DILLARD'S, INC. [DDT] Filings

10-Q 1 dds-20230729x10q.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 July 29, 2023


☐	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 26, 2023 12,438,541

CLASS B COMMON STOCK as of August 26, 2023 3,986,233

Table of Contents

Index

DILLARD’S, INC.

		Page
		Number
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of July 29, 2023, January 28, 2023 and July 30, 2022	3

	Condensed Consolidated Statements of Income for the Three and Six Months Ended July 29, 2023 and July 30, 2022	4

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended July 29, 2023 and July 30, 2022	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended July 29, 2023 and July 30, 2022	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 29, 2023 and July 30, 2022	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

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

DILLARD’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands)


	July 29,		January 28,		July 30,
	2023		2023		2022
Assets
Current assets:
Cash and cash equivalents	$	774,343	$	650,336	$	492,856
Restricted cash		—		9,995		—
Accounts receivable		59,701		56,952		36,396
Short-term investments		150,151		148,902		74,006
Merchandise inventories		1,192,703		1,120,208		1,193,443
Federal and state income taxes		—		—		35,655
Other current assets		103,331		85,453		97,782

Total current assets		2,280,229		2,071,846		1,930,138

Property and equipment (net of accumulated depreciation of $2,664,745, $2,584,708 and $2,601,424, respectively)		1,098,947		1,118,379		1,159,740
Operating lease assets		30,364		33,821		37,126
Deferred income taxes		45,980		42,278		30,243
Other assets		56,842		62,826		64,356

Total assets	$	3,512,362	$	3,329,150	$	3,221,603

Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable and accrued expenses	$	803,142	$	828,484	$	890,784
Current portion of long-term debt		—		—		44,800
Current portion of operating lease liabilities		8,047		9,702		10,422
Federal and state income taxes		115,633		20,775		—

Total current liabilities		926,822		858,961		946,006

Long-term debt		321,407		321,354		321,300
Operating lease liabilities		22,291		24,164		26,485
Other liabilities		332,326		326,033		278,811
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		964,119		962,839		958,974
Accumulated other comprehensive loss		(63,034)		(65,722)		(22,435)
Retained earnings		5,975,028		5,648,700		5,435,331
Less treasury stock, at cost		(5,167,837)		(4,948,419)		(4,924,109)

Total stockholders’ equity		1,709,516		1,598,638		1,449,001

Total liabilities and stockholders’ equity	$	3,512,362	$	3,329,150	$	3,221,603

See notes to condensed consolidated financial statements.

Table of Contents

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands, Except Per Share Data)


	Three Months Ended				Six Months Ended
	July 29,		July 30,		July 29,		July 30,
	2023		2022		2023		2022
Net sales	$	1,567,377	$	1,588,620	$	3,151,325	$	3,200,288
Service charges and other income		30,041		29,267		60,000		60,381

		1,597,418		1,617,887		3,211,325		3,260,669

Cost of sales		958,835		941,217		1,850,096		1,802,654
Selling, general and administrative expenses		412,543		401,332		818,918		802,105
Depreciation and amortization		44,818		47,919		90,565		94,128
Rentals		4,961		5,316		9,342		10,395
Interest and debt expense, net		132		9,589		255		20,151
Other expense		4,698		1,936		9,396		3,872
Gain on disposal of assets		(160)		(1)		(1,953)		(7,238)

Income before income taxes		171,591		210,579		434,706		534,602
Income taxes		40,080		47,130		101,700		120,060

Net income	$	131,511	$	163,449	$	333,006	$	414,542

Earnings per share:
Basic and diluted	$	7.98	$	9.30	$	19.89	$	23.07

See notes to condensed consolidated financial statements.

Table of Contents

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In Thousands)


	Three Months Ended				Six Months Ended
	July 29,		July 30,		July 29,		July 30,
	2023		2022		2023		2022
Net income	$	131,511	$	163,449	$	333,006	$	414,542
Other comprehensive income:
Amortization of retirement plan and other retiree benefit adjustments (net of tax of $117, $58, $233 and $116, respectively)		1,344		182		2,688		363

Comprehensive income	$	132,855	$	163,631	$	335,694	$	414,905

See notes to condensed consolidated financial statements.

Table of Contents

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In Thousands, Except Share and Per Share Data)


	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


	Three Months Ended July 30, 2022
					Accumulated
			Additional		Other
	Common		Paid-in		Comprehensive		Retained		Treasury
	Stock		Capital		Loss		Earnings		Stock		Total
Balance, April 30, 2022	$	1,240	$	956,653	$	(22,617)	$	5,275,371	$	(4,698,314)	$	1,512,333
Net income		—		—		—		163,449		—		163,449
Other comprehensive income		—		—		182		—		—		182
Issuance of 9,000 shares under equity plans		—		2,321		—		—		—		2,321
Purchase of 874,818 shares of treasury stock		—		—		—		—		(225,795)		(225,795)
Cash dividends declared:
Common stock, $0.20 per share		—		—		—		(3,489)		—		(3,489)
Balance, July 30, 2022	$	1,240	$	958,974	$	(22,435)	$	5,435,331	$	(4,924,109)	$	1,449,001


	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

Table of Contents


	Six Months Ended July 30, 2022
					Accumulated
			Additional		Other
	Common		Paid-in		Comprehensive		Retained		Treasury
	Stock		Capital		Loss		Earnings		Stock		Total
Balance, January 29, 2022	$	1,240	$	956,653	$	(22,798)	$	5,027,922	$	(4,511,799)	$	1,451,218
Net income		—		—		—		414,542		—		414,542
Other comprehensive income		—		—		363		—		—		363
Issuance of 9,000 shares under equity plans		—		2,321		—		—		—		2,321
Purchase of 1,609,935 shares of treasury stock		—		—		—		—		(412,310)		(412,310)
Cash dividends declared:
Common stock, $0.40 per share		—		—		—		(7,133)		—		(7,133)
Balance, July 30, 2022	$	1,240	$	958,974	$	(22,435)	$	5,435,331	$	(4,924,109)	$	1,449,001

See notes to condensed consolidated financial statements.

Table of Contents

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)


	Six Months Ended
	July 29,		July 30,
	2023		2022
Operating activities:
Net income	$	333,006	$	414,542
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and other deferred costs		91,376		94,922
Gain on disposal of assets		(1,953)		(7,238)
Accrued interest on short-term investments		(3,113)		(37)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(2,749)		3,381
Increase in merchandise inventories		(72,495)		(113,265)
Increase in other current assets		(12,408)		(18,240)
Decrease (increase) in other assets		4,492		(185)
Decrease in trade accounts payable and accrued expenses and other liabilities		(24,878)		(40,089)
Increase (decrease) in income taxes payable		86,572		(54,741)

Net cash provided by operating activities		397,850		279,050

Investing activities:
Purchase of property and equipment and capitalized software		(63,807)		(61,093)
Proceeds from disposal of assets		2,179		8,091
Proceeds from insurance		—		4,773
Purchase of short-term investments		(148,098)		(24,657)
Proceeds from maturities of short-term investments		149,962		—

Net cash used in investing activities		(59,764)		(72,886)

Financing activities:
Cash dividends paid		(6,818)		(7,524)
Purchase of treasury stock		(217,256)		(422,543)

Net cash used in financing activities		(224,074)		(430,067)

Increase (decrease) in cash and cash equivalents and restricted cash		114,012		(223,903)
Cash and cash equivalents and restricted cash, beginning of period		660,331		716,759

Cash and cash equivalents, end of period	$	774,343	$	492,856

Non-cash transactions:
Accrued capital expenditures	$	11,973	$	9,818
Stock awards		1,280		2,321
Accrued purchases of treasury stock and excise taxes		2,162		6,000
Accrued purchases of short-term investments		—		49,312
Lease assets obtained in exchange for new operating lease liabilities		2,027		567

See notes to condensed consolidated financial statements.

Table of Contents

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 July 29, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending February 3, 2024 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 January 28, 2023 filed with the SEC on March 27, 2023.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows.


	July 29,		January 28,		July 30,
(in thousands of dollars)	2023		2023		2022
Cash and cash equivalents	$	774,343	$	650,336	$	492,856
Restricted cash		—		9,995		—
Total cash, cash equivalents and restricted cash	$	774,343	$	660,331	$	492,856

Note 2. Accounting Standards

Recently Adopted Accounting Pronouncements

There have been no recently adopted accounting pronouncements, except as noted below, that had a material impact on the Company’s condensed consolidated financial statements.

Disclosure of Supplier Finance Program Obligations

In September 2022, the Financial Accounting Standards Board issued accounting standards update ("ASU") No. 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. The ASU is intended to enhance the transparency of the use of supplier finance programs by requiring that the buyers in those programs provide additional disclosures about the program’s nature and potential magnitude, including a rollforward of the obligations and activity during the period. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The amendments in the update should be applied retrospectively, except for the amendment on rollforward information, which should be applied prospectively. This ASU was adopted for the fiscal period beginning January 29, 2023 and did not have a material impact on the Company’s condensed consolidated financial statements.

Under the terms of the Company’s supplier finance program, participating suppliers have the option of payment in advance of an invoice due date, which is paid by certain administering banks, on the basis of invoices that the Company has confirmed as valid and approved. The Company agrees to pay the administering bank the stated amount of confirmed invoices from its designated suppliers on the Company’s standard payment terms or on the original due dates of the invoices, as applicable. The Company’s suppliers are not required to participate in the supplier finance program. The early payment transactions between the Company’s supplier and the administering bank are subject to an agreement

Table of Contents

between those parties, and the Company does not participate in any financial aspect of the agreement between the Company’s supplier and the administering bank. The Company has not pledged assets or any other security for the committed payment to the administering bank. The Company or the administering bank may terminate the agreement upon at least 30 days’ notice.

The amount of obligations confirmed under the program that remain unpaid by the Company were $2.0 million, $1.8 million and $1.6 million as of July 29, 2023, January 28, 2023 and July 30, 2022, respectively. These obligations are presented within trade accounts payable and accrued expenses in our condensed consolidated balance sheets.

Recently Issued Accounting Pronouncements

Management has considered all recent accounting pronouncements and believes there is no accounting guidance issued but not yet effective that would be material to the Company’s condensed consolidated financial statements.

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
	July 29,		July 30,		July 29,		July 30,
	2023		2022		2023		2022
Retail operations segment:
Cosmetics	14	%	14	%	14	%	13	%
Ladies’ apparel	22		23		23		23
Ladies’ accessories and lingerie	14		15		13		14
Juniors’ and children’s apparel	8		8		9		10
Men’s apparel and accessories	21		21		19		20
Shoes	14		14		15		15
Home and furniture	3		3		3		3
	96		98		96		98
Construction segment	4		2		4		2
Total	100	%	100	%	100	%	100	%

Table of Contents

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 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

Three Months Ended July 30, 2022
Net sales from external customers	$	1,552,658	$	35,962	$	1,588,620
Gross margin		644,921		2,482		647,403
Depreciation and amortization		47,863		56		47,919
Interest and debt expense (income), net		9,601		(12)		9,589
Income before income taxes		209,960		619		210,579
Total assets		3,174,436		47,167		3,221,603

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

Six Months Ended July 30, 2022
Net sales from external customers	$	3,133,457	$	66,831	$	3,200,288
Gross margin		1,393,365		4,269		1,397,634
Depreciation and amortization		94,014		114		94,128
Interest and debt expense (income), net

DILLARD'S, INC. [DDT] Filings

DILLARD'S, INC. [DDS] Filings