How Dillard’s Survived The Department Store Bloodbath

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Between the e-commerce revolution and the pandemic, the past decade has seemed like an extinction event for malls and their department store anchors. Companies that have lost their glow, or stumbled, or just faded away (e.g., Lord & Taylor) include so many brands once thought of as solid-gold “forever” names — Saks, Macy’s, J.C. Penney — plus a long list of once-stalwart regionals like Filene’s, Field’s, and Burdine’s.

The winners coming out of this dark period include two very different legends that happen to be from the same region of the same state, in the American heartland. Walmart and Dillard’s were both founded in small towns in western Arkansas. Both are public companies.

Walmart’s epic story is well documented. From a single, modest variety store in 1950, the company — whose founder’s descendants continue to control about 45% of the shares — now operates almost 11,000 outlets around the world generating annual (trailing 12-month) revenue of more than $700 billion. Walmart’s market cap is now over $1 trillion. About eight cents of every shopping dollar spent in the U.S. today is said to go into a Walmart register.

The history of Dillard’s is similar if less grand, but in its own way remarkable. Founded in 1938 with an initial investment of $8,000, the company at last count operates 272 stores across the southern U.S., from Florida through Texas and into Arizona, generating annual sales for the fiscal year ended this Jan. 31 of $6.2 billion. The Dillard family descendants control about 40% of the voting stock and run the company on a day-to-day basis.

Remarkable is that near the end of last year, after a long and steep run in its stock price, Dillard’s market cap reached an outsized $11 billion. That gave it a robust “P/S” ratio (market cap divided by annual revenue, a popular investment metric) of about 1.7, more than double the average for publicly-held apparel retailers like Abercrombie & Fitch, according to FullRatio, an investment data research platform.

By comparison, Macy’s P/S ratio — after four years of sagging sales — is currently an anemic 0.3. (Walmart is lower still at 0.2, but its business model is more akin to a fast-turnover grocery store than a fashion house.)

What makes Dillard’s a standout and a retail curiosity is that, over the past 15 fiscal years, the company’s annual sales have hardly budged. Sales in fiscal 2012 were $6.4 billion. In the most recent fiscal year, 2026, they were $6.6 billion.

In only one year, 2021 — the depth of the Covid-19 crisis — did sales dip below $6.3 billion. On the upper end, revenue has yet to cross the $7 billion mark. The 15-year average: $6.5 billion, essentially a flat line with little to no growth. The same nearly flat-line trend shows up in many of its other financial metrics.

At first glance, the company’s data looks like the record of a company stuck in a rut. But when you dig into the details, you discover that during the six full years since the pandemic began, Dillard’s cash hoard nearly quadrupled to more than $1 billion. To be fair, that includes a $104 million settlement received from a banking dispute. Even without it, the stack has grown by more than three-fold.

Its gross profit has also been on the level, ranging in recent years between $2.6 billion and $3 billion.

How is all this possible? Just to keep pace with the Consumer Price Index for the past 15 years Dillard’s would have to be showing revenue today of about $9.5 billion, not $6.5 billion.

Yet, in spite of all the headwinds, the company managed to stash away $1 billion. And, to top things off, the company recently opened a new full-service department store in Dayton, Ohio, replacing a Macy’s mall anchor.

The “how” answer is what investors and money managers want to know, but asking the Dillards is apparently an exercise in frustration. The family members are known for fiercely guarding the details of their private lives, and tight-lipped when it comes to business chatter.

At most public firms, managements are eager to brag about the brilliant strategies they employed to yield all that prosperity. In Dillard’s case, the company provides copies of quarterly reports filed with the Securities and Exchange Commission with the printed commentary, and not much else.

“We continue to focus on motivating our customer with newness in our merchandise assortment,” CEO William Dillard wrote in the company’s first quarter report. Small wonder that in the investment community the company has earned the nickname Dullard’s.

The company does not hold earnings press conferences and is notorious for not returning calls from analysts or the press. But decoding balance sheets reveals that that Dillard’s invests its cash wisely, maintains tight inventory controls, and creates a traditional store experience rather than flashy new gimmicks. Customers love Dillard’s.

In a recent report on RetailDive.com, shopping center development expert Nick Egelanian summed up this quirky company as, “by far the best run and most relevant (and successful) fashion department store operating today.”

That success has also become something of a ceiling as the few analysts who follow the stock are now split between recommendations to buy or to sell. In spite of all the positives, the stock price may have gotten so rich that investors no longer see much upside anytime soon. The stock pays a dividend, but the yield at the current share price is less than a quarter of one percent.

For those who care about such things, Dillard’s is an object case for why some companies are best run by founder descendants who are paying attention to the business (and protecting their family legacies) instead of listening to the seductive siren calls of private equity managers and venture capitalists.

Dillard’s is known in its markets for its consistent, customer-first focus, and a case study for the notion that slow and steady still wins the race.