10-Q 1 dds-20241102x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

  

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 2, 2024

or

  

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

Commission File Number:  1-6140

DILLARD’S, INC.

(Exact name of registrant as specified in its charter)

DELAWARE

     

71-0388071

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

1600 CANTRELL ROAD, LITTLE ROCK, ARKANSAS  72201

(Address of principal executive offices)

(Zip Code)

(501) 376-5200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock

DDS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

     

Accelerated filer

Non-accelerated filer 

 

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

CLASS A COMMON STOCK as of November 30, 2024     11,917,962

CLASS B COMMON STOCK as of November 30, 2024 3,986,233

Index

DILLARD’S, INC.

Page

Number

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited):

Condensed Consolidated Balance Sheets as of November 2, 2024, February 3, 2024 and October 28, 2023

3

Condensed Consolidated Statements of Income for the Three and Nine Months Ended November 2, 2024 and October 28, 2023

4

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended November 2, 2024 and October 28, 2023

5

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended November 2, 2024 and October 28, 2023

6

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended November 2, 2024 and October 28, 2023

8

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

28

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 5.

Other Information

29

Item 6.

Exhibits

30

SIGNATURES

31

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

DILLARD’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands)

    

November 2,

    

February 3,

    

October 28,

    

2024

2024

2023

    

Assets

 

  

 

  

 

  

 

Current assets:

 

  

 

  

 

  

 

Cash and cash equivalents

$

980,392

$

808,287

$

842,001

Accounts receivable

 

61,741

 

60,547

 

57,412

Short-term investments

128,875

148,036

51,257

Merchandise inventories

 

1,682,217

 

1,093,999

 

1,629,245

Other current assets

 

89,076

 

97,341

 

85,646

Total current assets

 

2,942,301

 

2,208,210

 

2,665,561

Property and equipment (net of accumulated depreciation of $2,769,402, $2,638,167 and $2,699,516, respectively)

 

1,030,690

 

1,074,304

 

1,094,587

Operating lease assets

 

35,921

 

42,681

 

34,462

Deferred income taxes

 

64,733

 

63,951

 

47,563

Other assets

 

59,417

 

59,760

 

55,761

Total assets

$

4,133,062

$

3,448,906

$

3,897,934

Liabilities and stockholders’ equity

 

  

 

  

 

  

Current liabilities:

 

  

 

  

 

  

Trade accounts payable and accrued expenses

$

1,214,982

$

782,545

$

1,181,198

Current portion of operating lease liabilities

11,721

11,252

8,461

Federal and state income taxes

 

10,030

 

33,959

 

12,500

Total current liabilities

 

1,236,733

 

827,756

 

1,202,159

Long-term debt

 

321,541

 

321,461

 

321,434

Operating lease liabilities

 

24,338

 

31,728

 

26,246

Other liabilities

 

387,055

 

370,893

 

334,457

Subordinated debentures

 

200,000

 

200,000

 

200,000

Commitments and contingencies

 

  

 

  

 

  

Stockholders’ equity:

 

  

 

  

 

  

Common stock

 

1,240

 

1,240

 

1,240

Additional paid-in capital

 

968,909

 

967,348

 

964,119

Accumulated other comprehensive loss

 

(81,376)

 

(87,208)

 

(61,689)

Retained earnings

 

6,415,270

 

6,048,288

 

6,126,277

Less treasury stock, at cost

 

(5,340,648)

 

(5,232,600)

 

(5,216,309)

Total stockholders’ equity

 

1,963,395

 

1,697,068

 

1,813,638

Total liabilities and stockholders’ equity

$

4,133,062

$

3,448,906

$

3,897,934

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

    

Net sales

$

1,427,009

$

1,476,362

$

4,465,998

$

4,627,687

Service charges and other income

 

24,151

 

27,872

 

72,617

 

87,872

 

1,451,160

 

1,504,234

 

4,538,615

 

4,715,559

Cost of sales

 

819,313

 

834,537

 

2,607,469

 

2,684,633

Selling, general and administrative expenses

 

418,899

 

421,825

 

1,279,232

 

1,240,743

Depreciation and amortization

 

44,045

 

44,707

 

136,540

 

135,272

Rentals

 

4,888

 

4,932

 

14,868

 

14,274

Interest and debt (income) expense, net

 

(4,478)

 

(1,790)

 

(11,944)

 

(1,535)

Other expense

 

6,158

 

4,697

 

18,474

 

14,093

Gain on disposal of assets

 

(171)

 

(4,053)

 

(451)

 

(6,006)

Income before income taxes

 

162,506

 

199,379

 

494,427

 

634,085

Income taxes

 

37,910

 

44,040

 

115,310

 

145,740

Net income

$

124,596

$

155,339

$

379,117

$

488,345

Earnings per share:

 

  

 

  

 

  

 

  

Basic and diluted

$

7.73

$

9.49

$

23.42

$

29.38

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

 

November 2,

October 28,

November 2,

October 28,

2024

    

2023

    

2024

    

2023

    

Net income

$

124,596

$

155,339

$

379,117

$

488,345

Other comprehensive income:

 

  

 

  

 

  

 

  

 

Amortization of retirement plan and other retiree benefit adjustments (net of tax of $238, $117, $716 and $350, respectively)

 

1,945

 

1,345

 

5,832

 

4,033

 

Comprehensive income

$

126,541

$

156,684

$

384,949

$

492,378

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

    

    

    

Accumulated 

    

    

    

Additional 

Other 

Common 

Paid-in 

Comprehensive

Retained 

Treasury 

Stock

Capital

 Loss

Earnings

Stock

Total

Balance, August 3, 2024

$

1,240

$

968,909

$

(83,321)

$

6,294,693

$

(5,232,600)

$

1,948,921

Net income

 

 

 

 

124,596

 

 

124,596

Other comprehensive income

 

 

 

1,945

 

 

 

1,945

Purchase of 293,583 shares of treasury stock (including excise tax)

 

 

 

 

 

(108,048)

 

(108,048)

Cash dividends declared:

 

  

 

  

 

  

 

  

 

  

 

Common stock, $0.25 per share

 

 

 

 

(4,019)

 

 

(4,019)

Balance, November 2, 2024

$

1,240

$

968,909

$

(81,376)

$

6,415,270

$

(5,340,648)

$

1,963,395

Three Months Ended October 28, 2023

    

    

    

Accumulated 

    

    

    

Additional 

Other 

Common 

Paid-in 

Comprehensive

Retained 

Treasury 

Stock

Capital

 Loss

Earnings

Stock

Total

Balance, July 29, 2023

$

1,240

$

964,119

$

(63,034)

$

5,975,028

$

(5,167,837)

$

1,709,516

Net income

 

 

 

 

155,339

 

 

155,339

Other comprehensive income

 

 

 

1,345

 

 

 

1,345

Purchase of 150,908 shares of treasury stock (including excise tax)

 

 

 

 

 

(48,472)

 

(48,472)

Cash dividends declared:

 

  

 

  

 

  

 

  

 

  

 

Common stock, $0.25 per share

 

 

 

 

(4,090)

 

 

(4,090)

Balance, October 28, 2023

$

1,240

$

964,119

$

(61,689)

$

6,126,277

$

(5,216,309)

$

1,813,638

Nine Months Ended November 2, 2024

    

    

    

Accumulated

    

    

    

Additional

Other

Common

Paid-in

Comprehensive

Retained

Treasury

Stock

Capital

Loss

Earnings

Stock

Total

Balance, February 3, 2024

$

1,240

$

967,348

$

(87,208)

$

6,048,288

$

(5,232,600)

$

1,697,068

Net income

 

 

 

 

379,117

 

 

379,117

Other comprehensive income

 

 

 

5,832

 

 

 

5,832

Issuance of 3,600 shares under equity plans

 

 

1,561

 

 

 

 

1,561

Purchase of 293,583 shares of treasury stock (including excise tax)

 

 

 

 

 

(108,048)

 

(108,048)

Cash dividends declared:

 

  

 

  

 

  

 

  

 

  

 

  

Common stock, $0.75 per share

 

 

 

 

(12,135)

 

 

(12,135)

Balance, November 2, 2024

$

1,240

$

968,909

$

(81,376)

$

6,415,270

$

(5,340,648)

$

1,963,395

6

Nine Months Ended October 28, 2023

    

    

    

Accumulated 

    

    

    

Additional 

Other 

Common 

Paid-in 

Comprehensive

Retained 

Treasury 

Stock

Capital

 Loss

Earnings

Stock

Total

Balance, January 28, 2023

$

1,240

$

962,839

$

(65,722)

$

5,648,700

$

(4,948,419)

$

1,598,638

Net income

 

 

 

 

488,345

 

 

488,345

Other comprehensive income

 

 

 

4,033

 

 

 

4,033

Issuance of 4,500 shares under equity plans

 

 

1,280

 

 

 

 

1,280

Purchase of 865,610 shares of treasury stock (including excise tax)

 

 

 

 

 

(267,890)

 

(267,890)

Cash dividends declared:

 

  

 

  

 

  

 

  

 

  

 

  

Common stock, $0.65 per share

 

 

 

 

(10,768)

 

 

(10,768)

Balance, October 28, 2023

$

1,240

$

964,119

$

(61,689)

$

6,126,277

$

(5,216,309)

$

1,813,638

See notes to condensed consolidated financial statements.

7

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

    

Nine Months Ended

 

November 2,

    

October 28,

 

2024

2023

    

Operating activities:

 

  

 

  

Net income

$

379,117

$

488,345

Adjustments to reconcile net income to net cash provided by operating activities:

 

  

 

  

Depreciation and amortization of property and other deferred costs

 

137,817

 

136,482

Gain on disposal of assets

 

(451)

 

(6,006)

Accrued interest on short-term investments

(9,253)

(4,219)

Changes in operating assets and liabilities:

 

  

 

  

Increase in accounts receivable

 

(1,194)

 

(460)

Increase in merchandise inventories

 

(588,218)

 

(509,037)

Decrease in other current assets

 

9,820

 

4,610

(Increase) decrease in other assets

 

(1,037)

 

188

Increase in trade accounts payable and accrued expenses and other liabilities

 

447,635

 

354,638

Decrease in income taxes payable

 

(24,802)

 

(17,434)

Net cash provided by operating activities

 

349,434

 

447,107

Investing activities:

 

  

 

  

Purchase of property and equipment and capitalized software

 

(89,147)

 

(104,679)

Proceeds from disposal of assets

 

571

 

6,254

Proceeds from insurance

 

 

4,477

Purchase of short-term investments

(422,438)

(148,098)

Proceeds from maturities of short-term investments

450,852

249,962

Net cash (used in) provided by investing activities

 

(60,162)

 

7,916

Financing activities:

 

  

 

  

Cash dividends paid

 

(12,172)

 

(10,104)

Purchase of treasury stock

 

(104,995)

 

(263,249)

Net cash used in financing activities

 

(117,167)

 

(273,353)

Increase in cash and cash equivalents and restricted cash

 

172,105

 

181,670

Cash and cash equivalents and restricted cash, beginning of period

 

808,287

 

660,331

Cash and cash equivalents, end of period

$

980,392

$

842,001

Non-cash transactions:

 

  

 

  

Accrued capital expenditures

$

9,935

$

10,934

Stock awards

 

1,561

 

1,280

Accrued purchases of treasury stock and excise taxes

3,053

4,641

Lease assets obtained in exchange for new operating lease liabilities

 

2,152

 

9,186

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 two reportable segments: the operation of retail department stores (“retail operations”) and a general contracting construction company (“construction”).

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 one reportable segment for financial reporting purposes because stores are similar in each of the following areas: economic characteristics, class of consumer, nature of products and distribution methods. Revenues from external customers are derived from merchandise sales, and the Company does not rely on any major customers as a source of revenue. Across all stores, the Company operates one store format under the Dillard’s name where each store offers the same general mix of merchandise with similar categories and similar customers. The Company believes that disaggregating its retail operations segment would not provide meaningful additional information.

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

 

Retail operations segment:

  

  

  

  

 

Cosmetics

 

15

%  

14

%  

15

%  

14

%

Ladies’ apparel

 

21

 

21

 

22

 

22

Ladies’ accessories and lingerie

 

13

 

13

 

13

 

13

Juniors’ and children’s apparel

 

9

 

10

 

9

 

10

Men’s apparel and accessories

 

19

 

19

 

19

 

19

Shoes

 

15

 

15

 

15

 

15

Home and furniture

 

3

 

3

 

3

 

3

 

95

 

95

 

96

 

96

Construction segment

 

5

 

5

 

4

 

4

Total

 

100

%  

100

%  

100

%  

100

%

10

The following tables summarize certain segment information, including the reconciliation of those items to the Company’s consolidated operations:

    

Retail 

    

    

(in thousands of dollars)

Operations

Construction

Consolidated

Three Months Ended November 2, 2024

 

  

 

  

 

  

Net sales from external customers

$

1,356,240

$

70,769

$

1,427,009

Gross margin

 

603,480

 

4,216

 

607,696

Depreciation and amortization

 

43,976

 

69

 

44,045

Interest and debt (income) expense, net

 

(4,267)

 

(211)

 

(4,478)

Income before income taxes

 

160,413

 

2,093

 

162,506

Total assets

 

4,053,706

 

79,356

 

4,133,062

Three Months Ended October 28, 2023

 

  

 

  

 

  

Net sales from external customers

$

1,409,487

$

66,875

$

1,476,362

Gross margin

 

638,612

 

3,213

 

641,825

Depreciation and amortization

 

44,641

 

66

 

44,707

Interest and debt (income) expense, net

 

(1,581)

 

(209)

 

(1,790)

Income before income taxes

 

198,369

 

1,010

 

199,379

Total assets

 

3,828,418

 

69,516

 

3,897,934

Nine Months Ended November 2, 2024

 

  

 

  

 

  

Net sales from external customers

$

4,275,314

$

190,684

$

4,465,998

Gross margin

 

1,849,863

 

8,666

 

1,858,529

Depreciation and amortization

 

136,240

 

300

 

136,540

Interest and debt (income) expense, net

 

(11,273)

 

(671)

 

(11,944)

Income before income taxes

 

493,097

 

1,330

 

494,427

Total assets

 

4,053,706

 

79,356

 

4,133,062

Nine Months Ended October 28, 2023

 

  

 

  

 

  

Net sales from external customers

$

4,422,952

$

204,735

$

4,627,687

Gross margin

 

1,934,624

 

8,430

 

1,943,054

Depreciation and amortization

 

135,079

 

193

 

135,272

Interest and debt (income) expense, net

 

(1,078)

 

(457)

 

(1,535)

Income before income taxes

 

631,810

 

2,275

 

634,085

Total assets

 

3,828,418

 

69,516

 

3,897,934

Intersegment construction revenues of $6.8 million and $14.4 million for the three months ended November 2, 2024 and October 28, 2023, respectively, and $23.6 million and $34.9 million for the nine months ended November 2, 2024 and October 28, 2023, respectively, were eliminated during consolidation and have been excluded from net sales for the respective periods.

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,

     

(in thousands of dollars)

    

2024

    

2024

    

2023

    

2023

Contract liabilities

$

67,189

$

85,227

$

71,675

$

83,909

11

During the nine months ended November 2, 2024 and October 28, 2023, the Company recorded $47.1 million and $44.4 million, respectively, in revenue that was previously included in the retail operations contract liability balances of $85.2 million and $83.9 million at February 3, 2024 and January 28, 2023, respectively.

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: