronouncements that had a material impact on the Companys condensed consolidated financial statements. Recently Issued Accounting Pronouncements Management has considered all recent accounting pronouncements, except as noted below, and believes there is no accounting guidance issued but not yet effective that would be material to the Companys condensed consolidated financial statements. Disaggregation of Income Statement Expenses In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40) . The update requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in the update require that at each interim and annual reporting period an entity (i) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption; (ii) include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements; (iii) disclose a qualitative description …

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Note 6. Benefit Plans The Company has an unfunded, nonqualified defined benefit plan (Pension Plan) for its officers. The Pension Plan is noncontributory and provides benefits based on years of service and compensation during employment. Pension expense is determined using an actuarial cost method to estimate the total benefits ultimately payable to officers and allocates this cost to service periods. The actuarial assumptions used to calculate pension costs are reviewed annually. The Company contributed $2.2 million to the Pension Plan during the three months ended May 2, 2026 and expects to make additional contributions to the Pension Plan of approximately $6.7 million during the remainder of fiscal 2026. The components of net periodic benefit costs are as follows: Three Months Ended May 2, May 3, (in thousands of dollars) 2026 2025 Components of net periodic benefit costs: Service cost $ 1,532 $ 1,439 Interest cost 4,160 4,106 Net actuarial loss 843 929 Net periodic benefit costs $ 6,535 $ 6,474 The service cost component of net periodic benefit costs is included in selling, general and administrative expenses, and the interest costs and net actuarial loss components are included in other expense in the condensed consolidated statements of income. …

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Note 3. Business Segments The Company operates in two reportable segments: the operation of retail department stores (retail operations) and a general contracting construction company (construction). For the Companys retail operations segment, the Company determined its operating segments on a store-by-store basis. Each stores operating performance has been aggregated into one reportable segment for financial reporting purposes because stores are similar in each of the following areas: economic characteristics, class of consumer, nature of products and distribution methods. Revenues from external customers are derived from merchandise sales, and the Company does not rely on any major customers as a source of revenue. Across all stores, the Company operates one store format under the Dillards name where each store offers the same general mix of merchandise with similar categories and similar customers. The Company believes that disaggregating its retail operations segment would not provide meaningful additional information. The Companys chief operating decision maker is the Executive Committee of the Board of Directors, which is comprised of Dillards Chief Executive Officer and its President. The members of Dillards Executive Committee use their experience in the retail industry and extensive and specific knowledge of the Dillards businesses when assessing segment performance and deciding how to allocate resources. The following table summarizes the percentage of net sales by …

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Note 12. Subsequent Event On May 28, 2026, the Companys shareholders approved an agreement and plan of merger with W.D. Company, Inc. (WDC), a privately held Arkansas corporation organized as a family holding company to own and hold shares of Dillards Common Stock primarily for the benefit of the Dillard family. WDC had no business operations and engaged in no business activities other than (a) owning, holding, and disposing of certain equity securities, including 41,496 shares of Dillards Class A Common Stock and 3,985,776 shares of Dillards Class B Common Stock and a de minimis amount of shares of another publicly-traded common stock, and (b) receiving cash dividends from Dillards and distributing such dividends directly to WDCs shareholders. On June 4, 2026, the merger was consummated and WDC merged with and into the Company, with the Company surviving the merger, and the separate corporate existence of WDC terminated. Each share of WDC common stock issued and outstanding was automatically cancelled, and in exchange therefor, each WDC shareholder received such WDC shareholders pro rata share of the merger consideration, which included: the cash held by WDC plus the value of other public company common stock owned by WDC; and 41,494 shares of Dillards Class A Common Stock and 3,985,758 shares of Dillards Class B Common Stock, which had been reduced by fractional shares. The shares of Dillards Common Stock held by WDC immediately prior to the merger automatically became trea …

SubsequentEventsTextBlock · excerpt; the full note is in the filing