美國
證券交易委員會
華盛頓特區 20549
表格
（選擇一個）
根據1934年證券交易法第13或15(d)條的季度報告 |
截至季度末
或
根據《1934年證券交易法》第13或15(d)條的過渡報告 |
過渡期爲 到 。
佣金檔案編號：
(註冊人名稱按章程所示)
(主要執行辦公室地址)
(郵政編碼)
(
(註冊公司電話號碼，包括區號)
根據法案第12(b)節登記的證券：
每一類股票的名稱 | 交易代號 | 註冊的每個交易所名稱 |
請通過勾選的方式指明註冊人是否在前12個月內（或在註冊人被要求提交此類報告的較短期間內）已提交了根據1934年證券交易法第13節或15(d)節要求提交的所有報告，並且在過去90天內是否受到此類提交要求。
☒
請用勾選標記指示註冊人是否在過去12個月內（或註冊人被要求提交這些文件的較短期間內）按照規則405提交了所有按要求提交的互動數據文件。
☒
請載明檢查標記，公司是否為大型加速披露人、加速披露人、非加速披露人、小型報告公司或新興成長公司。請於「交易所法案」第1202條中查閱「大型加速披露人」、「加速披露人」、「小型報告公司」和「新興成長公司」的定義。
如果一家新興成長型企業，請勾選“是”表示註冊人選擇不使用根據證券交易所法第13(a)條所提供的任何新的或修改後的財務會計準則的延長過渡期來遵守。 ☐
在Check Mark中指示註冊公司是否為空殼公司（根據交易所法規第120億2條的定義）。
請指明截至最新可行日期，每個發行人普通股類別的流通股數。
截至2024年11月30日的A類普通股
類別截至2024年11月30日的B類普通股
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
DILLARD’S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
| November 2, |
| February 3, |
| October 28, |
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2024 | 2024 | 2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents | $ | | $ | | $ | | ||||
Accounts receivable |
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Short-term investments | | | | |||||||
Merchandise inventories |
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Other current assets |
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Total current assets |
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Property and equipment (net of accumulated depreciation of $ |
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Operating lease assets |
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Deferred income taxes |
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Other assets |
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Total assets | $ | | $ | | $ | | ||||
Liabilities and stockholders’ equity |
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Current liabilities: |
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Trade accounts payable and accrued expenses | $ | | $ | | $ | | ||||
Current portion of operating lease liabilities | | | | |||||||
Federal and state income taxes |
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Total current liabilities |
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Long-term debt |
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Operating lease liabilities |
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Other liabilities |
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Subordinated debentures |
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Commitments and contingencies |
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Stockholders’ equity: |
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Common stock |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Retained earnings |
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Less treasury stock, at cost |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity | $ | | $ | | $ | | ||||
See notes to condensed consolidated financial statements.
3
DILLARD’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share Data)
| Three Months Ended |
| Nine Months Ended | ||||||||||
November 2, |
| October 28, | November 2, |
| October 28, | ||||||||
2024 | 2023 | 2024 | 2023 |
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Net sales | $ | | $ | | $ | | $ | | |||||
Service charges and other income |
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Cost of sales |
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Selling, general and administrative expenses |
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Depreciation and amortization |
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Rentals |
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Interest and debt (income) expense, net |
| ( |
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Other expense |
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Gain on disposal of assets |
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Income before income taxes |
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Income taxes |
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Net income | $ | | $ | | $ | | $ | | |||||
Earnings per share: |
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Basic and diluted | $ | | $ | | $ | | $ | | |||||
See notes to condensed consolidated financial statements.
4
DILLARD’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In Thousands)
| Three Months Ended | Nine Months Ended |
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November 2, | October 28, | November 2, | October 28, | ||||||||||
2024 |
| 2023 |
| 2024 |
| 2023 |
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Net income | $ | | $ | | $ | | $ | | |||||
Other comprehensive income: |
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Amortization of retirement plan and other retiree benefit adjustments (net of tax of $ |
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Comprehensive income | $ | | $ | | $ | | $ | | |||||
See notes to condensed consolidated financial statements.
5
DILLARD’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In Thousands, Except Share and Per Share Data)
Three Months Ended November 2, 2024 | ||||||||||||||||||
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Additional | Other | |||||||||||||||||
Common | Paid-in | Comprehensive | Retained | Treasury | ||||||||||||||
Stock | Capital | Loss | Earnings | Stock | Total | |||||||||||||
Balance, August 3, 2024 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Net income |
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Other comprehensive income |
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Purchase of |
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Cash dividends declared: |
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Common stock, $ |
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Balance, November 2, 2024 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Three Months Ended October 28, 2023 | ||||||||||||||||||
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Additional | Other | |||||||||||||||||
Common | Paid-in | Comprehensive | Retained | Treasury | ||||||||||||||
Stock | Capital | Loss | Earnings | Stock | Total | |||||||||||||
Balance, July 29, 2023 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Net income |
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Other comprehensive income |
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Purchase of |
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Cash dividends declared: |
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Common stock, $ |
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Balance, October 28, 2023 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Nine Months Ended November 2, 2024 | ||||||||||||||||||
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Additional | Other | |||||||||||||||||
Common | Paid-in | Comprehensive | Retained | Treasury | ||||||||||||||
Stock | Capital | Loss | Earnings | Stock | Total | |||||||||||||
Balance, February 3, 2024 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Net income |
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Other comprehensive income |
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Issuance of |
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Purchase of |
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Cash dividends declared: |
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Common stock, $ |
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Balance, November 2, 2024 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
6
Nine Months Ended October 28, 2023 | ||||||||||||||||||
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Additional | Other | |||||||||||||||||
Common | Paid-in | Comprehensive | Retained | Treasury | ||||||||||||||
Stock | Capital | Loss | Earnings | Stock | Total | |||||||||||||
Balance, January 28, 2023 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Net income |
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Other comprehensive income |
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Issuance of |
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Purchase of |
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Cash dividends declared: |
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Common stock, $ |
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Balance, October 28, 2023 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
See notes to condensed consolidated financial statements.
7
DILLARD’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
| Nine Months Ended |
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November 2, |
| October 28, |
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2024 | 2023 |
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Operating activities: |
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Net income | $ | | $ | | |||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization of property and other deferred costs |
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Gain on disposal of assets |
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Accrued interest on short-term investments | ( | ( | |||||
Changes in operating assets and liabilities: |
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Increase in accounts receivable |
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Increase in merchandise inventories |
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Decrease in other current assets |
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(Increase) decrease in other assets |
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Increase in trade accounts payable and accrued expenses and other liabilities |
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Decrease in income taxes payable |
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Net cash provided by operating activities |
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Investing activities: |
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Purchase of property and equipment and capitalized software |
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Proceeds from disposal of assets |
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Proceeds from insurance |
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Purchase of short-term investments | ( | ( | |||||
Proceeds from maturities of short-term investments | | | |||||
Net cash (used in) provided by investing activities |
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Financing activities: |
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Cash dividends paid |
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Purchase of treasury stock |
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Net cash used in financing activities |
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Increase in cash and cash equivalents and restricted cash |
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Cash and cash equivalents and restricted cash, beginning of period |
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Cash and cash equivalents, end of period | $ | | $ | | |||
Non-cash transactions: |
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Accrued capital expenditures | $ | | $ | | |||
Stock awards |
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Accrued purchases of treasury stock and excise taxes | | | |||||
Lease assets obtained in exchange for new operating lease liabilities |
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See notes to condensed consolidated financial statements.
8
DILLARD’S, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements of Dillard’s, Inc. (the “Company”) have been prepared in accordance with the rules of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended November 2, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending February 1, 2025 due to, among other factors, the seasonal nature of the business.
These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024 filed with the SEC on March 29, 2024.
Note 2. Accounting Standards
Recently Adopted Accounting Pronouncements
There have been no recently adopted accounting pronouncements that had a material impact on the Company’s condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
Management has considered all recent accounting pronouncements, except as noted below, and believes there is no accounting guidance issued but not yet effective that would be material to the Company’s condensed consolidated financial statements.
Improvements to Reportable Segment Disclosures
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The update modifies the disclosure/presentation requirements of reportable segments. The amendments in the update require the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit and loss. The amendments also require disclosure of all other segment items by reportable segment and a description of its composition. Additionally, the amendments require disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. This update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and accompanying notes.
Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The update requires increased transparency in tax disclosures, specifically by expanding requirements for rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that this ASU will have on its income tax disclosures.
9
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The update requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in the update require that at each interim and annual reporting period an entity (i) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption; (ii) include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements; (iii) disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively; and (iv) disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and accompanying notes.
Note 3. Business Segments
The Company operates in
For the Company’s retail operations segment, the Company determined its operating segments on a store by store basis. Each store’s operating performance has been aggregated into
The following table summarizes the percentage of net sales by segment and major product line:
Three Months Ended | Nine Months Ended | ||||||||
November 2, | October 28, | November 2, | October 28, | ||||||
2024 |
| 2023 | 2024 |
| 2023 |
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Retail operations segment: |
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Cosmetics |
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Ladies’ apparel |
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Ladies’ accessories and lingerie |
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Juniors’ and children’s apparel |
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Men’s apparel and accessories |
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Shoes |
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Home and furniture |
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Construction segment |
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Total |
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10
The following tables summarize certain segment information, including the reconciliation of those items to the Company’s consolidated operations:
| Retail |
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(in thousands of dollars) | Operations | Construction | Consolidated | ||||||
Three Months Ended November 2, 2024 |
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Net sales from external customers | $ | | $ | | $ | | |||
Gross margin |
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Depreciation and amortization |
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Interest and debt (income) expense, net |
| ( |
| ( |
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Income before income taxes |
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Total assets |
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Three Months Ended October 28, 2023 |
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Net sales from external customers | $ | | $ | | $ | | |||
Gross margin |
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Depreciation and amortization |
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Interest and debt (income) expense, net |
| ( |
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Income before income taxes |
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Total assets |
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Nine Months Ended November 2, 2024 |
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Net sales from external customers | $ | | $ | | $ | | |||
Gross margin |
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Depreciation and amortization |
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Interest and debt (income) expense, net |
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Income before income taxes |
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Total assets |
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Nine Months Ended October 28, 2023 |
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Net sales from external customers | $ | | $ | | $ | | |||
Gross margin |
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Depreciation and amortization |
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Interest and debt (income) expense, net |
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Income before income taxes |
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Total assets |
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Intersegment construction revenues of $
The retail operations segment gives rise to contract liabilities through the customer loyalty program associated with Dillard’s private label cards and through the issuances of gift cards. The customer loyalty program liability and a portion of the gift card liability are included in trade accounts payable and accrued expenses, and a portion of the gift card liability is included in other liabilities on the condensed consolidated balance sheets. Our retail operations segment contract liabilities are as follows:
Retail | |||||||||||||
November 2, | February 3, | October 28, | January 28, |
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(in thousands of dollars) |
| 2024 |
| 2024 |
| 2023 |
| 2023 | |||||
Contract liabilities | $ | | $ | | $ | | $ | | |||||
11
During the nine months ended November 2, 2024 and October 28, 2023, the Company recorded $
Construction contracts give rise to accounts receivable, contract assets and contract liabilities. We record accounts receivable based on amounts expected to be collected from customers. We also record costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) in other current assets and trade accounts payable and accrued expenses, respectively, in the condensed consolidated balance sheets. The amounts included in the condensed consolidated balance sheets are as follows:
Construction |
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November 2, | February 3, | October 28, | January 28, |
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(in thousands of dollars) | 2024 | 2024 | 2023 | 2023 | |||||||||
Accounts receivable | $ | | $ | | $ | | $ | | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts |
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Billings in excess of costs and estimated earnings on uncompleted contracts |
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During the nine months ended November 2, 2024 and October 28, 2023, the Company recorded $
The remaining performance obligations related to executed construction contracts totaled $
Note 4. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data).
| Three Months Ended | Nine Months Ended | ||||||||||
November 2, |
| October 28, |
| November 2, |
| October 28, | ||||||
2024 | 2023 | 2024 | 2023 | |||||||||
Net income | $ | | $ | | $ | | $ | | ||||
Weighted average shares of common stock outstanding |
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Basic and diluted earnings per share | $ | | $ | | $ | | $ | | ||||
The Company maintains a capital structure in which common stock is the only equity security issued and outstanding, and there were
Note 5. Commitments and Contingencies
Various legal proceedings, in the form of lawsuits and claims, which occur in the normal course of business, are pending against the Company and its subsidiaries. In the opinion of management, disposition of these matters, individually or in the aggregate, is not expected to materially affect the Company’s financial position, cash flows or results of operations.
At November 2, 2024, letters of credit totaling $
12
Note 6. Benefit Plans
The Company has an unfunded, nonqualified defined benefit plan (“Pension Plan”) for its officers. The Pension Plan is noncontributory and provides benefits based on years of service and compensation during employment. Pension expense is determined using an actuarial cost method to estimate the total benefits ultimately payable to officers and allocates this cost to service periods. The actuarial assumptions used to calculate pension costs are reviewed annually. The Company contributed $
The components of net periodic benefit costs are as follows:
| Three Months Ended | Nine Months Ended | ||||||||||
November 2, |
| October 28, |
| November 2, |
| October 28, | ||||||
(in thousands of dollars) | 2024 | 2023 | 2024 | 2023 | ||||||||
Components of net periodic benefit costs: | ||||||||||||
Service cost | $ | | $ | | $ | | $ | | ||||
Interest cost |
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| |
| | ||||
Net actuarial loss |
| |
| |
| |
| | ||||
Net periodic benefit costs | $ | | $ | | $ | | $ | | ||||
The service cost component of net periodic benefit costs is included in selling, general and administrative expenses, and the interest costs and net actuarial loss components are included in other expense in the condensed consolidated statements of income.
Note 7. Revolving Credit Agreement
The Company maintains a credit facility (“credit agreement”) for general corporate purposes including, among other uses, working capital financing, the issuance of letters of credit, capital expenditures and, subject to certain restrictions, the repayment of existing indebtedness and share repurchases. The credit agreement, which is secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries, provides a borrowing capacity of $
Effective July 1, 2023, the Company amended the credit agreement (the "2023 amendment") to reflect the changes necessary for the phaseout of LIBOR. Pursuant to the 2023 amendment, the Company pays a variable rate of interest on borrowings under the credit agreement and a commitment fee to the participating banks. The rate of interest on borrowings is Adjusted Daily Simple SOFR, as defined in the 2023 amendment, plus
At November 2, 2024,
Note 8. Stock Repurchase Programs
In February 2022, the Company’s Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $
13
to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or through privately negotiated transactions. The May 2023 Stock Plan has no expiration date.
The following is a summary of share repurchase activity for the periods indicated (in thousands, except per share data):
| Three Months Ended |
| Nine Months Ended | |||||||||
November 2, |
| October 28, | November 2, |
| October 28, | |||||||
2024 | 2023 | 2024 | 2023 | |||||||||
Cost of shares repurchased | $ | | $ | | $ | | $ | | ||||
Number of shares repurchased |
| |
| |
| |
| | ||||
Average price per share | $ | | $ | | $ | | $ | | ||||
All repurchases of the Company’s Class A Common Stock above were made at the market price at the trade date, and all amounts paid to reacquire these shares were allocated to treasury stock. As of November 2, 2024, the Company had completed the authorized purchases under the February 2022 Stock Plan, and $
Note 9. Income Taxes
During the three and nine months ended November 2, 2024 and October 28, 2023, income tax expense differed from what would be computed using the statutory federal income tax rate primarily due to the effects of state and local income taxes.
Note 10. Gain on Disposal of Assets
During the three months ended October 28, 2023, the Company recorded proceeds of $
Note 11. Fair Value Disclosures
The estimated fair values of financial instruments presented herein have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of amounts the Company could realize in a current market exchange.
The fair value of the Company’s long-term debt and subordinated debentures are based on market prices and are categorized as Level 1 in the fair value hierarchy.
The fair value of the Company’s cash and cash equivalents and trade accounts receivable approximates their carrying values at November 2, 2024 due to the short-term maturities of these instruments. The Company’s short-term investments are recorded at amortized cost, which is consistent with the Company’s held-to-maturity classification. The fair value of the Company’s long-term debt at November 2, 2024 was approximately $
Note 12. Subsequent Event
On November 21, 2024, the Company announced that its Board of Directors declared a special dividend of $
14
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the condensed consolidated financial statements and the footnotes thereto included elsewhere in this report, as well as the financial and other information included in our Annual Report on Form 10-K for the fiscal year ended February 3, 2024.
EXECUTIVE OVERVIEW
While retail sales declined during our third quarter compared to the prior year third quarter, the Company focused on gross margin performance. The Company also focused on expense control during the quarter following its reports of increased selling, general and administrative (“SG&A”) expenses during the first half of the year.
Compared to the prior year third quarter, total retail sales (which exclude construction sales) declined 4% while retail gross margin was 44.5% of sales compared to 45.3%. Inventory increased 3% at November 2, 2024 compared to October 28, 2023.
SG&A expenses for the three months ended November 2, 2024 declined $2.9 million to $418.9 million (29.4% of sales) from $421.8 million (28.6% of sales) for the prior year third quarter.
For the three months ended November 2, 2024, the Company reported net income of $124.6 million ($7.73 per share) compared to net income of $155.3 million ($9.49 per share) for the three months ended October 28, 2023.
Net cash provided by operating activities was $349.4 million for the nine months ended November 2, 2024 compared to $447.1 million for the prior year nine-month period.
As of November 2, 2024, the Company had working capital of $1,705.6 million (including cash and cash equivalents of $980.4 million and short-term investments of $128.9 million) and $521.5 million of total debt outstanding, including $321.5 million of long-term debt and $200.0 million of subordinated debentures.
The Company operated 273 Dillard’s stores, including 28 clearance centers, and an internet store as of November 2, 2024.
Key Performance Indicators
We use a number of key indicators of financial condition and operating performance to evaluate our business, including the following:
| Three Months Ended | |||||||
November 2, |
| October 28, |
| |||||
2024 | 2023 |
| ||||||
Net sales (in millions) | $ | 1,427.0 | $ | 1,476.4 | ||||
Retail stores sales trend |
| (4) | % |
| (6) | % | ||
Comparable retail stores sales trend |
| (4) | % |
| (6) | % | ||
Gross margin (in millions) | $ | 607.7 | $ | 641.8 | ||||
Gross margin as a percentage of net sales |
| 42.6 | % |
| 43.5 | % | ||
Retail gross margin as a percentage of retail net sales |
| 44.5 | % |
| 45.3 | % | ||
Selling, general and administrative expenses as a percentage of net sales |
| 29.4 | % |
| 28.6 | % | ||
Cash flow provided by operations (in millions)* | $ | 349.4 | $ | 447.1 | ||||
Total retail store count at end of period |
| 273 |
| 273 | ||||
Retail sales per square foot | $ | 30 | $ | 31 | ||||
Retail store inventory trend |
| 3 | % |
| (1) | % | ||
Annualized retail merchandise inventory turnover |
| 2.1 |
| 2.2 | ||||
* Cash flow from operations data is for the nine months ended November 2, 2024 and October 28, 2023.
16
General
Net sales. Net sales includes merchandise sales of comparable and non-comparable stores and revenue recognized on contracts of CDI Contractors, LLC (“CDI”), the Company’s general contracting construction company. Comparable store sales includes sales for those stores which were in operation for a full period in both the most recently completed quarter and the corresponding quarter for the prior fiscal year, including our internet store. Comparable store sales excludes changes in the allowance for sales returns. Non-comparable store sales includes: sales in the current fiscal year from stores opened during the previous fiscal year before they are considered comparable stores; sales from new stores opened during the current fiscal year; sales in the previous fiscal year for stores closed during the current or previous fiscal year that are no longer considered comparable stores; sales in clearance centers; and changes in the allowance for sales returns.
Sales occur as a result of interaction with customers across multiple points of contact, creating an interdependence between in-store and online sales. Online orders are fulfilled from both fulfillment centers and retail stores. Additionally, online customers have the ability to buy online and pick up in-store. Retail in-store customers have the ability to purchase items that may be ordered and fulfilled from either a fulfillment center or another retail store location. Online customers may return orders via mail, or customers may return orders placed online to retail store locations. Customers who earn reward points under the private label credit card program may earn and redeem rewards through in-store or online purchases.
Service charges and other income. Service charges and other income includes income generated through the Company’s private label credit card portfolio alliances. These alliances include the former marketing and servicing alliance with Wells Fargo Bank, N.A. (“Wells Fargo Alliance”), which terminated in September 2024, and the Company’s new long-term marketing and servicing alliance with Citibank, N.A (“Citibank Alliance”), which replaced the Wells Fargo Alliance upon its termination. Other income includes rental income, shipping and handling fees and gift card breakage.
Cost of sales. Cost of sales includes the cost of merchandise sold (net of purchase discounts, non-specific margin maintenance allowances and merchandise margin maintenance allowances), bankcard fees, freight to the distribution centers, employee and promotional discounts, shipping to customers and direct payroll for salon personnel. Cost of sales also includes CDI contract costs, which comprise all direct material and labor costs, subcontract costs and those indirect costs related to contract performance, such as indirect labor, employee benefits and insurance program costs.
Selling, general and administrative expenses. Selling, general and administrative expenses include buying, occupancy, selling, distribution, warehousing, store and corporate expenses (including payroll and employee benefits), insurance, employment taxes, advertising, management information systems, legal and other corporate level expenses. Buying expenses consist of payroll, employee benefits and travel for design, buying and merchandising personnel.
Depreciation and amortization. Depreciation and amortization expenses include depreciation and amortization on property and equipment.
Rentals. Rentals includes expenses for store leases, including contingent rent, data processing and other equipment rentals and office space leases.
Interest and debt (income) expense, net. Interest and debt (income) expense includes interest, net of interest income from demand deposits and short-term investments and capitalized interest, relating to the Company’s unsecured notes, subordinated debentures and commitment fees and borrowings, if any, under the Company’s credit agreement. Interest and debt expense also includes the amortization of financing costs and interest on finance lease obligations, if any.
Other expense. Other expense includes the interest cost and net actuarial loss components of net periodic benefit costs related to the Company’s unfunded, nonqualified defined benefit plan and charges related to the write off of certain deferred financing fees in connection with the amendment and extension of the Company's secured revolving credit facility, if any.
17
Gain on disposal of assets. Gain on disposal of assets includes the net gain or loss on the sale or disposal of property and equipment, as well as gains from insurance proceeds in excess of the cost basis of insured assets, if any.
Seasonality
Our business, like many other retailers, is subject to seasonal influences, with a significant portion of sales and income typically realized during the last quarter of our fiscal year due to the holiday season. Because of the seasonality of our business, results from any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.
RESULTS OF OPERATIONS
The following table sets forth the results of operations as a percentage of net sales for the periods indicated (percentages may not foot due to rounding):
| Three Months Ended | Nine Months Ended |
| ||||||
November 2, |
| October 28, |
| November 2, |
| October 28, |
| ||
2024 | 2023 | 2024 | 2023 |
| |||||
Net sales |
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Service charges and other income |
| 1.7 |
| 1.9 |
| 1.6 |
| 1.9 | |
| 101.7 |
| 101.9 |
| 101.6 |
| 101.9 | ||
Cost of sales |
| 57.4 |
| 56.5 |
| 58.4 |
| 58.0 | |
Selling, general and administrative expenses |
| 29.4 |
| 28.6 |
| 28.6 |
| 26.8 | |
Depreciation and amortization |
| 3.1 |
| 3.0 |
| 3.1 |
| 2.9 | |
Rentals |
| 0.3 |
| 0.3 |
| 0.3 |
| 0.3 | |
Interest and debt (income) expense, net |
| (0.3) |
| (0.1) |
| (0.3) |
| 0.0 | |
Other expense |
| 0.4 |
| 0.3 |
| 0.4 |
| 0.3 | |
Gain on disposal of assets |
| 0.0 |
| (0.3) |
| 0.0 |
| (0.1) | |
Income before income taxes | 11.4 | 13.5 | 11.1 | 13.7 | |||||
Income taxes |
| 2.7 |
| 3.0 |
| 2.6 |
| 3.1 | |
Net income |
| 8.7 | % | 10.5 | % | 8.5 | % | 10.6 | % |
Net Sales
| Three Months Ended |
| |||||||
November 2, | October 28, | ||||||||
(in thousands of dollars) | 2024 | 2023 | $ Change | ||||||
Net sales: |
|
|
|
|
|
| |||
Retail operations segment | $ | 1,356,240 | $ | 1,409,487 | $ | (53,247) | |||
Construction segment |
| 70,769 |
| 66,875 |
| 3,894 | |||
Total net sales | $ | 1,427,009 | $ | 1,476,362 | $ | (49,353) | |||
18
The percent change by segment and product category in the Company’s sales for the three months ended November 2, 2024 compared to the three months ended October 28, 2023 as well as the sales percentage by segment and product category to total net sales for the three months ended November 2, 2024 are as follows:
| % Change |
| % of |
| |
2024 - 2023 | Net Sales |
| |||
Retail operations segment |
|
|
|
| |
Cosmetics |
| 1.6 | % | 15 | % |
Ladies’ apparel |
| (4.2) |
| 21 | |
Ladies’ accessories and lingerie |
| (2.0) |
| 13 | |
Juniors’ and children’s apparel |
| (7.8) |
| 9 | |
Men’s apparel and accessories |
| (6.4) |
| 19 | |
Shoes |
| (4.4) |
| 15 | |
Home and furniture |
| (1.1) |
| 3 | |
| 95 | ||||
Construction segment |
| 5.8 |
| 5 | |
Total |
| 100 | % |
Net sales from the retail operations segment decreased $53.2 million, or approximately 4%, and sales in comparable stores decreased approximately 4% during the three months ended November 2, 2024 compared to the three months ended October 28, 2023. Sales in juniors’ and children’s apparel and men’s apparel and accessories decreased significantly, while sales in shoes, ladies’ apparel and ladies’ accessories and lingerie decreased moderately. Sales in home and furniture decreased slightly. Sales in cosmetics increased moderately.
The number of sales transactions decreased 7% for the three months ended November 2, 2024 compared to the three months ended October 28, 2023, while the average dollars per sales transaction increased 3%.
We recorded a return asset of $10.5 million and $11.5 million and an allowance for sales returns of $20.2 million and $22.6 million as of November 2, 2024 and October 28, 2023, respectively.
During the three months ended November 2, 2024, net sales from the construction segment increased $3.9 million, or approximately 6%, compared to the three months ended October 28, 2023 due to an increase in construction activity. The remaining performance obligations related to executed construction contracts totaled $248.8 million as of November 2, 2024, increasing approximately 52% from February 3, 2024 and increasing approximately 13% from October 28, 2023, respectively. We expect these remaining performance obligations to be satisfied over the next nine to eighteen months.
| Nine Months Ended |
|
| |||||||
November 2, | October 28, | |||||||||
(in thousands of dollars) | 2024 | 2023 | $ Change |
| ||||||
Net sales: |
|
|
|
|
|
|
| |||
Retail operations segment | $ | 4,275,314 | $ | 4,422,952 | $ | (147,638) | ||||
Construction segment |
| 190,684 |
| 204,735 |
| (14,051) | ||||
Total net sales | $ | 4,465,998 | $ | 4,627,687 | $ | (161,689) | ||||
19
The percent change by segment and product category in the Company’s sales for the nine months ended November 2, 2024 compared to the nine months ended October 28, 2023 as well as the sales percentage by segment and product category to total net sales for the nine months ended November 2, 2024 are as follows:
| % Change |
| % of |
|
| |
2024 - 2023 | Net Sales |
|
| |||
Retail operations segment |
|
|
|
|
| |
Cosmetics |
| 3.0 | % | 15 | % |
|
Ladies’ apparel |
| (3.7) |
| 22 |
| |
Ladies’ accessories and lingerie |
| (2.1) |
| 13 |
| |
Juniors’ and children’s apparel |
| (5.3) |
| 9 |
| |
Men’s apparel and accessories |
| (6.8) |
| 19 |
| |
Shoes |
| (4.9) |
| 15 |
| |
Home and furniture |
| (0.2) |
| 3 |
| |
| 96 | |||||
Construction segment |
| (6.9) |
| 4 |
| |
Total |
| 100 | % |
Net sales from the retail operations segment decreased $147.6 million, or approximately 3%, and sales in comparable stores decreased approximately 4% during the nine months ended November 2, 2024 compared to the nine months ended October 28, 2023. Sales in men’s apparel and accessories, juniors’ and children’s apparel and shoes decreased significantly, while sales in ladies’ apparel and ladies’ accessories and lingerie decreased moderately. Sales in home and furniture remained essentially flat. Sales in cosmetics increased moderately.
The number of sales transactions decreased 7% for the nine months ended November 2, 2024 compared to the nine months ended October 28, 2023, while the average dollars per sales transaction increased 3%.
During the nine months ended November 2, 2024, net sales from the construction segment decreased $14.1 million, or approximately 7%, compared to the nine months ended October 28, 2023 due to a decrease in construction activity.
Service Charges and Other Income
Three | Nine | |||||||||||||||||
| Three Months Ended |
| Nine Months Ended |
| Months |
| Months | |||||||||||
November 2, | October 28, | November 2, | October 28, | $ Change | $ Change | |||||||||||||
(in thousands of dollars) | 2024 |
| 2023 | 2024 |
| 2023 | 2024 - 2023 | 2024 - 2023 | ||||||||||
Service charges and other income: |
|
|
|
|
|
| ||||||||||||
Retail operations segment |
|
|
|
|
|
| ||||||||||||
Income from the Citibank Alliance and former Wells Fargo Alliance | $ | 13,285 | $ | 16,784 | $ | 37,642 | $ | 50,908 | $ | (3,499) | $ | (13,266) | ||||||
Shipping and handling income |
| 7,723 |
| 8,431 |
| 25,356 |
| 27,782 |
| (708) |
| (2,426) | ||||||
Other |
| 3,115 |
| 2,594 |
| 9,465 |
| 8,992 |
| 521 |
| 473 | ||||||
| 24,123 |
| 27,809 |
| 72,463 |
| 87,682 |
| (3,686) |
| (15,219) | |||||||
Construction segment |
| 28 |
| 63 |
| 154 |
| 190 |
| (35) |
| (36) | ||||||
Total service charges and other income | $ | 24,151 | $ | 27,872 | $ | 72,617 | $ | 87,872 | $ | (3,721) | $ | (15,255) | ||||||
Service charges and other income is composed primarily of income from the Citibank Alliance and former Wells Fargo Alliance. Income from the alliances decreased $3.5 million for the three months ended November 2, 2024 compared to the three months ended October 28, 2023, primarily from increases in credit losses and decreases in finance charge income. Income from the alliances decreased $13.3 million for the nine months ended November 2, 2024 compared to the nine months ended October 28, 2023, primarily from increases in credit losses and decreases in finance charge income and late fees.
20
While future cash flows under the Citibank Alliance are difficult to predict, the Company expects income from this new alliance to initially be less than historical earnings from the Wells Fargo Alliance. The extent to which future cash flows will vary over the term of the new program from historical cash flows cannot be reasonably estimated at this time.
Gross Margin
| November 2, |
| October 28, |
|
|
| ||||||
(in thousands of dollars) | 2024 | 2023 | $ Change | % Change | ||||||||
Gross margin: |
|
|
|
|
| |||||||
Three months ended |
|
|
|
|
|
|
|
| ||||
Retail operations segment | $ | 603,480 | $ | 638,612 | $ | (35,132) |
| (5.5) | % | |||
Construction segment |
| 4,216 |
| 3,213 |
| 1,003 |
| 31.2 | ||||
Total gross margin | $ | 607,696 | $ | 641,825 | $ | (34,129) |
| (5.3) | % | |||
Nine months ended |
|
|
|
|
|
|
| |||||
Retail operations segment | $ | 1,849,863 | $ | 1,934,624 | $ | (84,761) |
| (4.4) | % | |||
Construction segment |
| 8,666 |
| 8,430 |
| 236 |
| 2.8 | ||||
Total gross margin | $ | 1,858,529 | $ | 1,943,054 | $ | (84,525) |
| (4.4) | % | |||
| Three Months Ended |
| Nine Months Ended |
| |||||
November 2, | October 28, | November 2, | October 28, |
| |||||
2024 |
| 2023 | 2024 |
| 2023 | ||||
Gross margin as a percentage of segment net sales: |
|
|
|
| |||||
Retail operations segment |
| 44.5 | % | 45.3 | % | 43.3 | % | 43.7 | % |
Construction segment |
| 6.0 |
| 4.8 |
| 4.5 |
| 4.1 | |
Total gross margin as a percentage of net sales |
| 42.6 |
| 43.5 |
| 41.6 |
| 42.0 | |
Gross margin, as a percentage of sales, decreased to 42.6% from 43.5% during the three months ended November 2, 2024 compared to the three months ended October 28, 2023, respectively.
Gross margin from retail operations, as a percentage of sales, decreased to 44.5% from 45.3% during the three months ended November 2, 2024 compared to the three months ended October 28, 2023, respectively, primarily as a result of increased markdowns. Gross margin decreased moderately in home and furniture and ladies’ apparel, while gross margin decreased slightly in juniors’ and children’s apparel and shoes. Gross margin remained essentially flat in cosmetics and men’s apparel and accessories. Gross margin increased slightly in ladies’ accessories and lingerie.
Gross margin, as a percentage of sales, decreased to 41.6% from 42.0% during the nine months ended November 2, 2024 compared to the nine months ended October 28, 2023, respectively.
Gross margin from retail operations, as a percentage of sales, decreased to 43.3% from 43.7% during the nine months ended November 2, 2024 compared to the nine months ended October 28, 2023, respectively. Gross margin decreased moderately in home and furniture, while gross margin decreased slightly in ladies’ apparel and shoes. Gross margin remained essentially flat in all other product categories.
Total inventory increased 3% at November 2, 2024 compared to October 28, 2023. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $1 million and $4 million for the three and nine months ended November 2, 2024, respectively.
Inflation, trade restrictions, including tariffs, and higher interest rates are a concern for management. The extent to which our business will be affected by these factors depends on our customers’ continuing ability and willingness to accept higher costs.
21
Selling, General and Administrative Expenses (“SG&A”)
| November 2, |
| October 28, |
|
|
|
| ||||||
(in thousands of dollars) | 2024 | 2023 | $ Change | % Change |
| ||||||||
SG&A: |
| ||||||||||||
Three months ended |
|
|
|
|
|
|
|
|
| ||||
Retail operations segment | $ | 416,652 | $ | 419,470 | $ | (2,818) |
| (0.7) | % | ||||
Construction segment |
| 2,247 |
| 2,355 |
| (108) |
| (4.6) | |||||
Total SG&A | $ | 418,899 | $ | 421,825 | $ | (2,926) |
| (0.7) | % | ||||
Nine months ended |
|
|
|
|
|
|
|
| |||||
Retail operations segment | $ | 1,271,508 | $ | 1,234,283 | $ | 37,225 |
| 3.0 | % | ||||
Construction segment |
| 7,724 |
| 6,460 |
| 1,264 |
| 19.6 | |||||
Total SG&A | $ | 1,279,232 | $ | 1,240,743 | $ | 38,489 |
| 3.1 | % | ||||
| Three Months Ended |
| Nine Months Ended |
| |||||
November 2, | October 28, | November 2, | October 28, |
| |||||
2024 |
| 2023 | 2024 |
| 2023 | ||||
SG&A as a percentage of segment net sales: |
| ||||||||
Retail operations segment |
| 30.7 | % | 29.8 | % | 29.7 | % | 27.9 | % |
Construction segment |
| 3.2 |
| 3.5 |
| 4.1 |
| 3.2 | |
Total SG&A as a percentage of net sales |
| 29.4 |
| 28.6 |
| 28.6 |
| 26.8 | |
SG&A increased to 29.4% of sales during the three months ended November 2, 2024 from 28.6% of sales during the three months ended October 28, 2023, while decreasing $2.9 million. SG&A from retail operations increased to 30.7% of sales for the three months ended November 2, 2024 from 29.8% of sales for the three months ended October 28, 2023, while decreasing $2.8 million.
SG&A increased to 28.6% of sales during the nine months ended November 2, 2024 from 26.8% of sales during the nine months ended October 28, 2023, an increase of $38.5 million. SG&A from retail operations increased to 29.7% of sales for the nine months ended November 2, 2024 from 27.9% of sales for the nine months ended October 28, 2023, an increase of $37.2 million.
During the three months ended November 2, 2024 compared to the three months ended October 28, 2023, payroll and payroll-related expenses were $298.5 million and $296.7 million, increasing $1.8 million. During those periods, payroll expense decreased $0.1 million while payroll-related expenses increased $1.9 million, primarily from increased insurance benefit expense.
During the nine months ended November 2, 2024 compared to the nine months ended October 28, 2023, payroll and payroll-related expenses were $905.0 million and $869.9 million, increasing $35.1 million.
The Company plans to continue its focus of aligning expenses with sales performance.
22
Interest and Debt (Income) Expense, Net
| November 2, |
| October 28, |
|
|
|
| ||||||
(in thousands of dollars) | 2024 | 2023 | $ Change | % Change |
| ||||||||
Interest and debt (income) expense, net: |
|
|
|
|
| ||||||||
Three months ended |
|
|
|
|
|
|
|
|
| ||||
Retail operations segment | $ | (4,267) | $ | (1,581) | $ | (2,686) |
| 169.9 | % | ||||
Construction segment |
| (211) |
| (209) |
| (2) |
| 1.0 | |||||
Total interest and debt (income) expense, net | $ | (4,478) | $ | (1,790) | $ | (2,688) |
| 150.2 | % | ||||
Nine months ended |
|
|
|
|
|
|
|
| |||||
Retail operations segment | $ | (11,273) | $ | (1,078) | $ | (10,195) |
| 945.7 | % | ||||
Construction segment |
| (671) |
| (457) |
| (214) |
| 46.8 | |||||
Total interest and debt (income) expense, net | $ | (11,944) | $ | (1,535) | $ | (10,409) |
| 678.1 | % | ||||
Net interest and debt (income) expense improved $2.7 million and $10.4 million during the three and nine months ended November 2, 2024 compared to the three and nine months ended October 28, 2023, respectively, primarily due to an increase in interest income. Interest income was $14.1 million and $11.7 million for the three months ended November 2, 2024 and October 28, 2023, respectively, and interest income was $41.4 million and $31.7 million for the nine months ended November 2, 2024 and October 28, 2023, respectively.
Other Expense
| November 2, |
| October 28, |
|
|
|
| ||||||
(in thousands of dollars) | 2024 | 2023 | $ Change | % Change |
| ||||||||
Other expense: |
| ||||||||||||
Three months ended |
|
|
|
|
|
|
|
|
| ||||
Retail operations segment | $ | 6,158 | $ | 4,697 | $ | 1,461 |
| 31.1 | % | ||||
Construction segment |
| — |
| — |
| — |
| — | |||||
Total other expense | $ | 6,158 | $ | 4,697 | $ | 1,461 |
| 31.1 | % | ||||
Nine months ended |
|
|
|
|
|
|
|
| |||||
Retail operations segment | $ | 18,474 | $ | 14,093 | $ | 4,381 |
| 31.1 | % | ||||
Construction segment |
| — |
| — |
| — |
| — | |||||
Total other expense | $ | 18,474 | $ | 14,093 | $ | 4,381 |
| 31.1 | % | ||||
Other expense increased $1.5 million and $4.4 million during the three and nine months ended November 2, 2024 compared to the three and nine months ended October 28, 2023 due to an increase in the interest cost and the amortization of the net actuarial loss related to the Company’s Pension Plan.
23
Gain on Disposal of Assets
| November 2, |
| October 28, |
|
| |||||
(in thousands of dollars) | 2024 | 2023 | $ Change | |||||||
Gain on disposal of assets: |
| |||||||||
Three months ended |
|
|
|
|
|
|
| |||
Retail operations segment | $ | (167) | $ | (4,053) | $ | 3,886 | ||||
Construction segment |
| (4) |
| — |
| (4) | ||||
Total gain on disposal of assets | $ | (171) | $ | (4,053) | $ | 3,882 | ||||
Nine months ended |
|
|
|
|
|
| ||||
Retail operations segment | $ | (422) | $ | (5,993) | $ | 5,571 | ||||
Construction segment |
| (29) |
| (13) |
| (16) | ||||
Total gain on disposal of assets | $ | (451) | $ | (6,006) | $ | 5,555 | ||||
During the three months ended October 28, 2023, the Company recorded proceeds of $4.1 million primarily from the sale of a store property, resulting in a gain of $4.1 million that was recorded in gain on disposal of assets. During the nine months ended October 28, 2023, the Company recorded proceeds of $6.3 million primarily from the sale of two store properties, resulting in a gain of $6.0 million that was recorded in gain on disposal of assets.
Income Taxes
The Company’s estimated federal and state effective income tax rate was approximately 23.3% and 22.1% for the three months ended November 2, 2024 and October 28, 2023, respectively. The Company’s estimated federal and state effective income tax rate was approximately 23.3% and 23.0% for the nine months ended November 2, 2024 and October 28, 2023, respectively. During the three and nine months ended November 2, 2024 and October 28, 2023, income tax expense differed from what would be computed using the statutory federal income tax rate primarily due to the effects of state and local income taxes.
The Company expects the fiscal 2024 federal and state effective income tax rate to approximate 19%. This rate includes expected federal and state income tax benefits due to a deduction related to that portion of the special dividend of $25.00 per share to be paid to the Dillard’s, Inc. Investment and Employee Stock Ownership Plan. This rate may change if results of operations for fiscal 2024 differ from management’s current expectations. Changes in the Company’s assumptions and judgments can materially affect amounts recognized in the condensed consolidated financial statements.
FINANCIAL CONDITION
A summary of net cash flows for the nine months ended November 2, 2024 and October 28, 2023 follows:
| Nine Months Ended |
|
| |||||||
November 2, | October 28, | |||||||||
(in thousands of dollars) | 2024 |
| 2023 | $ Change | ||||||
Operating activities | $ | 349,434 | $ | 447,107 | $ | (97,673) | ||||
Investing activities |
| (60,162) |
| 7,916 |
| (68,078) |
| |||
Financing activities |
| (117,167) |
| (273,353) |
| 156,186 |
| |||
Total Increase in Cash and Cash Equivalents and Restricted Cash | $ | 172,105 | $ | 181,670 | $ | (9,565) | ||||
Net cash flows from operations decreased $97.7 million during the nine months ended November 2, 2024 compared to the nine months ended October 28, 2023. This decrease was primarily due to lower sales.
In January 2024, the Company announced that it entered into a new agreement with Citibank, N.A. (“Citi”) to provide a credit card program for Dillard’s customers under the Citibank Alliance, replacing the existing Wells Fargo Alliance. Wells Fargo owned and managed the Dillard’s private label cards under the Wells Fargo Alliance, which
24
terminated in September 2024. The Dillard’s credit card program offered by Citi includes a new co-branded Mastercard as well as a private label credit card. The new co-branded Mastercard replaced the previous co-branded card. Additionally, Citi provides customer service functions and supports certain Dillard’s marketing and loyalty program activities related to the new program. The new program launched on August 19, 2024 for new Dillard’s credit applicants. Existing accounts transferred from Wells Fargo to Citi on September 16, 2024. The term of the new Citi agreement is 10 years with automatic extensions for successive two-year terms unless the agreement is terminated by a party in accordance with the terms and conditions of the agreement.
The Company recognized income of $37.6 million and $50.9 million during the nine months ended November 2, 2024 and October 28, 2023, respectively, from the former Wells Fargo Alliance and the Citibank Alliance.
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. We participate in the marketing of the private label cards, which includes the cost of customer reward programs.
While future cash flows under the new program are difficult to predict, the Company expects cash flows from the new program to initially be less than historical cash flows from the Wells Fargo Alliance. The extent to which future cash flows will vary over the term of the new program from historical cash flows cannot be reasonably estimated at this time. Any material decrease could adversely affect our operating results and cash flows.
Capital expenditures were $89.1 million and $104.7 million for the nine months ended November 2, 2024 and October 28, 2023, respectively. The capital expenditures were primarily related to equipment purchases, the continued construction of new stores and the remodeling of existing stores. During the nine months ended November 2, 2024, the Company opened a new location at The Empire Mall in Sioux Falls, South Dakota (140,000 square feet) marking its 30th state of operation. During the nine months ended October 28, 2023, the Company opened a 100,000 square foot expansion at Gateway Mall in Lincoln, Nebraska.
During the nine months ended November 2, 2024, the Company closed its Eastwood Mall Clearance Center in Niles, Ohio (120,000 square feet). The Company has also announced the upcoming closure of its leased facility at Stones River Town Centre in Murfreesboro, Tennessee (145,000 square feet). The store is expected to close in January 2025. There were no material costs associated or expected with any of these store closures. We remain committed to closing under-performing stores where appropriate and may incur future closing costs related to such stores when they close.
During the nine months ended October 28, 2023, the Company received cash proceeds of $6.3 million and recorded a related gain of $6.0 million, primarily from the sale of two store properties.
During the nine months ended October 28, 2023, the Company received proceeds from insurance of $4.5 million primarily from life insurance proceeds related to two policies.
During the nine months ended November 2, 2024 and October 28, 2023, the Company purchased certain treasury bills for $422.4 million and $148.1 million, respectively, that are classified as short-term investments. During the nine months ended November 2, 2024 and October 28, 2023, the Company received proceeds of $450.9 million and $250.0 million, respectively, related to maturities of these short-term investments.
The Company had cash and cash equivalents of $980.4 million as of November 2, 2024. The Company maintains a credit facility (“credit agreement”) for general corporate purposes including, among other uses, working capital financing, the issuance of letters of credit, capital expenditures and, subject to certain restrictions, the repayment of existing indebtedness and share repurchases. The credit agreement is secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries and provides a borrowing capacity of $800 million, subject to certain limitations as outlined in the credit agreement, with a $200 million expansion option. See Note 7, Revolving Credit Agreement, in the “Notes to Condensed Consolidated Financial Statements,” in Part I, Item 1 hereof for additional
25
information. At November 2, 2024, no borrowings were outstanding, and letters of credit totaling $25.3 million were issued under the credit agreement leaving unutilized availability of $774.7 million.
During the nine months ended November 2, 2024, the Company repurchased 0.3 million shares of Class A Common Stock at an average price of $364.43 per share for $107.0 million (including the accrual of $2.0 million of share repurchases that had not settled as of November 2, 2024) under the Company’s stock repurchase plan. During the nine months ended October 28, 2023, the Company repurchased 0.9 million shares of Class A Common Stock at an average price of $306.41 per share for $265.2 million (including the accrual of $2.0 million of share repurchases that had not settled as of October 28, 2023) under its stock repurchase plans. As of November 2, 2024, $287.0 million of authorization remained under the Company’s open stock repurchase plan. The ultimate disposition of the repurchased stock has not been determined. See Note 8, Stock Repurchase Programs, in the “Notes to Condensed Consolidated Financial Statements,” in Part I, Item 1 hereof for additional information.
On August 16, 2022, the Inflation Reduction Act of 2022 ("the Act") was signed into law. Under the Act, the Company’s share repurchases after December 31, 2022 are subject to a 1% excise tax. During the nine months ended November 2, 2024 and October 28, 2023, the Company accrued $1.1 million and $2.6 million, respectively, of excise tax related to its share repurchase programs as an additional cost of treasury shares.
On November 21, 2024, the Company announced that its Board of Directors declared a special dividend of $25.00 per share. The dividend is payable on the Class A Common Stock and Class B Common Stock of the Company on January 6, 2025 to stockholders of record as of December 13, 2024. The Company expects to fund the dividend from cash flows from operations.
The Company expects to finance its operations during fiscal 2024 from cash on hand, cash flows generated from operations and, if necessary, utilization of the credit facility. Depending upon our actual and anticipated sources and uses of liquidity, the Company will from time to time consider other possible financing transactions, the proceeds of which could be used to fund working capital or for other corporate purposes.
There have been no material changes in the information set forth under caption “Commercial Commitments” in Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024.
OFF-BALANCE-SHEET ARRANGEMENTS
The Company has not created, and is not party to, any special-purpose entities or off-balance-sheet arrangements for the purpose of raising capital, incurring debt or operating the Company’s business. The Company does not have any off-balance-sheet arrangements or relationships that are reasonably likely to materially affect the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or the availability of capital resources.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company evaluates its estimates and judgments on an ongoing basis and predicates those estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. Since future events and their effects cannot be determined with absolute certainty, actual results could differ from those estimates. For further information on our critical accounting policies and estimates, see “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the notes to our audited financial statements included in our Annual Report on Form 10-K for the year ended February 3, 2024. As of November 2, 2024, there have been no material changes to these critical accounting policies and estimates.
26
NEW ACCOUNTING STANDARDS
For information with respect to new accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, see Note 2, Accounting Standards, in the “Notes to Condensed Consolidated Financial Statements,” in Part I, Item 1 hereof.
FORWARD-LOOKING INFORMATION
This report contains certain forward-looking statements. The following are or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: (a) statements including words such as “may,” “will,” “could,” “should,” “believe,” “expect,” “future,” “potential,” “anticipate,” “intend,” “plan,” “estimate,” “continue,” or the negative or other variations thereof; (b) statements regarding matters that are not historical facts; and (c) statements about the Company’s future occurrences, plans and objectives, including statements regarding management’s expectations and forecasts for the 52-week period ended February 1, 2025 and beyond, statements regarding future income and cash flows from our new credit program with Citi, statements concerning the opening of new stores or the closing of existing stores, statements concerning capital expenditures, dividends and sources of liquidity, statements concerning share repurchases, statements concerning pension contributions, statements regarding the impacts of inflation, trade restrictions, including tariffs, and higher interest rates and statements concerning estimated taxes. The Company cautions that forward-looking statements contained in this report are based on estimates, projections, beliefs and assumptions of management and information available to management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise. Forward-looking statements of the Company involve risks and uncertainties and are subject to change based on various important factors. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and assumptions. Representative examples of those factors include (without limitation) general retail industry conditions and macro-economic conditions including inflation, higher interest rates, economic recession and changes in traffic at malls and shopping centers; economic and weather conditions for regions in which the Company’s stores are located and the effect of these factors on the buying patterns of the Company’s customers, including the effect of changes in prices and availability of oil and natural gas; the availability of and interest rates on consumer credit; the impact of competitive pressures in the department store industry and other retail channels including specialty, off-price, discount and Internet retailers; changes in the Company’s ability to meet labor needs amid nationwide labor shortages and an intense competition for talent; changes in consumer spending patterns, debt levels and their ability to meet credit obligations; high levels of unemployment; changes in tax legislation (including the Inflation Reduction Act of 2022); changes in legislation and governmental regulations, affecting trade restrictions, including tariffs, and such matters as the cost of employee benefits or credit card income, such as the Consumer Financial Protection Bureau’s recent amendment to Regulation Z to limit the dollar amounts credit card companies can charge for late fees; adequate and stable availability and pricing of materials, production facilities and labor from which the Company sources its merchandise; changes in operating expenses, including employee wages, commission structures and related benefits; system failures or data security breaches; possible future acquisitions of store properties from other department store operators; the continued availability of financing in amounts and at the terms necessary to support the Company’s future business; fluctuations in SOFR and other base borrowing rates; potential disruption from terrorist activity and the effect on ongoing consumer confidence; epidemic, pandemic or public health issues and their effects on public health, our supply chain, the health and well-being of our employees and customers and the retail industry in general; potential disruption of international trade and supply chain efficiencies; global conflicts (including the ongoing conflicts in the Middle East and Ukraine) and the possible impact on consumer spending patterns and other economic and demographic changes of similar or dissimilar nature, and other risks and uncertainties, including those detailed from time to time in our periodic reports filed with the Securities and Exchange Commission, particularly those set forth under the caption “Item 1A, Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024.
27
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in the information set forth under caption “Item 7A-Quantitative and Qualitative Disclosures about Market Risk” in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024.
Item 4. Controls and Procedures.
The Company has established and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). The Company’s management, with the participation of our Principal Executive Officer and Co-Principal Financial Officers, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the fiscal quarter covered by this quarterly report, and based on that evaluation, the Company’s Principal Executive Officer and Co-Principal Financial Officers have concluded that these disclosure controls and procedures were effective.
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended November 2, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
28
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, the Company is involved in litigation relating to claims arising out of the Company’s operations in the normal course of business. This may include litigation with customers, employment related lawsuits, class action lawsuits, purported class action lawsuits and actions brought by governmental authorities. As of December 6, 2024, the Company is not a party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.
Item 1A. Risk Factors.
There have been no material changes in the information set forth under caption “Item 1A-Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
| (c) | Purchases of Equity Securities |
Issuer Purchases of Equity Securities
|
|
| (c) Total Number of Shares |
| (d) Approximate Dollar Value of | |||||
Purchased as Part | Shares that May | |||||||||
(a) Total Number | of Publicly | Yet Be Purchased | ||||||||
of Shares | (b) Average Price | Announced Plans | Under the Plans | |||||||
Period | Purchased | Paid per Share | or Programs | or Programs | ||||||
August 4, 2024 through August 31, 2024 | 54,775 | $ | 346.84 | 54,775 | $ | 374,998,500 | ||||
September 1, 2024 through October 5, 2024 | 132,646 | 361.83 | 132,646 | 327,002,805 | ||||||
October 6, 2024 through November 2, 2024 | 106,162 | 376.75 | 106,162 | 287,005,827 | ||||||
Total | 293,583 | $ | 364.43 | 293,583 | $ | 287,005,827 | ||||
In May 2023, the Company’s Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $500 million of its Class A Common Stock under an open-ended plan (“May 2023 Stock Plan”). During the three months ended November 2, 2024, the Company repurchased 0.3 million shares totaling $107.0 million under its stock repurchase plan. As of November 2, 2024, $287.0 million of authorization remained under the May 2023 Stock Plan.
Reference is made to the discussion in Note 8, Stock Repurchase Programs, in the “Notes to Condensed Consolidated Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10-Q, which information is incorporated by reference herein.
Item 5. Other Information.
(c) During the three months ended November 2, 2024,
29
Item 6. Exhibits.
Number |
| Description |
31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | ||
31.3 | ||
32.1 | ||
32.2 | ||
32.3 | ||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| DILLARD’S, INC. | |
| (Registrant) | ||
| |||
|
| ||
Date: | December 6, 2024 |
| /s/ Phillip R. Watts |
Phillip R. Watts | |||
|
| Senior Vice President, Co-Principal Financial Officer and Principal Accounting Officer | |
|
| ||
/s/ Chris B. Johnson | |||
Chris B. Johnson | |||
Senior Vice President and Co-Principal Financial Officer |
31