Highlights of the Company's Second Quarter Performance

A 25% increase in second quarter earnings per share compared to the prior year

A 1% increase in comparable store sales

Merchandise gross margin improvement of 10 basis points of sales

Second Quarter Results

Dillard's reported net income for the 13 weeks ended August 3, 2013 of $36.5 million, or $0.79 per share compared to net income of $31.0 million, or $0.63 per share, for the prior year second quarter.

Dillard's Chief Executive Officer, William T. Dillard, II, stated, "Following a strong start to the year, we made further progress in the second quarter. Positive comparable store sales and gross margin expansion combined with continued expense control enabled us to report another quarter of year over year improvement at Dillard's."

26 Week Results

Dillard's reported net income for the 26 weeks ended August 3, 2013 of $153.7 million, or $3.30 per share compared to net income of $126.0 million, or $2.53 per share, for the prior year 26-week period. Included in net income for the 26-week period ended August 3, 2013 is a net after-tax credit totaling $4.4 million ($0.09 per share) comprised of the following three items:

A $7.6 million after tax gain ($0.16 per share) related to the sale of an investment

A $1.0 million after tax credit ($0.02 per share) related to a pension adjustment

After-tax asset impairment and store closing charges of $4.2 million ($0.09 per share)

Excluding this credit, Dillard's would have reported net income of $149.3 million ($3.20 per share) for the 26-week period ended August 3, 2013, a 26% earnings per share increase over the prior year 26-week performance.

Net Sales

Net sales for the 13 weeks ended August 3, 2013 were $1.480 billion and $1.488 billion for the 13 weeks ended July 28, 2012. Net sales include the operations of the Company's construction business, CDI Contractors, LLC ("CDI").

Total merchandise sales (which exclude CDI) for the 13-week period ended August 3, 2013 were $1.459 billion and $1.456 billion for the 13-week period ended July 28, 2012. Total merchandise sales were unchanged on a percentage basis for the 13-week period ended August 3, 2013. Sales in comparable stores for the period increased 1%.

Sales trends were notably strong in ladies' accessories and lingerie followed by juniors' and children's apparel. Sales were weakest in the home and furniture category followed by ladies' apparel. Sales trends were strongest in the Central region, followed by the Western and Eastern regions, respectively.

Gross Margin/Inventory

Gross margin from retail operations (which excludes CDI) improved 10 basis points of sales to 34.4% for the 13 weeks ended August 3, 2013 compared to 34.3% for the prior year second quarter. Consolidated gross margin for the 13 weeks ended August 3, 2013 improved 40 basis points of sales to 34.0% from 33.6% during the prior year second quarter. Inventory increased 7% at August 3, 2013 compared to July 28, 2012.

Dillard's