DILLARD'S, INC. Revenue Disclosure

Revenue Recognition—The Company’s retail operations segment recognizes merchandise revenue at the “point of sale”. An allowance for sales returns is recorded as a component of net sales in the period in which the related sales are recorded. Sales taxes collected from customers are excluded from revenue and are recorded in trade accounts payable and accrued expenses until remitted to the taxing authorities.

Citibank, N.A. (“Citi”) owns and manages Dillard’s private label cards under a 10-year agreement (“Citibank Alliance”) which expires in fiscal 2034. Pursuant to the Citibank Alliance, we receive on-going cash compensation from Citi based upon the portfolio’s earnings. The compensation received from the portfolio is determined monthly and has no recourse provisions. The amount the Company receives is dependent on the level of sales on Citi accounts, the level of balances carried on Citi accounts by Citi customers, payment rates on Citi accounts, finance charge rates and other fees on Citi accounts, the level of credit losses for the Citi accounts as well as Citi’s ability to extend credit to our customers. The Company’s share of income under the Citibank Alliance and former Wells Fargo Alliance is included as a component of service charges and other income. The Company recognized income of $54.1 million, $67.2 million and $67.8 million from the Citibank Alliance and former Wells Fargo Alliance in fiscal 2024, 2023 and 2022, respectively. The Company participates in the marketing of the private label credit cards, which includes the cost of customer reward programs. Through the reward programs, customers earn points that are redeemable for discounts on future purchases.

The Company defers a portion of its net sales upon the sale of merchandise to its customer reward program members that is recognized in net sales when the reward is redeemed or expired at a future date.

Revenue from CDI construction contracts is generally measured based on the ratio of costs incurred to total estimated contract costs (the “cost-to-cost method”). The length of each contract varies but is typically nine to eighteen months. The progress towards completion is determined by relating the actual costs of work performed to date to the current estimated total costs of the respective contracts. When the estimate on a contract indicates a loss, the entire loss is recorded in the current period.