UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact name of registrant as specified in its charter)
(Address of principal executive offices)
(Zip Code)
(
(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 |
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.
☒
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).
☒
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.
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).
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 26, 2022
CLASS B COMMON STOCK as of November 26, 2022
Index
DILLARD’S, INC.
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
DILLARD’S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
| October 29, |
| January 29, |
| October 30, | ||||
2022 | 2022 | 2021 | |||||||
Assets |
|
|
|
|
|
| |||
Current assets: |
|
|
|
|
|
| |||
Cash and cash equivalents | $ | | $ | | $ | | |||
Accounts receivable |
| |
| |
| | |||
Short-term investments | | — | — | ||||||
Merchandise inventories |
| |
| |
| | |||
Federal and state income taxes |
| — |
| — |
| | |||
Other current assets |
| |
| |
| | |||
Total current assets |
| |
| |
| | |||
Property and equipment (net of accumulated depreciation and amortization of $ |
| |
| |
| | |||
Operating lease assets |
| |
| |
| | |||
Deferred income taxes |
| |
| |
| | |||
Other assets |
| |
| |
| | |||
Total assets | $ | | $ | | $ | | |||
Liabilities and stockholders’ equity |
|
|
|
|
|
| |||
Current liabilities: |
|
|
|
|
|
| |||
Trade accounts payable and accrued expenses | $ | | $ | | $ | | |||
Current portion of long-term debt |
| |
| |
| — | |||
Current portion of finance lease liabilities |
| — |
| — |
| | |||
Current portion of operating lease liabilities | | | | ||||||
Federal and state income taxes |
| |
| |
| — | |||
Total current liabilities |
| |
| |
| | |||
Long-term debt |
| |
| |
| | |||
Operating lease liabilities |
| |
| |
| | |||
Other liabilities |
| |
| |
| | |||
Subordinated debentures |
| |
| |
| | |||
Commitments and contingencies |
|
|
|
|
|
| |||
Stockholders’ equity: |
|
|
|
|
|
| |||
Common stock |
| |
| |
| | |||
Additional paid-in capital |
| |
| |
| | |||
Accumulated other comprehensive loss |
| ( |
| ( |
| ( | |||
Retained earnings |
| |
| |
| | |||
Less treasury stock, at cost |
| ( |
| ( |
| ( | |||
Total stockholders’ equity |
| |
| |
| | |||
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 | |||||||||
October 29, |
| October 30, | October 29, |
| October 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||||||
Net sales | $ | | $ | | $ | | $ | | ||||
Service charges and other income |
| |
| |
| |
| | ||||
| |
| |
| |
| | |||||
Cost of sales |
| |
| |
| |
| | ||||
Selling, general and administrative expenses |
| |
| |
| |
| | ||||
Depreciation and amortization |
| |
| |
| |
| | ||||
Rentals |
| |
| |
| |
| | ||||
Interest and debt expense, net |
| |
| |
| |
| | ||||
Other expense |
| |
| |
| |
| | ||||
Gain on disposal of assets |
| ( |
| ( |
| ( |
| ( | ||||
Income before income taxes |
| |
| |
| |
| | ||||
Income taxes |
| |
| |
| |
| | ||||
Net income | $ | | $ | | $ | | $ | | ||||
Earnings per share: |
|
|
|
|
|
|
|
| ||||
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 | ||||||||||
October 29, | October 30, | October 29, | October 30, | |||||||||
2022 |
| 2021 |
| 2022 |
| 2021 | ||||||
Net income | $ | | $ | | $ | | $ | | ||||
Other comprehensive income: |
|
|
|
|
|
|
|
| ||||
Amortization of retirement plan and other retiree benefit adjustments (net of tax of $ |
| |
| |
| |
| | ||||
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 October 29, 2022 | ||||||||||||||||||
|
|
| Accumulated |
|
|
| ||||||||||||
Additional | Other | |||||||||||||||||
Common | Paid-in | Comprehensive | Retained | Treasury | ||||||||||||||
Stock | Capital | Loss | Earnings | Stock | Total | |||||||||||||
Balance, July 30, 2022 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Net income |
| — |
| — |
| — |
| |
| — |
| | ||||||
Other comprehensive income |
| — |
| — |
| |
| — |
| — |
| | ||||||
Purchase of |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
Cash dividends declared: |
|
|
|
|
|
|
|
|
|
|
| |||||||
Common stock, $ |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Balance, October 29, 2022 | $ | | $ | | $ | ( | $ | | $ | ( | $ | |
Three Months Ended October 30, 2021 | ||||||||||||||||||
|
|
| Accumulated |
|
|
| ||||||||||||
Additional | Other | |||||||||||||||||
Common | Paid-in | Comprehensive | Retained | Treasury | ||||||||||||||
Stock | Capital | Loss | Earnings | Stock | Total | |||||||||||||
Balance, July 31, 2021 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Net income |
| — |
| — |
| — |
| |
| — |
| | ||||||
Other comprehensive income |
| — |
| — |
| |
| — |
| — |
| | ||||||
Purchase of |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
Cash dividends declared: |
|
|
|
|
|
|
|
|
|
|
| |||||||
Common stock, $ |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Balance, October 30, 2021 | $ | | $ | | $ | ( | $ | | $ | ( | $ | |
Nine Months Ended October 29, 2022 | ||||||||||||||||||
|
|
| Accumulated |
|
|
| ||||||||||||
Additional | Other | |||||||||||||||||
Common | Paid-in | Comprehensive | Retained | Treasury | ||||||||||||||
Stock | Capital | Loss | Earnings | Stock | Total | |||||||||||||
Balance, January 29, 2022 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Net income |
| — |
| — |
| — |
| |
| — |
| | ||||||
Other comprehensive income |
| — |
| — |
| |
| — |
| — |
| | ||||||
Issuance of |
| — |
| |
| — |
| — |
| — |
| | ||||||
Purchase of |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
Cash dividends declared: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Common stock, $ |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Balance, October 29, 2022 | $ | | $ | | $ | ( | $ | | $ | ( | $ | |
6
Nine Months Ended October 30, 2021 | ||||||||||||||||||
|
|
| Accumulated |
|
|
| ||||||||||||
Additional | Other | |||||||||||||||||
Common | Paid-in | Comprehensive | Retained | Treasury | ||||||||||||||
Stock | Capital | Loss | Earnings | Stock | Total | |||||||||||||
Balance, January 30, 2021 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Net income |
| — |
| — |
| — |
| |
| — |
| | ||||||
Other comprehensive income |
| — |
| — |
| |
| — |
| — |
| | ||||||
Issuance of |
| — |
| |
| — |
| — |
| — |
| | ||||||
Purchase of |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
Cash dividends declared: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Common stock, $ |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Balance, October 30, 2021 | $ | | $ | | $ | ( | $ | | $ | ( | $ | |
See notes to condensed consolidated financial statements.
7
DILLARD’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
| Nine Months Ended | |||||
October 29, |
| October 30, | ||||
2022 | 2021 | |||||
Operating activities: |
|
|
|
| ||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
| ||
Depreciation and amortization of property and other deferred cost |
| |
| | ||
Gain on disposal of assets |
| ( |
| ( | ||
Proceeds from insurance |
| — |
| | ||
Loss on early extinguishment of debt |
| — |
| | ||
Accrued interest on short-term investments | ( | — | ||||
Changes in operating assets and liabilities: |
|
|
|
| ||
(Increase) decrease in accounts receivable |
| ( |
| | ||
Increase in merchandise inventories |
| ( |
| ( | ||
Increase in other current assets |
| ( |
| ( | ||
Increase in other assets |
| ( |
| ( | ||
Increase in trade accounts payable and accrued expenses and other liabilities |
| |
| | ||
(Decrease) increase in income taxes |
| ( |
| | ||
Net cash provided by operating activities |
| |
| | ||
Investing activities: |
|
|
|
| ||
Purchase of property and equipment and capitalized software |
| ( |
| ( | ||
Proceeds from disposal of assets |
| |
| | ||
Proceeds from insurance |
| |
| | ||
Purchase of short-term investments | ( | — | ||||
Distribution from joint venture |
| — |
| | ||
Net cash used in investing activities |
| ( |
| ( | ||
Financing activities: |
|
|
|
| ||
Principal payments on long-term debt and finance lease liabilities |
| — |
| ( | ||
Issuance cost of line of credit |
| — |
| ( | ||
Cash dividends paid |
| ( |
| ( | ||
Purchase of treasury stock |
| ( |
| ( | ||
Net cash used in financing activities |
| ( |
| ( | ||
(Decrease) increase in cash and cash equivalents |
| ( |
| | ||
Cash and cash equivalents, beginning of period |
| |
| | ||
Cash and cash equivalents, end of period | $ | | $ | | ||
Non-cash transactions: |
|
|
|
| ||
Accrued capital expenditures | $ | | $ | | ||
Stock awards |
| |
| | ||
Lease assets obtained in exchange for new operating lease liabilities |
| |
| |
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 October 29, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending January 28, 2023 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 29, 2022 filed with the SEC on March 29, 2022.
During the fiscal quarter ended July 30, 2022, the Company began purchasing short-term investments. Short-term investments are securities with original maturities of greater than three months but less than twelve months and are comprised of U.S. Treasury Bills. The Company determines the classification of these securities as trading, available for sale or held to maturity at the time of purchase and re-evaluates these determinations at each balance sheet date. Our short-term investments are classified as held-to-maturity for the period presented as we have the positive intent and ability to hold these investments to maturity. Our held-to-maturity investments are stated at amortized cost, which approximated fair value, and are periodically assessed for other-than-temporary impairment.
Note 2. Accounting Standards
Recently Issued Accounting Pronouncements
Except as noted below, the Company has considered all recent accounting pronouncements and Management believes there is no accounting guidance issued but not yet effective that would be relevant to the Company’s current 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, 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. The Company is currently assessing the impact of this ASU on our condensed consolidated financial statements.
Note 3. Business Segments
The Company operates in
For the Company’s retail operations, the Company determined its operating segments on a store by store basis. Each store’s operating performance has been aggregated into
9
aggregated for financial reporting purposes because they 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
The following table summarizes the percentage of net sales by segment and major product line:
| Three Months Ended |
| Nine Months Ended |
| |||||
October 29, | October 30, | October 29, | October 30, | ||||||
2022 |
| 2021 | 2022 |
| 2021 |
| |||
Retail operations segment |
|
|
|
|
| ||||
Cosmetics |
| | % | | % | | % | | % |
Ladies’ apparel |
| |
| |
| |
| | |
Ladies’ accessories and lingerie |
| |
| |
| |
| | |
Juniors’ and children’s apparel |
| |
| |
| |
| | |
Men’s apparel and accessories |
| |
| |
| |
| | |
Shoes |
| |
| |
| |
| | |
Home and furniture |
| |
| |
| |
| | |
| |
| |
| |
| | ||
Construction segment |
| |
| |
| |
| | |
Total |
| | % | | % | | % | | % |
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 October 29, 2022 |
|
|
|
|
|
| |||
Net sales from external customers | $ | | $ | | $ | | |||
Gross margin |
| |
| |
| | |||
Depreciation and amortization |
| |
| |
| | |||
Interest and debt expense (income), net |
| |
| ( |
| | |||
Income before income taxes |
| |
| |
| | |||
Total assets |
| |
| |
| | |||
Three Months Ended October 30, 2021 |
|
|
|
|
|
| |||
Net sales from external customers | $ | | $ | | $ | | |||
Gross margin |
| |
| |
| | |||
Depreciation and amortization |
| |
| |
| | |||
Interest and debt expense (income), net |
| |
| ( |
| | |||
Income before income taxes |
| |
| |
| | |||
Total assets |
| |
| |
| | |||
Nine Months Ended October 29, 2022 |
|
|
|
|
|
| |||
Net sales from external customers | $ | | $ | | $ | | |||
Gross margin |
| |
| |
| | |||
Depreciation and amortization |
| |
| |
| | |||
Interest and debt expense (income), net |
| |
| ( |
| | |||
Income before income taxes |
| |
| |
| | |||
Total assets |
| |
| |
| | |||
Nine Months Ended October 30, 2021 |
|
|
|
|
|
| |||
Net sales from external customers | $ | | $ | | $ | | |||
Gross margin |
| |
| |
| | |||
Depreciation and amortization |
| |
| |
| | |||
Interest and debt expense (income), net |
| |
| ( |
| | |||
Income before income taxes |
| |
| |
| | |||
Total assets |
| |
| |
| |
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 loyalty program liability and a portion of the gift card liability is 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 | ||||||||||||
October 29, | January 29, | October 30, | January 30, | |||||||||
(in thousands of dollars) |
| 2022 |
| 2022 |
| 2021 |
| 2021 | ||||
Contract liabilities | $ | | $ | | $ | | $ | |
11
During the nine months ended October 29, 2022 and October 30, 2021, 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 in the condensed consolidated balance sheets, respectively. The amounts included in the condensed consolidated balance sheets are as follows:
Construction |
|
|
|
| ||||||||
October 29, | January 29, | October 30, | January 30, | |||||||||
(in thousands of dollars) | 2022 | 2022 | 2021 | 2021 | ||||||||
Accounts receivable | $ | | $ | | $ | | $ | | ||||
Costs and estimated earnings in excess of billings on uncompleted contracts |
| |
| |
| |
| | ||||
Billings in excess of costs and estimated earnings on uncompleted contracts |
| |
| |
| |
| |
During the nine months ended October 29, 2022 and October 30, 2021, the Company recorded $
The remaining performance obligations related to executed construction contracts totaled $
Note 4. Earnings Per Share Data
The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data).