Episode Details

Dillard's (DDS) Q2 FY2026 — Q2 FY2026 (13 weeks ended August 1, 2026, reported BMO Aug 13): net sales $1,507.6M, -0.4%; total retail sales +1%, comps +1%. EPS $6.25 vs $4.66 and a $4.29 bar. But $37.2M of IEEPA tariff refunds ($1.82/sh) sit inside it and the company says no more are coming. Core EPS was $4.43 vs $4.42. Stock -11.80% over two sessions, from $636.02 to $560.95. Dillard's earned $6.25 against a $4.29 bar - a 46% beat - and the stock fell 11.8% over two sessions. EPS rose $1.59 on the year. $1.58 of that was one-off items: $37.2M of IEEPA tariff refunds worth $1.82 a share, less $0.24 of property gains last year. One cent came from operations. THE CALL: AVOID (3/5, THE BEAT WAS A TARIFF REFUND AND THE BUYBACK IS OFF) — base-case value ~$461.0 vs ~$560.95 today. KEY METRICS: - CALL: AVOID, 3/5. Fair value ~$461 vs the $560.95 close on Aug 14, about 18% below. Bull $547, bear $354 - even the bull does not clear the price. Street: 2 buy, 6 hold, 5 sell; consensus target $557.50 ($465-$650), already 0.6% BELOW the close. The only dated actions are UBS Sell (May 6, 2026), JP Morgan Underweight and Telsey Market Perform (Feb 25, 2026) - nobody has acted since the print. - THE QUARTER: net sales $1,507.6M, -0.4%; total retail sales (ex-CDI) $1,455M, +1%; comps +1%. Retail gross margin 40.9% vs 38.1%. Operating expenses $443.6M, 29.4% of sales vs 28.7%. Pre-tax income $127.1M vs $94.6M; tax rate 23.4% vs 23.0%. Net income $97.7M, +34.2%. EPS $6.25 vs $4.66, against a $4.29 bar. Ending inventory $1,283.2M, +5%. 272 stores, 30 states, 46.1M sq ft. - THE BRIDGE - WHERE THE $1.59 CAME FROM: $37.2M of IEEPA tariff refunds, $28.4M after tax, $1.82/sh - 260 of the 280bp of retail gross margin expansion. The release says no additional significant IEEPA refunds are expected. Last year carried $4.8M of property gains, $0.24/sh. Core EPS $4.43 vs $4.42: +$0.01. Pre-tax ex-items $89.8M vs $85.0M. EPS basis proven: FY2025 quarters 10.39+4.66+8.31+13.06 = $36.42, the reported full year. - THE BUYBACK AND THE BALANCE SHEET: zero shares repurchased in H1 FY2026 vs $107.8M a year ago; the last buy was 0.3M shares at $355.65 in Q1 FY2025; $165.2M authorisation unused. Diluted shares 15.6M in both quarters - the buyback added 0.0 points. FY2022-FY2025 net income fell 36.0% ($892M to $570M) while EPS fell 28.3% ($50.81 to $36.42) on an 11.1% lower share count. Cash and short-term investments $1,260.8M vs $425.7M debt = $835.1M net cash ($53.47/sh). What to watch: UP: repurchases restarting against the unused $165.2M authorisation, or a Q3 retail gross margin near last year's 45.3% showing the 5% inventory build cleared at full price. DOWN: a Q3 comp below +1% with gross margin down, or another quarter of zero buyback while inventory keeps outgrowing sales. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.