Retailers reap windfalls from card fee settlements
Dillard’s, Dick’s Sporting Goods and Macy’s booked hundreds of millions in one-time gains from interchange litigation, lifting earnings and cash flow.
A wave of credit-card interchange fee settlements is delivering outsized, one-time earnings boosts to US retailers. Dillard’s (DDS), Dick’s Sporting Goods (DKS) and Macy’s (M) collectively recognized more than half a billion dollars in pre-tax gains during their latest reporting periods, turning long-running litigation into immediate profit infusions.
Dillard’s led the trio in per-share impact, booking a $104.1 million pre-tax gain—equal to $5.10 per share—from a settlement reached in early 2026. The proceeds lifted net income to $250.6 million for the quarter ended May 2, nearly $90 million above the year-earlier period, and bolstered operating cash flow by the same amount. For a company whose trailing free cash flow totaled $623.6 million, the settlement represented a 17% cash-flow uplift in a single quarter.
Dick’s Sporting Goods converted a $204.3 million gross settlement into $150 million of pre-tax income after legal fees, recorded in the 13 weeks ended May 2. The gain arrived as a lump-sum payment in February, providing a mid-quarter liquidity jolt that outpaced the company’s $400.2 million of free cash flow for the full prior year. While Dick’s did not break out the per-share effect, the $150 million pre-tax gain equates to roughly $2.50 per diluted share, assuming a 25% tax rate and 50 million shares outstanding.
Macy’s, the largest of the three by revenue, recognized the largest absolute gain: $328 million net of legal fees during fiscal 2025. The windfall arrived as the department-store chain navigates a turnaround plan that has included store closures and debt reduction; the settlement proceeds exceeded its $1.06 billion of free cash flow for the year, offering a rare bright spot in a period of uneven sales trends.