DILLARD'S, INC. [DDS] Filings

10-Q 1 dds-20240803x10q.htm 10-Q

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 August 3, 2024


☐	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 August 31, 2024 12,192,670

CLASS B COMMON STOCK as of August 31, 2024 3,986,233

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Index

DILLARD’S, INC.

		Page
		Number
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of August 3, 2024, February 3, 2024 and July 29, 2023	3

	Condensed Consolidated Statements of Income for the Three and Six Months Ended August 3, 2024 and July 29, 2023	4

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended August 3, 2024 and July 29, 2023	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended August 3, 2024 and July 29, 2023	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended August 3, 2024 and July 29, 2023	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 5.	Other Information	28

Item 6.	Exhibits	29

SIGNATURES		30

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

DILLARD’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands)


	August 3,		February 3,		July 29,
	2024		2024		2023
Assets
Current assets:
Cash and cash equivalents	$	946,728	$	808,287	$	774,343
Accounts receivable		64,468		60,547		59,701
Short-term investments		123,751		148,036		150,151
Merchandise inventories		1,191,432		1,093,999		1,192,703
Federal and state income taxes		35,462		—		—
Other current assets		91,701		97,341		103,331

Total current assets		2,453,542		2,208,210		2,280,229

Property and equipment (net of accumulated depreciation of $2,727,608, $2,638,167 and $2,664,745, respectively)		1,044,866		1,074,304		1,098,947
Operating lease assets		38,936		42,681		30,364
Deferred income taxes		63,935		63,951		45,980
Other assets		60,583		59,760		56,842

Total assets	$	3,661,862	$	3,448,906	$	3,512,362

Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable and accrued expenses	$	768,758	$	782,545	$	803,142
Current portion of operating lease liabilities		11,535		11,252		8,047
Federal and state income taxes		—		33,959		115,633

Total current liabilities		780,293		827,756		926,822

Long-term debt		321,514		321,461		321,407
Operating lease liabilities		27,440		31,728		22,291
Other liabilities		383,694		370,893		332,326
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		(83,321)		(87,208)		(63,034)
Retained earnings		6,294,693		6,048,288		5,975,028
Less treasury stock, at cost		(5,232,600)		(5,232,600)		(5,167,837)

Total stockholders’ equity		1,948,921		1,697,068		1,709,516

Total liabilities and stockholders’ equity	$	3,661,862	$	3,448,906	$	3,512,362

See notes to condensed consolidated financial statements.

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DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands, Except Per Share Data)


	Three Months Ended				Six Months Ended
	August 3,		July 29,		August 3,		July 29,
	2024		2023		2024		2023
Net sales	$	1,489,938	$	1,567,377	$	3,038,989	$	3,151,325
Service charges and other income		24,708		30,041		48,466		60,000

		1,514,646		1,597,418		3,087,455		3,211,325

Cost of sales		930,331		958,835		1,788,156		1,850,096
Selling, general and administrative expenses		433,659		412,543		860,333		818,918
Depreciation and amortization		46,376		44,818		92,495		90,565
Rentals		4,956		4,961		9,980		9,342
Interest and debt (income) expense, net		(3,934)		132		(7,466)		255
Other expense		6,158		4,698		12,316		9,396
Gain on disposal of assets		(13)		(160)		(280)		(1,953)

Income before income taxes		97,113		171,591		331,921		434,706
Income taxes		22,630		40,080		77,400		101,700

Net income	$	74,483	$	131,511	$	254,521	$	333,006

Earnings per share:
Basic and diluted	$	4.59	$	7.98	$	15.68	$	19.89

See notes to condensed consolidated financial statements.

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DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In Thousands)


	Three Months Ended				Six Months Ended
	August 3,		July 29,		August 3,		July 29,
	2024		2023		2024		2023
Net income	$	74,483	$	131,511	$	254,521	$	333,006
Other comprehensive income:
Amortization of retirement plan and other retiree benefit adjustments (net of tax of $239, $117, $478 and $233, respectively)		1,943		1,344		3,887		2,688

Comprehensive income	$	76,426	$	132,855	$	258,408	$	335,694

See notes to condensed consolidated financial statements.

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DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In Thousands, Except Share and Per Share Data)


	Three Months Ended August 3, 2024
					Accumulated
			Additional		Other
	Common		Paid-in		Comprehensive		Retained		Treasury
	Stock		Capital		Loss		Earnings		Stock		Total
Balance, May 4, 2024	$	1,240	$	967,348	$	(85,264)	$	6,224,268	$	(5,232,600)	$	1,874,992
Net income		—		—		—		74,483		—		74,483
Other comprehensive income		—		—		1,943		—		—		1,943
Issuance of 3,600 shares under equity plans		—		1,561		—		—		—		1,561
Cash dividends declared:
Common stock, $0.25 per share		—		—		—		(4,058)		—		(4,058)
Balance, August 3, 2024	$	1,240	$	968,909	$	(83,321)	$	6,294,693	$	(5,232,600)	$	1,948,921


	Three Months Ended July 29, 2023
					Accumulated
			Additional		Other
	Common		Paid-in		Comprehensive		Retained		Treasury
	Stock		Capital		Loss		Earnings		Stock		Total
Balance, April 29, 2023	$	1,240	$	962,839	$	(64,378)	$	5,846,802	$	(5,063,369)	$	1,683,134
Net income		—		—		—		131,511		—		131,511
Other comprehensive income		—		—		1,344		—		—		1,344
Issuance of 4,500 shares under equity plans		—		1,280		—		—		—		1,280
Purchase of 357,548 shares of treasury stock (including excise tax)		—		—		—		—		(104,468)		(104,468)
Cash dividends declared:
Common stock, $0.20 per share		—		—		—		(3,285)		—		(3,285)
Balance, July 29, 2023	$	1,240	$	964,119	$	(63,034)	$	5,975,028	$	(5,167,837)	$	1,709,516


	Six Months Ended August 3, 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		—		—		—		254,521		—		254,521
Other comprehensive income		—		—		3,887		—		—		3,887
Issuance of 3,600 shares under equity plans		—		1,561		—		—		—		1,561
Cash dividends declared:
Common stock, $0.50 per share		—		—		—		(8,116)		—		(8,116)
Balance, August 3, 2024	$	1,240	$	968,909	$	(83,321)	$	6,294,693	$	(5,232,600)	$	1,948,921

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	Six Months Ended July 29, 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		—		—		—		333,006		—		333,006
Other comprehensive income		—		—		2,688		—		—		2,688
Issuance of 4,500 shares under equity plans		—		1,280		—		—		—		1,280
Purchase of 714,702 shares of treasury stock (including excise tax)		—		—		—		—		(219,418)		(219,418)
Cash dividends declared:
Common stock, $0.40 per share		—		—		—		(6,678)		—		(6,678)
Balance, July 29, 2023	$	1,240	$	964,119	$	(63,034)	$	5,975,028	$	(5,167,837)	$	1,709,516

See notes to condensed consolidated financial statements.

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DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)


	Six Months Ended
	August 3,		July 29,
	2024		2023
Operating activities:
Net income	$	254,521	$	333,006
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and other deferred costs		93,387		91,376
Gain on disposal of assets		(280)		(1,953)
Accrued interest on short-term investments		(7,062)		(3,113)
Changes in operating assets and liabilities:
Increase in accounts receivable		(3,921)		(2,749)
Increase in merchandise inventories		(97,433)		(72,495)
Decrease (increase) in other current assets		3,860		(12,408)
(Increase) decrease in other assets		(1,466)		4,492
Decrease in trade accounts payable and accrued expenses and other liabilities		(3,201)		(24,878)
(Decrease) increase in income taxes payable		(62,448)		86,572

Net cash provided by operating activities		175,957		397,850

Investing activities:
Purchase of property and equipment and capitalized software		(61,086)		(63,807)
Proceeds from disposal of assets		336		2,179
Purchase of short-term investments		(319,505)		(148,098)
Proceeds from maturities of short-term investments		350,852		149,962

Net cash used in investing activities		(29,403)		(59,764)

Financing activities:
Cash dividends paid		(8,113)		(6,818)
Purchase of treasury stock		—		(217,256)

Net cash used in financing activities		(8,113)		(224,074)

Increase in cash and cash equivalents and restricted cash		138,441		114,012
Cash and cash equivalents and restricted cash, beginning of period		808,287		660,331

Cash and cash equivalents, end of period	$	946,728	$	774,343

Non-cash transactions:
Accrued capital expenditures	$	8,442	$	11,973
Stock awards		1,561		1,280
Accrued purchases of treasury stock and excise taxes		—		2,162
Lease assets obtained in exchange for new operating lease liabilities		2,152		2,027

See notes to condensed consolidated financial statements.

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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 six months ended August 3, 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.

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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				Six Months Ended
	August 3,		July 29,		August 3,		July 29,
	2024		2023		2024		2023
Retail operations segment:
Cosmetics	15	%	14	%	15	%	14	%
Ladies’ apparel	22		22		23		23
Ladies’ accessories and lingerie	14		14		13		13
Juniors’ and children’s apparel	8		8		9		9
Men’s apparel and accessories	20		21		19		19
Shoes	14		14		14		15
Home and furniture	3		3		3		3
	96		96		96		96
Construction segment	4		4		4		4
Total	100	%	100	%	100	%	100	%

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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 August 3, 2024
Net sales from external customers	$	1,426,431	$	63,507	$	1,489,938
Gross margin		557,198		2,409		559,607
Depreciation and amortization		46,213		163		46,376
Interest and debt (income) expense, net		(3,718)		(216)		(3,934)
Income (loss) before income taxes		97,477		(364)		97,113
Total assets		3,584,664		77,198		3,661,862

Three Months Ended July 29, 2023
Net sales from external customers	$	1,498,532	$	68,845	$	1,567,377
Gross margin		605,623		2,919		608,542
Depreciation and amortization		44,751		67		44,818
Interest and debt expense (income), net		275		(143)		132
Income before income taxes		170,618		973		171,591
Total assets		3,443,882		68,480		3,512,362

Six Months Ended August 3, 2024
Net sales from external customers	$	2,919,074	$	119,915	$	3,038,989
Gross margin		1,246,383		4,450		1,250,833
Depreciation and amortization		92,264		231		92,495
Interest and debt (income) expense, net		(7,006)		(460)		(7,466)
Income (loss) before income taxes		332,684		(763)		331,921
Total assets		3,584,664		77,198		3,661,862

Six Months Ended July 29, 2023
Net sales from external customers	$	3,013,465	$	137,860	$	3,151,325
Gross margin		1,296,012		5,217		1,301,229
Depreciation and amortization		90,438		127		90,565
Interest and debt expense (income), net		503		(248)		255
Income before income taxes		433,441		1,265		434,706
Total assets		3,443,882		68,480		3,512,362

Intersegment construction revenues of $7.3 million and $10.1 million for the three months ended August 3, 2024 and July 29, 2023, respectively, and $16.7 million and $20.5 million for the six months ended August 3, 2024 and July 29, 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
	August 3,		February 3,		July 29,		January 28,
(in thousands of dollars)	2024		2024		2023		2023
Contract liabilities	$	70,207	$	85,227	$	73,399	$	83,909

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During the six months ended August 3, 2024 and July 29, 2023, the Company recorded $38.1 million and $36.7 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:

Construction

DILLARD'S, INC. [DDS] Filings

DILLARD'S, INC. [DDT] Filings