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 ~~October~~July 31, ~~2020~~2021

☐ 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						(I.R.S. Employer
of incorporation or organization)						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~~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.

ý 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).

ý 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

ý☐

Accelerated filer

☐ý

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 ý 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~~August 28, ~~2020 17,987,659~~2021 16,627,015

CLASS B COMMON STOCK as of ~~November~~August 28, ~~2020 4,010,233~~2021 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 ~~October~~July 31, ~~2020, February~~2021, January 30, 2021 and August 1, 2020 ~~and November 2, 2019~~	43

	Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~October~~July 31,, 2021 and August 1, 2020 ~~and~~ ~~November 2, 2019~~	54

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and ~~Nine~~Six Months Ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019~~August 1, 2020	65

	Condensed Consolidated Statements of Stockholders' Equity for the Three and ~~Nine~~Six Months Ended ~~October~~July 31,, 2021 and August 1, 2020 ~~and~~ ~~November 2, 2019~~	76

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~October~~July 31, 2021 and August 1, 2020 ~~and~~ ~~November 2, 2019~~	98

	Notes to Condensed Consolidated Financial Statements	109

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1918

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3332

Item 1A.	Risk Factors	3332

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3533

Item 6.	Exhibits	3634

SIGNATURES		3735

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial ~~Statements~~

~~Table of Contents~~

Statements.

DILLARD’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands)


		October 31, 2020		February 1, 2020		November 2, 2019			July 31, 2021		January 30, 2021		August 1, 2020

Assets	Assets							Assets
Current assets:	Current assets:							Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	61,124	$	277,077	$	79,065	Cash and cash equivalents	$	669,474	$	360,339	$	82,868
Restricted cash		0		0		8,467

Accounts receivable	Accounts receivable	28,406		46,160		48,241		Accounts receivable	34,445		36,693		28,631
Merchandise inventories	Merchandise inventories	1,545,264		1,465,007		1,969,980		Merchandise inventories	1,112,815		1,087,763		1,283,141
Federal and state income taxes	Federal and state income taxes	126,973		0		0		Federal and state income taxes	122,807		118,439		85,658
Other current assets	Other current assets	65,631		59,838		74,231		Other current assets	66,275		58,706		65,758

Total current assets	Total current assets	1,827,398		1,848,082		2,179,984		Total current assets	2,005,816		1,661,940		1,546,056

Property and equipment (net of accumulated depreciation and amortization of $2,471,565, $2,336,728 and $2,358,469, respectively)		1,348,799		1,458,176		1,494,454
Property and equipment (net of accumulated depreciation and amortization of $2,537,137, $2,466,000 and $2,434,355, respectively)								Property and equipment (net of accumulated depreciation and amortization of $2,537,137, $2,466,000 and $2,434,355, respectively)	1,237,427		1,289,302		1,394,237
Operating lease assets	Operating lease assets	40,471		47,924		48,600		Operating lease assets	44,098		47,612		44,091
Deferred income taxes	Deferred income taxes	14,740		0		0		Deferred income taxes	26,792		23,453		23,289
Other assets	Other assets	74,581		76,075		77,025		Other assets	69,376		70,208		75,563

Total assets	Total assets	$	3,305,989	$	3,430,257	$	3,800,063	Total assets	$	3,383,509	$	3,092,515	$	3,083,236

Liabilities and stockholders’ equity	Liabilities and stockholders’ equity							Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:							Current liabilities:
Trade accounts payable and accrued expenses	Trade accounts payable and accrued expenses	$	1,031,806	$	892,789	$	1,211,446	Trade accounts payable and accrued expenses	$	881,543	$	758,363	$	586,865

Current portion of finance lease liabilities	Current portion of finance lease liabilities	849		1,219		1,148		Current portion of finance lease liabilities	356		695		986
Current portion of operating lease liabilities	Current portion of operating lease liabilities	12,775		14,654		15,250		Current portion of operating lease liabilities	12,113		13,819		13,758
Other short-term borrowings	Other short-term borrowings	15,000		0		98,600		Other short-term borrowings	—		—		229,600
Federal and state income taxes		0		22,158		4,505

Total current liabilities	Total current liabilities	1,060,430		930,820		1,330,949		Total current liabilities	894,012		772,877		831,209

Long-term debt	Long-term debt	365,814		365,709		365,674		Long-term debt	365,918		365,849		365,779
Finance lease liabilities	Finance lease liabilities	180		695		1,029		Finance lease liabilities	—		—		356
Operating lease liabilities	Operating lease liabilities	27,412		32,683		32,958		Operating lease liabilities	31,467		33,392		30,051
Other liabilities	Other liabilities	271,324		273,601		243,258		Other liabilities	282,533		279,389		284,527
Deferred income taxes		0		3,490		13,812

Subordinated debentures	Subordinated debentures	200,000		200,000		200,000		Subordinated debentures	200,000		200,000		200,000
Commitments and contingencies	Commitments and contingencies							Commitments and contingencies	0		0		0
Stockholders’ equity:	Stockholders’ equity:							Stockholders’ equity:
Common stock	Common stock	1,240		1,239		1,239		Common stock	1,240		1,240		1,240
Additional paid-in capital	Additional paid-in capital	952,522		951,726		949,846		Additional paid-in capital	955,198		954,131		952,522
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(29,768)		(31,059)		(12,809)		Accumulated other comprehensive loss	(33,878)		(34,935)		(30,198)
Retained earnings	Retained earnings	4,407,532		4,556,494		4,492,511		Retained earnings	4,808,737		4,471,269		4,378,988
Less treasury stock, at cost	Less treasury stock, at cost	(3,950,697)		(3,855,141)		(3,818,404)		Less treasury stock, at cost	(4,121,718)		(3,950,697)		(3,931,238)

Total stockholders’ equity	Total stockholders’ equity	1,380,829		1,623,259		1,612,383		Total stockholders’ equity	1,609,579		1,441,008		1,371,314

Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	3,305,989	$	3,430,257	$	3,800,063	Total liabilities and stockholders’ equity	$	3,383,509	$	3,092,515	$	3,083,236

See notes to condensed consolidated financial statements.

Table of Contents

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In Thousands, Except Per Share Data)


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019			July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020

Net sales	Net sales	$	1,024,899	$	1,388,310	$	2,730,598	$	4,280,614	Net sales	$	1,570,378	$	919,044	$	2,898,921	$	1,705,699
Service charges and other income	Service charges and other income	27,213		35,349		88,273		99,825		Service charges and other income	31,054		26,139		60,046		61,060

		1,052,112		1,423,659		2,818,871		4,380,439			1,601,432		945,183		2,958,967		1,766,759

Cost of sales	Cost of sales	658,684		926,782		1,987,000		2,886,563		Cost of sales	927,210		639,847		1,701,299		1,328,316
Selling, general and administrative expenses	Selling, general and administrative expenses	318,218		418,149		875,726		1,232,434		Selling, general and administrative expenses	365,868		267,062		702,482		557,508
Depreciation and amortization	Depreciation and amortization	53,377		56,143		155,229		162,890		Depreciation and amortization	50,043		50,951		96,451		101,852
Rentals	Rentals	5,115		5,927		16,304		18,254		Rentals	5,099		5,639		10,210		11,189
Interest and debt expense, net	Interest and debt expense, net	12,162		11,536		37,305		35,021		Interest and debt expense, net	10,771		12,873		22,306		25,143
Other expense	Other expense	2,105		1,916		6,313		5,750		Other expense	2,134		2,104		7,098		4,208
Loss (gain) on disposal of assets		2,221		304		2,235		(11,996)
(Gain) loss on disposal of assets										(Gain) loss on disposal of assets	(9)		33		(24,682)		14

Income (loss) before income taxes	Income (loss) before income taxes	230		2,902		(261,241)		51,523		Income (loss) before income taxes	240,316		(33,326)		443,803		(261,471)
Income taxes (benefit)	Income taxes (benefit)	(31,620)		(2,560)		(122,550)		8,130		Income taxes (benefit)	54,660		(24,760)		99,900		(90,930)

Net income (loss)	Net income (loss)	$	31,850	$	5,462	$	(138,691)	$	43,393	Net income (loss)	$	185,656	$	(8,566)	$	343,903	$	(170,541)

Earnings (loss) per share:	Earnings (loss) per share:									Earnings (loss) per share:
Basic and diluted	Basic and diluted	$	1.43	$	0.22	$	(6.05)	$	1.69	Basic and diluted	$	8.81	$	(0.37)	$	16.03	$	(7.33)

See notes to condensed consolidated financial statements.

Table of Contents

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In Thousands)


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019			July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Net income (loss)	Net income (loss)	$	31,850	$	5,462	$	(138,691)	$	43,393	Net income (loss)	$	185,656	$	(8,566)	$	343,903	$	(170,541)
Other comprehensive income:	Other comprehensive income:									Other comprehensive income:
Amortization of retirement plan and other retiree benefit adjustments (net of tax of $138, $0, $414, and $0, respectively)		430		0		1,291		0
Amortization of retirement plan and other retiree benefit adjustments (net of tax of $169, $138, $337 and $276, respectively)										Amortization of retirement plan and other retiree benefit adjustments (net of tax of $169, $138, $337 and $276, respectively)	528		430		1,057		861

Comprehensive income (loss)	Comprehensive income (loss)	$	32,280	$	5,462	$	(137,400)	$	43,393	Comprehensive income (loss)	$	186,184	$	(8,136)	$	344,960	$	(169,680)

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 October 31, 2020													Three Months Ended July 31, 2021
						Accumulated Other Comprehensive Loss													Accumulated Other Comprehensive Loss
		Common Stock		Additional Paid-in Capital				Retained Earnings		Treasury Stock					Common Stock		Additional Paid-in Capital				Retained Earnings		Treasury Stock

Balance, August 1, 2020		$	1,240	$	952,522	$	(30,198)	$	4,378,988	$	(3,931,238)
Balance, May 1, 2021														Balance, May 1, 2021	$	1,240	$	954,131	$	(34,406)	$	4,626,243	$	(4,009,511)
Net income	Net income	—		—		—		31,850		—		31,850		Net income	—		—		—		185,656		—		185,656
Other comprehensive income	Other comprehensive income	—		—		430		—		—		430		Other comprehensive income	—		—		528		—		—		528

Purchase of 645,284 shares of treasury stock		—		—		—		—		(19,459)		(19,459)
Issuance of 9,000 shares under equity plans														Issuance of 9,000 shares under equity plans	—		1,067		—		—		—		1,067
Purchase of 734,467 shares of treasury stock														Purchase of 734,467 shares of treasury stock	—		—		—		—		(112,207)		(112,207)
Cash dividends declared:	Cash dividends declared:													Cash dividends declared:
Common stock, $0.15 per share	Common stock, $0.15 per share	—		—		—		(3,306)		—		(3,306)		Common stock, $0.15 per share	—		—		—		(3,162)		—		(3,162)
Balance, October 31, 2020		$	1,240	$	952,522	$	(29,768)	$	4,407,532	$	(3,950,697)	$	1,380,829
Balance, July 31, 2021														Balance, July 31, 2021	$	1,240	$	955,198	$	(33,878)	$	4,808,737	$	(4,121,718)	$	1,609,579

Three Months Ended November 2, 2019
Accumulated
Other
Comprehensive
Loss
Common Stock Additional
Paid-in
Capital Retained
Earnings Treasury
Stock
Total
Balance, August 3, 2019 $ 1,239 $ 949,846 $ (12,809) $ 4,490,759 $ (3,783,191) $ 1,645,844
Net income — — — 5,462�� — 5,462
Purchase of 600,479 shares of treasury stock — — — — (35,213) (35,213)
Cash dividends declared:
Common stock, $0.15 per share — — — (3,710) — (3,710)
Balance, November 2, 2019 $ 1,239 $ 949,846 $ (12,809) $ 4,492,511 $ (3,818,404) $ 1,612,383


	Three Months Ended August 1, 2020
					Accumulated Other Comprehensive Loss
	Common Stock		Additional Paid-in Capital				Retained Earnings		Treasury Stock
											Total
Balance, May 2, 2020	$	1,239	$	951,726	$	(30,628)	$	4,391,039	$	(3,916,970)	$	1,396,406
Net loss	—		—		—		(8,566)		—		(8,566)
Other comprehensive income	—		—		430		—		—		430
Issuance of 32,000 shares under equity plans	1		796		—		—		—		797
Purchase of 586,851 shares of treasury stock	—		—		—		—		(14,268)		(14,268)
Cash dividends declared:
Common stock, $0.15 per share	—		—		—		(3,485)		—		(3,485)
Balance, August 1, 2020	$	1,240	$	952,522	$	(30,198)	$	4,378,988	$	(3,931,238)	$	1,371,314

Nine Months Ended October 31, 2020
Accumulated
Other
Comprehensive
Loss
Common Stock Additional
Paid-in
Capital Retained
Earnings Treasury
Stock
Total
Balance, February 1, 2020 $ 1,239 $ 951,726 $ (31,059) $ 4,556,494 $ (3,855,141) $ 1,623,259
Net loss — — — (138,691) — (138,691)
Other comprehensive income — — 1,291 — — 1,291
Issuance of 32,000 shares under equity plans 1 796 — — — 797
Purchase of 2,230,877 shares of treasury stock — — — — (95,556) (95,556)
Cash dividends declared:
Common stock, $0.45 per share — — — (10,271) — (10,271)
Balance, October 31, 2020 $ 1,240 $ 952,522 $ (29,768) $ 4,407,532 $ (3,950,697) $ 1,380,829


	Six Months Ended July 31, 2021
					Accumulated Other Comprehensive Loss
	Common Stock		Additional Paid-in Capital				Retained Earnings		Treasury Stock
											Total
Balance, January 30, 2021	$	1,240	$	954,131	$	(34,935)	$	4,471,269	$	(3,950,697)	$	1,441,008
Net income	—		—		—		343,903		—		343,903
Other comprehensive income	—		—		1,057		—		—		1,057
Issuance of 9,000 shares under equity plans	—		1,067		—		—		—		1,067
Purchase of 1,359,360 shares of treasury stock	—		—		—		—		(171,021)		(171,021)
Cash dividends declared:
Common stock, $0.30 per share	—		—		—		(6,435)		—		(6,435)
Balance, July 31, 2021	$	1,240	$	955,198	$	(33,878)	$	4,808,737	$	(4,121,718)	$	1,609,579

Table of Contents

Nine Months Ended November 2, 2019
Accumulated
Other
Comprehensive
Loss
Common Stock Additional
Paid-in
Capital Retained
Earnings Treasury
Stock
Total
Balance, February 2, 2019 $ 1,239 $ 948,835 $ (12,809) $ 4,458,006 $ (3,716,890) $ 1,678,381
Net income — — — 43,393 — 43,393
Issuance of 17,600 shares under equity plans — 1,011 — — — 1,011
Purchase of 1,665,222 shares of treasury stock — — — — (101,514) (101,514)
Cash dividends declared:
Common stock, $0.35 per share — — — (8,888) — (8,888)
Balance, November 2, 2019 $ 1,239 $ 949,846 $ (12,809) $ 4,492,511 $ (3,818,404) $ 1,612,383


	Six Months Ended August 1, 2020
					Accumulated Other Comprehensive Loss
	Common Stock		Additional Paid-in Capital				Retained Earnings		Treasury Stock
											Total
Balance, February 1, 2020	$	1,239	$	951,726	$	(31,059)	$	4,556,494	$	(3,855,141)	$	1,623,259
Net loss	—		—		—		(170,541)		—		(170,541)
Other comprehensive income	—		—		861		—		—		861
Issuance of 32,000 shares under equity plans	1		796		—		—		—		797
Purchase of 1,585,593 shares of treasury stock	—		—		—		—		(76,097)		(76,097)
Cash dividends declared:
Common stock, $0.30 per share	—		—		—		(6,965)		—		(6,965)
Balance, August 1, 2020	$	1,240	$	952,522	$	(30,198)	$	4,378,988	$	(3,931,238)	$	1,371,314

See notes to condensed consolidated financial statements.

Table of Contents

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)


		Nine Months Ended					Six Months Ended
		October 31, 2020		November 2, 2019			July 31, 2021		August 1, 2020

Operating activities:	Operating activities:					Operating activities:
Net (loss) income		$	(138,691)	$	43,393
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Net income (loss)						Net income (loss)	$	343,903	$	(170,541)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:						Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of property and other deferred cost	Depreciation and amortization of property and other deferred cost	157,335		164,373		Depreciation and amortization of property and other deferred cost	97,695		103,140
Loss (gain) on disposal of assets		2,235		(11,996)
(Gain) loss on disposal of assets						(Gain) loss on disposal of assets	(24,682)		14
Proceeds from insurance	Proceeds from insurance	8,659		397		Proceeds from insurance	2,254		—

Loss on early extinguishment of debt						Loss on early extinguishment of debt	2,830		—

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Decrease in accounts receivable	Decrease in accounts receivable	17,754		1,612		Decrease in accounts receivable	2,248		17,529
Increase in merchandise inventories		(80,257)		(441,563)
(Increase) decrease in merchandise inventories						(Increase) decrease in merchandise inventories	(25,052)		181,866
Increase in other current assets	Increase in other current assets	(13,680)		(2,015)		Increase in other current assets	(10,878)		(5,148)
Decrease (increase) in other assets		456		(8,404)
Increase in trade accounts payable and accrued expenses and other liabilities		145,745		286,322
Increase in other assets						Increase in other assets	(1,107)		(124)
Increase (decrease) in trade accounts payable and accrued expenses and other liabilities						Increase (decrease) in trade accounts payable and accrued expenses and other liabilities	111,622		(290,268)
Decrease in income taxes	Decrease in income taxes	(162,494)		(9,135)		Decrease in income taxes	(6,532)		(130,977)

Net cash (used in) provided by operating activities		(62,938)		22,984
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	492,301		(294,509)

Investing activities:	Investing activities:					Investing activities:
Purchases of property and equipment and capitalized software		(52,100)		(70,915)
Purchase of property and equipment and capitalized software						Purchase of property and equipment and capitalized software	(41,205)		(38,607)
Proceeds from disposal of assets	Proceeds from disposal of assets	1,533		22,031		Proceeds from disposal of assets	29,285		308

Proceeds from insurance						Proceeds from insurance	2,819		—

Distribution from joint venture	Distribution from joint venture	215		1,350		Distribution from joint venture	—		215

Net cash used in investing activities	Net cash used in investing activities	(50,352)		(47,534)		Net cash used in investing activities	(9,101)		(38,084)

Financing activities:	Financing activities:					Financing activities:
Principal payments on long-term debt and finance lease liabilities	Principal payments on long-term debt and finance lease liabilities	(885)		(703)		Principal payments on long-term debt and finance lease liabilities	(339)		(572)
Issuance cost of line of credit	Issuance cost of line of credit	(3,230)		0		Issuance cost of line of credit	(2,972)		(3,001)
Increase in short-term borrowings	Increase in short-term borrowings	15,000		98,600		Increase in short-term borrowings	—		229,600
Cash dividends paid	Cash dividends paid	(10,669)		(7,810)		Cash dividends paid	(6,573)		(7,185)
Purchase of treasury stock	Purchase of treasury stock	(102,879)		(101,514)		Purchase of treasury stock	(164,181)		(80,458)

Net cash used in financing activities		(102,663)		(11,427)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(174,065)		138,384

Decrease in cash, cash equivalents and restricted cash		(215,953)		(35,977)
Cash, cash equivalents and restricted cash, beginning of period		277,077		123,509
Increase (decrease) in cash and cash equivalents						Increase (decrease) in cash and cash equivalents	309,135		(194,209)
Cash and cash equivalents, beginning of period						Cash and cash equivalents, beginning of period	360,339		277,077

Cash, cash equivalents and restricted cash, end of period		$	61,124	$	87,532
Cash and cash equivalents, end of period						Cash and cash equivalents, end of period	$	669,474	$	82,868

Non-cash transactions:	Non-cash transactions:					Non-cash transactions:
Accrued capital expenditures	Accrued capital expenditures	$	6,038	$	9,573	Accrued capital expenditures	$	14,496	$	7,994

Accrued purchase of treasury stock						Accrued purchase of treasury stock	6,840		2,962
Stock awards	Stock awards	797		1,011		Stock awards	1,067		797

Lease assets obtained in exchange for new operating lease liabilities	Lease assets obtained in exchange for new operating lease liabilities	4,084		4,601		Lease assets obtained in exchange for new operating lease liabilities	3,815		4,084

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 ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the fiscal year ending January ~~30, 2021~~29, 2022 due to, among other factors, the seasonal nature of the business and the ongoing effect of the COVID-19 pandemic.

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 1, 2020~~January 30, 2021 filed with the SEC on March ~~31, 2020.~~

~~Restricted Cash~~ - Restricted cash consists of cash proceeds from the sale of property held in escrow for the acquisition of replacement property under like-kind exchange agreements. The escrow accounts are administered by an intermediary. Pursuant to the like-kind exchange agreements, the cash remains restricted for a maximum of 180 days from the date of the property sale pending the acquisition of replacement property.

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.

(in thousands) October 31,
2020 November 2,
2019
Cash and cash equivalents $ 61,124 $ 79,065
Restricted cash 0 8,467
Total cash, cash equivalents and restricted cash $ 61,124 $ 87,532
29, 2021.

COVID-19

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to ~~spread throughout~~impact the United States and ~~the world.~~ global economies. The ~~effects of the~~ COVID-19 pandemic ~~have~~has had and may continue to have a significant impact on the Company's business, results of operations and financial position. At present, the COVID-19 pandemic has had a significant negative effect on the Company's liquidity and net sales. Due to heightened uncertainty relating to the impacts of COVID-19 on the Company’s business operations, including the duration and impact on overall customer demand, our liquidity, net sales and profitability may be further impacted if we are unable to appropriately manage our inventory levels and expenses.

The Company began closing stores on March 19, 2020 as mandated by state and local governments, and by April 9, 2020, all brick-and-mortar store locations were temporarily closed to the public. ~~The Company began re-opening~~Our eCommerce capabilities allowed us to use our closed store locations (with limited staffing) to fill orders from our Internet store.

During the month ended May 30, 2020 (fiscal May), we re-opened most of our full-line stores, ~~on May 5, 2020,~~ and by June 2, 2020 all ~~stores~~Dillard's store locations had been ~~re-opened using the Centers for Disease Control and Prevention ("CDC") guidelines to promote~~re-opened. Following our re-opening, a ~~safe environment for our customers and employees.~~ ~~All stores are currently open and operating at reduced hours. A~~ very small number of our locations were temporarily closed to in-store shopping due to government mandate. ~~Other local mandates throughout the country require occupancy limits with which we are required to comply. We continue to monitor additional local government orders that may affect our operations.~~

As part of the Company's liquidity strategy during the COVID-19 pandemic, in March 2020, the Company borrowed $779 million under its revolving credit agreement, which was repaid concurrent with the execution of the amended credit agreement. At October 31, 2020, borrowings of $15.0 million were outstanding, and letters of credit totaling ~~$21.1 million~~ ~~were issued under the amended credit agreement leaving unutilized availability under the facility of~~ ~~$763.9 million. See Note 7,~~ ~~Revolving Credit Agreement, for additional information.~~

~~We assess~~All stores are currently open and are operating at reduced hours from fiscal 2019 operating hours. While the ~~impairment~~availability of ~~long-lived assets, primarily fixed assets and operating lease assets, whenever events or changes in circumstances indicate that~~vaccinations has led to re-openings across the carrying value may not be recoverable. We evaluated the effects of the COVID-19 pandemic on our business and determined that as of October 31, 2020, the carrying values of our property and equipment and operating

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~~lease assets were recoverable. Accordingly, no impairment charge was recorded for the nine months ended October 31, 2020. We will continue to monitor these factors~~country and the easing of restrictions, the continuing financial impact ~~of the COVID-19 pandemic on future periods and continue~~ to ~~assess these assets for impairment as needed.~~ fiscal 2021 cannot be reasonably estimated at this time.

Note 2. Accounting Standards

Recently ~~Issued~~Adopted Accounting Pronouncements

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ~~Accounting Standards Update ("ASU")~~ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The amendments within ASU No. 2019-12 are effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and early adoption is permitted. The ~~Company does not expect~~adoption of this update todid not have a material impact on ~~its~~the Company's consolidated financial statements.

Facilitation of the Effects of Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. More specifically, the amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. This guidance is effective from March 12, 2020 through

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December 31, 2022. Entities may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The adoption of this update did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

Management believes there is no other accounting guidance issued but not yet effective that would be relevant to the Company's current financial statements.

Note 3. Business Segments

The Company operates in 2 reportable segments: the operation of retail department stores (“retail operations”) and a general contracting construction company (“construction”).

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 1 reportable segment. The Company’s operating segments are 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 1 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 operating segments 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					Three Months Ended				Six Months Ended
		October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019			July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Retail operations segment	Retail operations segment									Retail operations segment
Cosmetics	Cosmetics	14	%	14	%	14	%	13	%	Cosmetics	13	%	14	%	14	%	14	%
Ladies’ apparel	Ladies’ apparel	20		23		21		24		Ladies’ apparel	24		21		23		21
Ladies’ accessories and lingerie	Ladies’ accessories and lingerie	15		14		15		15		Ladies’ accessories and lingerie	15		16		15		16
Juniors’ and children’s apparel	Juniors’ and children’s apparel	10		10		10		10		Juniors’ and children’s apparel	9		9		10		9
Men’s apparel and accessories	Men’s apparel and accessories	18		17		18		17		Men’s apparel and accessories	20		20		19		18
Shoes	Shoes	16		15		15		15		Shoes	14		13		14		14
Home and furniture	Home and furniture	4		3		4		3		Home and furniture	3		4		3		4
		97		96		97		97			98		97		98		96
Construction segment	Construction segment	3		4		3		3		Construction segment	2		3		2		4
Total	Total	100	%	100	%	100	%	100	%	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:


(in thousands of dollars)	(in thousands of dollars)	Retail Operations		Construction		Consolidated		(in thousands of dollars)	Retail Operations		Construction		Consolidated
Three Months Ended October 31, 2020
Three Months Ended July 31, 2021								Three Months Ended July 31, 2021
Net sales from external customers								Net sales from external customers	$	1,539,396	$	30,982	$	1,570,378
Gross profit								Gross profit	641,240		1,928		643,168
Depreciation and amortization								Depreciation and amortization	49,981		62		50,043
Interest and debt expense (income), net								Interest and debt expense (income), net	10,782		(11)		10,771
Income before income taxes								Income before income taxes	239,790		526		240,316

Total assets								Total assets	3,339,862		43,647		3,383,509

Three Months Ended August 1, 2020								Three Months Ended August 1, 2020
Net sales from external customers	Net sales from external customers	$	994,588	$	30,311	$	1,024,899	Net sales from external customers	$	893,216	$	25,828	$	919,044
Gross profit	Gross profit	364,232		1,983		366,215		Gross profit	277,407		1,790		279,197
Depreciation and amortization	Depreciation and amortization	53,290		87		53,377		Depreciation and amortization	50,784		167		50,951
Interest and debt expense (income), net	Interest and debt expense (income), net	12,167		(5)		12,162		Interest and debt expense (income), net	12,885		(12)		12,873
(Loss) income before income taxes	(Loss) income before income taxes	(232)		462		230		(Loss) income before income taxes	(33,699)		373		(33,326)

Total assets	Total assets	3,279,241		26,748		3,305,989		Total assets	3,056,320		26,916		3,083,236

Three Months Ended November 2, 2019
Six Months Ended July 31, 2021								Six Months Ended July 31, 2021
Net sales from external customers	Net sales from external customers	$	1,334,205	$	54,105	$	1,388,310	Net sales from external customers	$	2,836,132	$	62,789	$	2,898,921
Gross profit	Gross profit	460,549		979		461,528		Gross profit	1,194,241		3,381		1,197,622
Depreciation and amortization	Depreciation and amortization	55,963		180		56,143		Depreciation and amortization	96,319		132		96,451
Interest and debt expense (income), net	Interest and debt expense (income), net	11,562		(26)		11,536		Interest and debt expense (income), net	22,332		(26)		22,306
Income before income taxes	Income before income taxes	2,223		679		2,902		Income before income taxes	442,988		815		443,803

Total assets	Total assets	3,753,211		46,852		3,800,063		Total assets	3,339,862		43,647		3,383,509

Nine Months Ended October 31, 2020
Six Months Ended August 1, 2020								Six Months Ended August 1, 2020
Net sales from external customers	Net sales from external customers	$	2,638,831	$	91,767	$	2,730,598	Net sales from external customers	$	1,644,243	$	61,456	$	1,705,699
Gross profit	Gross profit	737,673		5,925		743,598		Gross profit	373,441		3,942		377,383
Depreciation and amortization	Depreciation and amortization	154,806		423		155,229		Depreciation and amortization	101,516		336		101,852
Interest and debt expense (income), net	Interest and debt expense (income), net	37,343		(38)		37,305		Interest and debt expense (income), net	25,176		(33)		25,143
(Loss) income before income taxes	(Loss) income before income taxes	(262,598)		1,357		(261,241)		(Loss) income before income taxes	(262,366)		895		(261,471)

Total assets	Total assets	3,279,241		26,748		3,305,989		Total assets	3,056,320		26,916		3,083,236

Nine Months Ended November 2, 2019
Net sales from external customers		$	4,132,890	$	147,724	$	4,280,614
Gross profit		1,392,057		1,994		1,394,051
Depreciation and amortization		162,364		526		162,890
Interest and debt expense (income), net		35,104		(83)		35,021
Income (loss) before income taxes		52,023		(500)		51,523

Total assets		3,753,211		46,852		3,800,063

Intersegment construction revenues of ~~$4.1~~$12.3 million and ~~$8.2~~$6.9 million for the three months ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019,~~August 1, 2020, respectively, and ~~$22.3~~$16.6 million and ~~$22.8~~$18.3 million for the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019,~~August 1, 2020, 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 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	Retail									Retail
(in thousands of dollars)	(in thousands of dollars)	October 31, 2020		February 1, 2020		November 2, 2019		February 2, 2019		(in thousands of dollars)	July 31, 2021		January 30, 2021		August 1, 2020		February 1, 2020
Contract liabilities	Contract liabilities	$	54,684	$	75,229	$	60,742	$	72,852	Contract liabilities	$	59,713	$	68,021	$	58,186	$	75,229

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During the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019,~~August 1, 2020, the Company recorded ~~$39.7~~$28.8 million and ~~$45.2~~$29.8 million, respectively, in revenue that was previously included in the retail operations contract liability balances of $68.0 million and $75.2 million at January 30, 2021 and ~~$72.9 million, at~~ February 1, 2020, ~~and February 2, 2019,~~ 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 in the condensed consolidated balance sheets, respectively. The amounts included in the condensed consolidated balance sheets are as follows:


Construction	Construction									Construction
(in thousands of dollars)	(in thousands of dollars)	October 31, 2020		February 1, 2020		November 2, 2019		February 2, 2019		(in thousands of dollars)	July 31, 2021		January 30, 2021		August 1, 2020		February 1, 2020
Accounts receivable	Accounts receivable	$	18,689	$	28,522	$	33,154	$	31,867	Accounts receivable	$	23,374	$	25,094	$	19,222	$	28,522
Costs and estimated earnings in excess of billings on uncompleted contracts	Costs and estimated earnings in excess of billings on uncompleted contracts	781		2,179		2,479		1,165		Costs and estimated earnings in excess of billings on uncompleted contracts	1,426		450		722		2,179
Billings in excess of costs and estimated earnings on uncompleted contracts	Billings in excess of costs and estimated earnings on uncompleted contracts	5,808		5,737		6,800		7,414		Billings in excess of costs and estimated earnings on uncompleted contracts	5,118		4,685		7,212		5,737

During the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019,~~August 1, 2020, the Company recorded ~~$4.9~~$4.1 million and ~~$7.1~~$4.7 million, respectively, in revenue that was previously included in billings in excess of costs and estimated earnings on uncompleted contracts of $4.7 million and $5.7 million at January 30, 2021 and ~~$7.4 million at~~ February 1, 2020, ~~and February 2, 2019,~~ respectively.

The remaining performance obligations related to executed construction contracts totaled ~~$97.2~~$51.8 million, ~~$156.5~~$76.2 million and ~~$71.9~~$127.0 million at ~~October~~July 31, ~~2020, February~~2021, January 30, 2021 and August 1, 2020, ~~and November 2, 2019,~~ respectively.

Note 4. Earnings (Loss) Per Share Data

The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods indicated (in thousands, except per share data).


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019			July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Net income (loss)	Net income (loss)	$	31,850	$	5,462	$	(138,691)	$	43,393	Net income (loss)	$	185,656	$	(8,566)	$	343,903	$	(170,541)

Weighted average shares of common stock outstanding	Weighted average shares of common stock outstanding	22,264		24,913		22,930		25,604		Weighted average shares of common stock outstanding	21,079		23,174		21,458		23,264

Basic and diluted earnings (loss) per share	Basic and diluted earnings (loss) per share	$	1.43	$	0.22	$	(6.05)	$	1.69	Basic and diluted earnings (loss) per share	$	8.81	$	(0.37)	$	16.03	$	(7.33)

The Company maintains a capital structure in which common stock is the only equity security issued and outstanding, and there were 0no shares of preferred stock, stock options, other dilutive securities or potentially dilutive securities issued or outstanding during the three and ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019.~~August 1, 2020.

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 have a material adverse effect on the Company’s financial position, cash flows or results of operations.

At ~~October~~July 31, ~~2020,~~2021, letters of credit totaling ~~$21.1~~$20.2 million were issued under the Company’s revolving credit facility. See Note 7, Revolving Credit Agreement, for additional information.

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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. The Company determines pension expense 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 ~~$1.4~~$1.7 million and ~~$4.2~~$3.2 million to the Pension Plan during the three and ~~nine~~six months ended ~~October~~July 31, ~~2020,~~2021, respectively, and expects to make additional contributions to the Pension Plan of approximately ~~$1.5~~$3.2 million during the remainder of fiscal ~~2020.~~2021.

The components of net periodic benefit costs are as follows (in thousands):

Three Months Ended Nine Months Ended
October 31,
2020 November 2,
2019 October 31,
2020 November 2,
2019
Components of net periodic benefit costs:
Service cost $ 1,090 $ 906 $ 3,270 $ 2,716
Interest cost 1,536 1,916 4,608 5,750
Net actuarial loss 568 0 1,705 0
Net periodic benefit costs $ 3,194 $ 2,822 $ 9,583 $ 8,466


	Three Months Ended				Six Months Ended
	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Components of net periodic benefit costs:
Service cost	$	1,067	$	1,090	$	2,134	$	2,180
Interest cost	1,438		1,536		2,875		3,072
Net actuarial loss	697		568		1,394		1,137
Net periodic benefit costs	$	3,202	$	3,194	$	6,403	$	6,389

The service cost component of net periodic benefit costs is included in selling, general and administrative expenses, and the interest cost and net actuarial loss components are included in other expense.

Note 7. Revolving Credit Agreement

InThe Company maintained an unsecured credit facility that provided a borrowing capacity of $800 million with a $200 million expansion option ("credit agreement") until the credit agreement was amended in April 2020 ~~the Company~~(the "2020 amended ~~its credit agreement (the "amended~~ credit agreement"). After giving effect to the amendment, the 2020 amended credit agreement became secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries. ~~The~~

In April 2021, the Company further amended its secured credit agreement (the "2021 amended credit ~~agreement provides a~~agreement"). The borrowing capacity ofremained at $800 million, subject to certain limitations as outlined in the 2021 amended credit agreement, with a $200 million expansion ~~option and matures on August 9, 2022.~~option. The 2021 amended credit agreement is available to the Company 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 Company pays a variable rate of interest on borrowings under the 2021 amended credit agreement and a commitment fee to the participating banks. The rate of interest on borrowings under the 2021 amended credit agreement is LIBOR plus 1.75% if average quarterly availability is less than 50% of the ~~greater of LIBOR or 1.0% plus 1.750%~~total commitment, as defined in the 2021 amended credit agreement ("total commitment"), and the rate of interest on borrowings is LIBOR plus 1.50% if average quarterly availability is greater than or equal to 50% of the total commitment. The commitment fee for unused borrowings is 0.30% per ~~annum.~~annum if average borrowings are less than 35% of the total commitment and 0.25% if average borrowings are greater than or equal to 35% of the total commitment. As long as availability exceeds ~~$100~~$80 million and ~~no event~~certain events of default ~~occurs~~have not occurred and isare not continuing, there are no financial covenant requirements under the 2021 amended credit agreement.

Concurrent with the signing of the amended credit facility, the Company repaid the $779 million borrowed on March 25, 2020 under the previous agreement. Additionally, the Company paid $3.2 million in issuance costs related to theThe 2021 amended credit agreement ~~which were recorded in other assets~~matures on ~~the condensed consolidated balance sheets.~~April 28, 2026.

At ~~October~~July 31, ~~2020, $15.0 million of~~2021, no borrowings were outstanding, and letters of credit totaling ~~$21.1~~$20.2 million were issued under the 2021 amended credit agreement leaving unutilized availability under the credit facility of ~~$763.9~~$716.0 million. ~~The weighted average interest rate under the credit agreement for the borrowings outstanding at October 31, 2020 was 2.75%.~~

Note 8. Stock Repurchase ~~Program~~Programs

In March 2018, the Company's Board of Directors authorized the ~~Company to~~ repurchase of up to $500 million of the Company’s Class A Common Stock ~~pursuant to~~under an open-ended stock repurchase plan ~~(the "March~~("March 2018 Plan"). The March 2018 Plan permits the Company 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 or through privately negotiated transactions and has no expiration date. As of July 31, 2021, $2.1 million of authorization remained under the March 2018 Plan.

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The following is a summary of share repurchase activity under the March 2018 Plan for the periods indicated (in thousands, except per share data):


	Three Months Ended				Six Months Ended
	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Cost of shares repurchased	$	112,207	$	14,268	$	171,021	$	76,097
Number of shares repurchased	734		587		1,359		1,586
Average price per share	$	152.77	$	24.31	$	125.81	$	47.99

All repurchases of the Company’s Class A Common Stock above were made at the market price at the trade date. All amounts paid to reacquire these shares were allocated to treasury stock.

On May 15, 2021, the Company announced that its Board of Directors approved a new stock repurchase program authorizing the Company to repurchase up to $500 million of its Class A Common Stock. This new open-ended authorization permits the Company 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 or through privately negotiated ~~transactions. The March 2018 Plan~~transactions and has no expiration date.

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~~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
October 31,
2020 November 2,
2019 October 31,
2020 November 2,
2019
Cost of shares repurchased $ 19,459 $ 35,213 $ 95,556 $ 101,514
Number of shares repurchased 645 600 2,231 1,665
Average price per share $ 30.16 $ 58.64 $ 42.83 $ 60.96

All repurchases of the Company’s Class A Common Stock above were made at the market price at the trade date. Accordingly, all amounts paid to reacquire these shares were allocated to treasury stock. As of October 31, 2020, $173.1 million of authorization remained under the March 2018 Plan.

Note 9. Income Taxes

During the three and six months ended July 31, 2021, 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 to be~~was in a net operating loss position for the fiscal year ~~ending~~ended January 30, 2021. The Coronavirus Aid, Relief and Economic Security (“CARES”) Act, signed into law on March 27, 2020, allows for net operating loss carryback to years in which the statutory federal tax rate was 35% rather than the current 21%. During the three and ~~nine~~six months ended ~~October 31,~~August 1, 2020, income tax benefit differed from what would be computed using the current statutory federal tax rate of 21% primarily due to the recognition of a net tax benefit of ~~$32.4~~$17.4 million and ~~$64.6~~$32.1 million, respectively, related to the rate differential in the carryback ~~year including its impact on changes in estimates of temporary differences for the current and prior~~ year. Income tax benefit for the three and ~~nine~~six months also included the effects of ~~federal tax credits and~~ state and local income taxes.

During the three and nine months ended November 2, 2019, income taxes differed from what would be computed using the statutory federal tax rate primarily due to the effects of federal tax credits and state and local income taxes which included tax benefits recognized of approximately~~$2.8 millionfor amended state income tax return filings and related decreases to accrued state income taxes.~~

Note 10. Reclassifications from Accumulated Other Comprehensive Loss (“AOCL”)

Reclassifications from AOCL are summarized as follows (in thousands):

Amount Reclassified from AOCL
Three Months Ended Nine Months Ended Affected Line Item in the Statement Where Net Income Is Presented
Details about AOCL Components October 31, 2020 November 2, 2019 October 31,
2020 November 2,
2019
Defined benefit pension plan items
Amortization of actuarial losses $ 568 $ 0 $ 1,705 $ 0 Total before tax (1)
138 0 414 0 Income tax expense
$ 430 $ 0 $ 1,291 $ 0 Total net of tax

~~For fiscal year 2019, there was 0 amortization of the net loss in AOCL as the net loss did not exceed 10% of the projected benefit obligation.~~


	Amount Reclassified from AOCL
	Three Months Ended				Six Months Ended				Affected Line Item in the Statement Where Net Income Is Presented
Details about AOCL Components	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Defined benefit pension plan items

Amortization of actuarial losses	$	697	$	568	$	1,394	$	1,137	Total before tax (1)
	169		138		337		276		Income tax expense
	$	528	$	430	$	1,057	$	861	Total net of tax

(1) This item is included in the computation of net periodic pension cost. See Note 6, Benefit Plans, for additional information.

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Note 11. Changes in Accumulated Other Comprehensive Loss

Changes in AOCL by component (net of tax) are summarized as follows (in thousands):


		Defined Benefit Pension Plan Items									Defined Benefit Pension Plan Items
		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019			July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Beginning balance	Beginning balance	$	30,198	$	12,809	$	31,059	$	12,809	Beginning balance	$	34,406	$	30,628	$	34,935	$	31,059

Amounts reclassified from AOCL	Amounts reclassified from AOCL	(430)		0		(1,291)		0		Amounts reclassified from AOCL	(528)		(430)		(1,057)		(861)

Ending balance	Ending balance	$	29,768	$	12,809	$	29,768	$	12,809	Ending balance	$	33,878	$	30,198	$	33,878	$	30,198

Note 12. Leases

The Company leases retail stores, office space and equipment under operating leases. As of ~~October~~July 31, ~~2020, February~~2021, January 30, 2021 and August 1, 2020, ~~and November 2, 2019,~~ right-of-use operating lease assets, which are recorded in operating lease assets in the condensed consolidated balance sheets, totaled ~~$40.5~~$44.1 million, ~~$47.9~~$47.6 million and ~~$48.6~~$44.1 million, respectively, and operating lease liabilities, which are recorded in current portion of operating lease liabilities and operating lease liabilities, totaled ~~$40.2~~$43.6 million, ~~$47.3~~$47.2 million and ~~$48.2~~$43.8 million, respectively.

In determining our operating lease assets and operating lease liabilities, we apply an incremental borrowing rate to the minimum lease payments within each lease agreement. ~~ASU No. 2016-02~~GAAP requires the use of the rate implicit in the lease whenever that rate is readily determinable; furthermore, if the implicit rate is not readily determinable, a lessee may use its incremental borrowing rate. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. To estimate our specific incremental borrowing rates that align with applicable lease terms, we utilize a model consistent with the credit quality of our outstanding debt instruments.

Renewal options ~~from~~of ~~two~~five ~~to 20~~or 10 years exist on the majority of leased properties. The Company has sole discretion in exercising the lease renewal options. We do not recognize operating lease assets or operating lease liabilities at lease inception for renewal periods unless we are reasonably certain of ~~renewing~~exercising the ~~lease at inception.~~renewal options. The depreciable life of operating lease assets and related leasehold improvements is limited by the expected lease term.

Contingent rentals on certain leases are based on a percentage of annual sales in excess of specified amounts. Other contingent rentals are based entirely on a percentage of sales. The Company's operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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The following table summarizes the Company's operating and finance leases:


(in thousands of dollars)	(in thousands of dollars)	Classification - Condensed Consolidated Balance Sheets	October 31, 2020		February 1, 2020		November 2, 2019		(in thousands of dollars)	Classification - Condensed Consolidated Balance Sheets	July 31, 2021		January 30, 2021		August 1, 2020
Assets	Assets								Assets
Finance lease assets	Finance lease assets	Property and equipment, net (a)	$	353	$	670	$	776	Finance lease assets	Property and equipment, net (a)	$	124	$	247	$	459
Operating lease assets	Operating lease assets		40,471		47,924		48,600		Operating lease assets		44,098		47,612		44,091
Total leased assets	Total leased assets		$	40,824	$	48,594	$	49,376	Total leased assets		$	44,222	$	47,859	$	44,550

Liabilities	Liabilities								Liabilities
Current	Current								Current
Finance	Finance	Current portion of finance lease liabilities	$	849	$	1,219	$	1,148	Finance	Current portion of finance lease liabilities	$	356	$	695	$	986
Operating	Operating	Current portion of operating lease liabilities	12,775		14,654		15,250		Operating	Current portion of operating lease liabilities	12,113		13,819		13,758
Noncurrent	Noncurrent								Noncurrent
Finance	Finance	Finance lease liabilities	180		695		1,029		Finance	Finance lease liabilities	—		—		356
Operating	Operating	Operating lease liabilities	27,412		32,683		32,958		Operating	Operating lease liabilities	31,467		33,392		30,051
Total lease liabilities	Total lease liabilities		$	41,216	$	49,251	$	50,385	Total lease liabilities		$	43,936	$	47,906	$	45,151

(a) Finance lease assets are recorded net of accumulated amortization of ~~$14.2~~$14.4 million, ~~$13.9~~$14.3 million and ~~$13.8~~$14.1 million as of ~~October~~July 31, ~~2020, February~~2021, January 30, 2021 and August 1, 2020, ~~and November 2, 2019,~~ respectively.


Lease Cost	Lease Cost		Three Months Ended				Nine Months Ended				Lease Cost		Three Months Ended				Six Months Ended
(in thousands of dollars)	(in thousands of dollars)	Classification - Condensed Consolidated Statements of Operations	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019		(in thousands of dollars)	Classification - Condensed Consolidated Statements of Operations	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Operating lease cost (a)	Operating lease cost (a)	Rentals	$	5,115	$	5,927	$	16,304	$	18,254	Operating lease cost (a)	Rentals	$	5,099	$	5,639	$	10,210	$	11,189
Finance lease cost	Finance lease cost										Finance lease cost
Amortization of leased assets	Amortization of leased assets	Depreciation and amortization	106		106		317		317		Amortization of leased assets	Depreciation and amortization	62		105		124		211
Interest on lease liabilities	Interest on lease liabilities	Interest and debt expense, net	44		109		186		367		Interest on lease liabilities	Interest and debt expense, net	10		62		24		142
Net lease cost	Net lease cost		$	5,265	$	6,142	$	16,807	$	18,938	Net lease cost		$	5,171	$	5,806	$	10,358	$	11,542

(a) Includes short term lease costs of $0.5 million and ~~$0.8~~$0.5 million for the three months ended and ~~$1.5~~$0.9 million and ~~$2.5~~$1.0 million for the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019,~~August 1, 2020, respectively, and variable lease costs, including contingent rent, of $0.4 million and ~~$0.3~~$0.4 million for the three months ended and ~~$1.1~~$0.7 million and ~~$1.0~~$0.7 million for the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019,~~August 1, 2020, respectively.

Maturities of Lease Liabilities

(in thousands of dollars)
Fiscal Year
Operating
Leases Finance
Leases Total
2020 (excluding the nine months ended October 31, 2020) $ 3,550 $ 357 $ 3,907
2021 14,154 726 14,880
2022 7,811 0 7,811
2023 4,496 0 4,496
2024 3,714 0 3,714
After 2024 15,916 0 15,916
Total minimum lease payments 49,641 1,083 50,724
Less amount representing interest (9,454) (54) (9,508)
Present value of lease liabilities $ 40,187 $ 1,029 $ 41,216


(in thousands of dollars) Fiscal Year	Operating Leases		Finance Leases		Total
2021 (excluding the six months ended July 31, 2021)	$	7,317	$	363	$	7,680
2022	13,017		—		13,017
2023	9,347		—		9,347
2024	4,673		—		4,673
2025	4,013		—		4,013
After 2025	14,138		—		14,138
Total minimum lease payments	52,505		363		52,868
Less amount representing interest	(8,925)		(7)		(8,932)
Present value of lease liabilities	$	43,580	$	356	$	43,936

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Lease Term and Discount Rate


	~~October~~July 31, ~~2020~~ 2021
Weighted-average remaining lease term
Operating leases	~~6.3~~5.9 years
Finance leases	~~1.1~~0.5 years
Weighted-average discount rate
Operating leases	~~6.6~~6.2	%
Finance leases	~~10.4~~9.5	%

Other Information


		Nine Months Ended					Six Months Ended
(in thousands of dollars)	(in thousands of dollars)	October 31, 2020		November 2, 2019		(in thousands of dollars)	July 31, 2021		August 1, 2020
Cash paid for amounts included in the measurement of lease liabilities	Cash paid for amounts included in the measurement of lease liabilities					Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	Operating cash flows from operating leases	$	14,490	$	15,060	Operating cash flows from operating leases	$	8,793	$	9,387
Operating cash flows from finance leases	Operating cash flows from finance leases	186		367		Operating cash flows from finance leases	24		142
Financing cash flows from finance leases	Financing cash flows from finance leases	885		703		Financing cash flows from finance leases	339		572

Lease assets obtained in exchange for new operating lease liabilities	Lease assets obtained in exchange for new operating lease liabilities	$	4,084	$	4,601	Lease assets obtained in exchange for new operating lease liabilities	$	3,815	$	4,084

Note 13. (Gain) Loss ~~(Gain)~~ on Disposal of Assets

During the ~~three~~six months ended ~~October~~July 31, ~~2020,~~2021, the Company recorded proceeds of ~~$1.5 million primarily from the sale of one store property, resulting in a loss of $2.2 million that was recorded in loss (gain) on disposal of assets.~~

~~During the three months ended November 2, 2019, the Company recorded a loss of $0.3 million primarily from the sale of one store property that was recorded in loss (gain) on disposal of assets.~~

~~During the nine months ended November 2, 2019, the Company recorded proceeds of $22.0~~$29.3 million primarily from the sale of three store properties, resulting in a gain of ~~$12.0~~$24.7 million that was recorded in (gain) loss ~~(gain)~~ on disposal of assets.

Note 14. 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 is based on market prices and is categorized as Level 1 in the fair value hierarchy.

The fair value of the Company’s cash and cash equivalents and accounts receivable ~~and short-term borrowings~~ approximates their carrying values at ~~October~~July 31, ~~2020~~2021 due to the short-term maturities of these instruments. The fair value of the Company’s long-term debt at ~~October~~July 31, ~~2020~~2021 was approximately ~~$384~~$438 million. The carrying value of the Company’s long-term debt at ~~October~~July 31, ~~2020~~2021 was ~~$365.8~~$365.9 million. The fair value of the Company’s subordinated debentures at ~~October~~July 31, ~~2020~~2021 was approximately ~~$183~~$212 million. The carrying value of the Company’s subordinated debentures at ~~October~~July 31, ~~2020~~2021 was $200.0 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~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 year ended ~~February 1, 2020.~~January 30, 2021. Due to the significant impact of COVID-19 on prior year figures, the information that follows will include certain comparisons to 2019 to provide additional context.

EXECUTIVE OVERVIEW

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to ~~spread throughout~~impact the United States and ~~the world.~~global economies. The COVID-19 pandemic has had and ~~continues~~may continue to have a significant impact on the Company's business, results of operations and financial position. The Company began closing stores on March 19, 2020 as mandated by state and local governments, and by April 9, 2020, all of the Company's brick-and-mortar store locations were temporarily closed to the public. Our eCommerce capabilities allowed us to use our closed store locations (with limited staffing) to fill orders from our Internet store.

During the month ended May 30, 2020 (fiscal May), we re-opened most of our full-line ~~stores: 45~~ stores, ~~on May 5th, 80 stores on May 12th, 115 stores on May 19th~~ and ~~20th and 8 stores on May 26th. All Dillard’s~~by June 2, 2020 all Dillard's store locations had been ~~re-opened by June 2, 2020~~ re-opened.~~using the Centers for Disease Control and Prevention ("CDC") guidelines to promote~~ Following our re-opening, a ~~safe environment for our customers and employees.~~ ~~All stores are currently open and operating at reduced hours. A~~ very small number of our locations were temporarily closed to in-store shopping due to government mandate. ~~Other local mandates throughout the country require occupancy limits with which we~~All stores are ~~required to comply. We continue to monitor additional local government orders that may affect our operations.~~currently open and are operating at reduced hours from fiscal 2019 operating hours.

~~During~~The Company's results for the three months ended ~~October~~July 31, ~~2020, total retail sales decreased approximately 25% and comparable store sales decreased approximately 24%~~2021 improved significantly compared to the three months ended ~~November 2, 2019. Retail gross margin increased 210 basis points~~August 1, 2020, marking a sequential record quarterly performance. The momentum of strong consumer demand that began in the first quarter continued throughout the second. This catalyst, in addition to the re-opening of stores, led to an approximately 72% increase in retail sales compared to ~~36.6%~~the second quarter of 2020. Due to the temporary closure of the Company's brick-and-mortar stores during the three months ended ~~October~~May 2, 2020 as well as the interdependence between in-store and online sales, the Company reported no comparable store sales data for the three months ended July 31, ~~2020~~2021 compared to ~~34.5%~~the three months ended August 1, 2020. Retail gross margin increased to 41.7% during the three months ended ~~November 2, 2019, primarily due~~July 31, 2021 compared to ~~lower markdowns.~~31.1% during the three months ended August 1, 2020. The Company ~~was able~~attributes this improvement to ~~reduce~~the strong consumer demand combined with better inventory ~~by approximately 22%~~management which led to decreased markdowns compared to the prior year ~~third quarter~~second quarter. Accordingly, the Company reduced inventory by ~~reducing purchases~~ approximately ~~31%.~~13% compared to the prior year second quarter. Selling, general and administrative expenses ~~decreased~~increased to ~~$318.2~~$365.9 million (23.3% of sales) compared to ~~$418.1~~$267.1 million ~~from~~(29.1% of sales) for the prior year ~~third~~second quarter primarily due to ~~decreases~~increases in payroll expense, ~~partially as a result~~which was driven by the re-opening of our retail store locations. Increased retail sales during the ~~Company's reduced operating hours.~~second quarter of 2021 compared to the second quarter of 2020, provided support for these increased expenses. The Company reported net income of ~~$31.9~~$185.7 million ($~~1.43~~8.81 per share) compared to a net ~~income~~loss of ~~$5.5~~$8.6 million ($~~0.22~~0.37 per share) for the prior year ~~third~~second quarter.

~~The Company expects to be~~Included in the net loss for the three months ended August 1, 2020 is a net ~~operating loss position for fiscal year 2020.~~tax benefit of $17.4 million ($0.75 per share) related to The Coronavirus Aid, Relief and Economic Security ~~(“CARES”~~Act ("CARES Act") ~~Act,~~, signed into law on March 27, 2020, ~~allows~~which allowed for net operating loss carryback to years in which the federal income tax rate was 35%. Included in net income for the quarter ended October 31, 2020 is a net tax benefit of $32.4 million ($1.46 per share) related to this provision. Also included in net income for the quarter is a pretax loss of $2.2 million ($1.4 million after tax or $0.06 per share) primarily related to the sale of a store property.

Included in net income for the quarter ended November 2, 2019 is a pretax loss on disposal of assets of $0.3 million ($0.2 million after tax or $0.01 per share) related to the sale of a store property. Also included in net income for the quarter is $2.8 million ($0.11 per share) in tax benefits related to amended state tax return filings.

During the three months ended ~~October~~July 31, ~~2020,~~2021, the Company purchased ~~$19.5~~$112.2 million of its outstanding Class A Common Stock under its stock repurchase plan authorized by the Company's Board of Directors in March 2018 (the "March 2018 Plan"). As of ~~October~~July 31, ~~2020,~~2021, authorization of ~~$173.1~~$2.1 million remained under the March 2018 Plan. On May 15, 2021, the Company announced that its Board of Directors approved a new stock repurchase program authorizing the Company to repurchase up to $500 million of its Class A Common Stock (the "May 2021 Plan").

As of ~~October~~July 31, ~~2020,~~2021, the Company had working capital of ~~$767.0~~$1,111.8 million (including cash and cash equivalents of ~~$61.1~~$669.5 million) and ~~$580.8~~$565.9 million of total debt outstanding, excluding finance lease liabilities and operating lease ~~liabilities.~~liabilities, with no scheduled maturities until the end of fiscal 2022. Cash flows ~~used in~~provided by operating activities were ~~$62.9~~$492.3 million for the ~~nine~~six months ended ~~October~~July 31, ~~2020.~~2021.

The Company maintained ~~282~~280 Dillard's stores, including 3231 clearance centers, and an internet store at ~~October~~July 31, ~~2020.~~2021.

~~On February 25, 2020,~~We source a significant portion of our private label and exclusive brand merchandise from countries that have experienced widespread transmission of the ~~Company provided estimates for certain financial statement items, including depreciation~~COVID-19 virus. Additionally, many of our branded merchandise vendors may also source a significant portion of their merchandise from these same countries. Manufacturing capacity in those countries has been significantly impacted by the pandemic and ~~amortization, rentals, interest and debt expense, net and capital expenditures, for the fiscal year ending January 30, 2021 based upon current conditions at that time, which did not include the~~in some countries continues to negatively impact of COVID-19. Due to heightened uncertainty relating to the impacts of COVID-19 on the Company’s business operations, including the duration and impact on overall customer demand, the Company previously withdrew its 2020 guidance.

our supply chain with shipping delays as well as increased shipping costs.

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Additionally, disruptions in the global transportation network which continued into fiscal 2021 have intensified in recent weeks, particularly in certain United States receiving ports. The ~~Company believes that Dillard's~~California ports of Los Angeles and Long Beach, which together handle a significant portion of United States merchandise imports including our own imports, have experienced and are continuing to experience delays in processing imported merchandise, thereby resulting in untimely deliveries of merchandise. At present, while monitoring the situation closely, management is ~~uniquely positioned, among U.S. department store retailers,~~unable to ~~weather~~quantify the ~~COVID-19 pandemic~~effects of these factors on the Company's results of operations and inventory position for ~~the following reasons:~~fiscal 2021.

▪~~The Company owns approximately 90% of its retail store square footage and 100% of its corporate headquarters, distribution and fulfillment facilities;~~

▪~~Store rent obligations are small compared to the industry;~~

▪~~Low long-term debt position with next payment due January 2023 ($45 million);~~

▪~~Amended $800 million revolving credit facility with no financial covenants as long as availability exceeds $100 million and no event of default occurs and is continuing; and~~

▪~~Strong eCommerce platform at dillards.com which includes ship-from-store capability.~~

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							Three Months Ended
		October 31, 2020			November 2, 2019				July 31, 2021			August 1, 2020
Net sales (in millions)	Net sales (in millions)	$	1,024.9		$	1,388.3		Net sales (in millions)	$	1,570.4		$	919.0
Retail stores sales trend	Retail stores sales trend	(25)		%	(1)		%	Retail stores sales trend	72		%	(35)		%
Comparable retail stores sales trend		(24)		%	—		%

Gross profit (in millions)	Gross profit (in millions)	$	366.2		$	461.5		Gross profit (in millions)	$	643.2		$	279.2
Gross profit as a percentage of net sales	Gross profit as a percentage of net sales	35.7		%	33.2		%	Gross profit as a percentage of net sales	41.0		%	30.4		%
Retail gross profit as a percentage of net sales	Retail gross profit as a percentage of net sales	36.6		%	34.5		%	Retail gross profit as a percentage of net sales	41.7		%	31.1		%
Selling, general and administrative expenses as a percentage of net sales	Selling, general and administrative expenses as a percentage of net sales	31.0		%	30.1		%	Selling, general and administrative expenses as a percentage of net sales	23.3		%	29.1		%
Cash flow (used in) provided by operations (in millions)*		$	(62.9)		$	23.0
Cash flow provided by (used in) operations (in millions)*								Cash flow provided by (used in) operations (in millions)*	$	492.3		$	(294.5)
Total retail store count at end of period	Total retail store count at end of period	282			289			Total retail store count at end of period	280			282
Retail sales per square foot	Retail sales per square foot	$	21		$	28		Retail sales per square foot	$	33		$	19
Retail store inventory trend	Retail store inventory trend	(22)		%	(4)		%	Retail store inventory trend	(13)		%	(20)		%
Annualized retail merchandise inventory turnover	Annualized retail merchandise inventory turnover	1.8			2.0			Annualized retail merchandise inventory turnover	2.9			1.7

*Cash flow from operations data is for the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019.~~August 1, 2020.

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 ~~current~~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 long-term ~~private label card~~marketing and servicing alliance with Wells Fargo Bank, N.A. (“Wells Fargo Alliance”). Other income includes rental income, shipping and handling fees, gift card breakage and lease income on leased departments.

~~Table of Contents~~

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.

Table of Contents

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, ~~office space and~~ data processing and other equipment ~~rentals.~~rentals and office space leases.

Interest and debt expense, net. Interest and debt expense includes interest, net of interest income and capitalized interest, relating to the Company’s unsecured notes, subordinated debentures and borrowings under the Company’s credit ~~facility.~~agreement. Interest and debt expense also includes ~~gains and losses on note repurchases, if any,~~the amortization of financing costs and interest on finance lease ~~liabilities.~~obligations.

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 deferred financing fees, if any.

~~Loss (gain)~~(Gain) loss on disposal of assets. ~~Loss (gain)~~(Gain) loss 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.

LIBOR

~~The use of~~On March 5, 2021, the U.K. Financial Conduct Authority, which regulates LIBOR, ~~is expected~~announced that all LIBOR settings will either cease to be ~~phased out~~provided by any administrator or no longer be representative: (a) immediately after December 31, 2021, in the ~~end~~case of ~~2021. At this time, there is no definitive information regarding~~ the ~~future utilization~~1-week and 2-month U.S. dollar settings; and (b) immediately after June 30, 2023, in the case of ~~LIBOR beyond 2021 or of any particular replacement rate.~~the remaining U.S. dollar settings. Going forward, we intend to work with our lenders to use a suitable alternative reference rate for the 2021 amended credit agreement, the Wells Fargo Alliance and any other applicable agreements. We will continue to monitor, assess and plan for the phase out of LIBOR.

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.

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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					Three Months Ended				Six Months Ended
		October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019			July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Net sales	Net sales	100.0	%	100.0	%	100.0	%	100.0	%	Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Service charges and other income	Service charges and other income	2.7		2.5		3.2		2.3		Service charges and other income	2.0		2.8		2.1		3.6

		102.7		102.5		103.2		102.3			102.0		102.8		102.1		103.6

Cost of sales	Cost of sales	64.3		66.8		72.8		67.4		Cost of sales	59.0		69.6		58.7		77.9
Selling, general and administrative expenses	Selling, general and administrative expenses	31.0		30.1		32.1		28.8		Selling, general and administrative expenses	23.3		29.1		24.2		32.7
Depreciation and amortization	Depreciation and amortization	5.2		4.0		5.7		3.8		Depreciation and amortization	3.2		5.5		3.3		6.0
Rentals	Rentals	0.5		0.4		0.6		0.4		Rentals	0.3		0.6		0.4		0.7
Interest and debt expense, net	Interest and debt expense, net	1.2		0.8		1.4		0.8		Interest and debt expense, net	0.7		1.4		0.8		1.5
Other expense	Other expense	0.2		0.1		0.2		0.1		Other expense	0.1		0.2		0.2		0.2
Loss (gain) on disposal of assets		0.2		—		0.1		(0.3)
(Gain) loss on disposal of assets										(Gain) loss on disposal of assets	—		—		(0.9)		—

Income (loss) before income taxes	Income (loss) before income taxes	—		0.2		(9.6)		1.2		Income (loss) before income taxes	15.3		(3.6)		15.3		(15.3)
Income taxes (benefit)	Income taxes (benefit)	(3.1)		(0.2)		(4.5)		0.2		Income taxes (benefit)	3.5		(2.7)		3.4		(5.3)

Net income (loss)	Net income (loss)	3.1	%	0.4	%	(5.1)	%	1.0	%	Net income (loss)	11.8	%	(0.9)	%	11.9	%	(10.0)	%

Net Sales


		Three Months Ended							Three Months Ended
(in thousands of dollars)	(in thousands of dollars)	October 31, 2020		November 2, 2019		$ Change		(in thousands of dollars)	July 31, 2021		August 1, 2020		$ Change
Net sales:	Net sales:							Net sales:
Retail operations segment	Retail operations segment	$	994,588	$	1,334,205	$	(339,617)	Retail operations segment	$	1,539,396	$	893,216	$	646,180
Construction segment	Construction segment	30,311		54,105		(23,794)		Construction segment	30,982		25,828		5,154
Total net sales	Total net sales	$	1,024,899	$	1,388,310	$	(363,411)	Total net sales	$	1,570,378	$	919,044	$	651,334

The percent change in the Company’s sales by segment and product category for the three months ended ~~October~~July 31, ~~2020~~2021 compared to the three months ended ~~November 2, 2019~~August 1, 2020 as well as the sales percentage by segment and product category to total net sales for the three months ended ~~October~~July 31, ~~2020~~2021 are as follows:


		% Change 2020 - 2019		% of Net Sales			% Change 2021 - 2020		% of Net Sales
Retail operations segment	Retail operations segment					Retail operations segment
Cosmetics	Cosmetics	(20.4)	%	14	%	Cosmetics	58.5	%	13	%
Ladies’ apparel	Ladies’ apparel	(38.3)		20		Ladies’ apparel	102.9		24
Ladies’ accessories and lingerie	Ladies’ accessories and lingerie	(15.9)		15		Ladies’ accessories and lingerie	59.2		15
Juniors’ and children’s apparel	Juniors’ and children’s apparel	(24.4)		10		Juniors’ and children’s apparel	61.4		9
Men’s apparel and accessories	Men’s apparel and accessories	(24.7)		18		Men’s apparel and accessories	71.1		20
Shoes	Shoes	(25.2)		16		Shoes	81.8		14
Home and furniture	Home and furniture	(3.5)		4		Home and furniture	21.6		3
				97					98
Construction segment	Construction segment	(44.0)		3		Construction segment	20.0		2
Total	Total			100	%	Total			100	%

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Net sales from the retail operations segment ~~decreased $339.6~~increased $646.2 million, or approximately 72%, during the three months ended ~~October~~July 31, ~~2020~~2021 compared to the three months ended ~~November 2, 2019, decreasing approximately 25% in total and approximately 24% in comparable stores,~~August 1, 2020, primarily due to the impact of the COVID-19 pandemic. The Company reported no comparable store sales data for the quarter due to the temporary closure of its brick-and-mortar stores during a portion of the second quarter of 2020 as well as the interdependence between in-store and online sales. Sales in all product categories ~~decreased~~increased significantly over the ~~third~~second quarter last ~~year with~~year.

Compared to the ~~exception~~second quarter of ~~home~~fiscal 2019, net sales from the retail operations segment for the three months ended July 31, 2021 and ~~furniture, which decreased moderately.~~August 3, 2019 were $1,539.4 million and $1,378.2 million, respectively, increasing $161.2 million or approximately 12% while sales in comparable stores increased approximately 14%.

We recorded a return asset of ~~$7.5~~$10.6 million and ~~$11.1~~$8.4 million and an allowance for sales returns of ~~$12.5~~$19.5 million and ~~$17.8~~$10.8 million as of ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019,~~August 1, 2020, respectively.

During the three months ended ~~October~~July 31, ~~2020,~~2021, net sales from the construction segment ~~decreased $23.8~~increased $5.2 million or ~~44.0%~~20.0% compared to the three months ended ~~November 2, 2019~~August 1, 2020 due to ~~a decrease~~an increase in construction activity. The remaining performance obligations related to executed construction contracts totaled ~~$97.2~~$51.8 million as of ~~October~~July 31, ~~2020~~2021, decreasing approximately ~~38%~~32% from ~~February~~January 30, 2021 and decreasing approximately 59% from August 1, 2020, ~~and increasing approximately 35% from November 2, 2019,~~ respectively. We expect these remaining performance obligations to be earned over the next nine to eighteen months.


		Nine Months Ended							Six Months Ended
(in thousands of dollars)	(in thousands of dollars)	October 31, 2020		November 2, 2019		$ Change		(in thousands of dollars)	July 31, 2021		August 1, 2020		$ Change
Net sales:	Net sales:							Net sales:
Retail operations segment	Retail operations segment	$	2,638,831	$	4,132,890	$	(1,494,059)	Retail operations segment	$	2,836,132	$	1,644,243	$	1,191,889
Construction segment	Construction segment	91,767		147,724		(55,957)		Construction segment	62,789		61,456		1,333
Total net sales	Total net sales	$	2,730,598	$	4,280,614	$	(1,550,016)	Total net sales	$	2,898,921	$	1,705,699	$	1,193,222

The percent change in the ~~Company’s~~Company's sales by segment and product category for the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 compared to the ~~nine~~six months ended ~~November 2, 2019~~August 1, 2020 as well as the sales percentage by segment and product category to total net sales for the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 are as follows:

% Change
2020 - 2019 % of
Net Sales
Retail operations segment
Cosmetics (30.2) % 14 %
Ladies’ apparel (45.4) 21
Ladies’ accessories and lingerie (31.3) 15
Juniors’ and children’s apparel (35.7) 10
Men’s apparel and accessories (34.2) 18
Shoes (37.4) 15
Home and furniture (19.7) 4
97
Construction segment (37.9) 3
Total 100 %



	% Change 2021 - 2020		% of Net Sales
Retail operations segment
Cosmetics	59.3	%	14	%
Ladies’ apparel	89.4		23
Ladies’ accessories and lingerie	68.4		15
Juniors’ and children’s apparel	72.6		10
Men’s apparel and accessories	75.4		19
Shoes	72.8		14
Home and furniture	31.9		3
			98
Construction segment	2.2		2
Total			100	%

Net sales from the retail operations segment ~~decreased $1.5 billion,~~increased $1,191.9 million, or approximately ~~36%~~72%, during the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 compared to the ~~nine~~six months ended ~~November 2, 2019~~August 1, 2020 primarily due to the impact of the COVID-19 pandemic. The Company reported no comparable store sales data for the period due to the temporary closure of its brick-and-mortar stores during a portion of the first six months of 2020 as well as the interdependence between in-store and online sales. Sales in all product categories ~~decreased~~increased significantly ~~during~~over the ~~nine~~first six months ~~ended October 31, 2020 compared to the nine months ended November 2, 2019.~~of fiscal 2020.

During the nine months ended October 31, 2020, net sales from the construction segment decreased $56.0 million or approximately 38% compared to the nine months ended November 2, 2019 due to a decrease in construction activity.

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Storewide sales penetration of exclusive brand merchandise for the six months ended July 31, 2021 and August 1, 2020 was 22.8% and 20.8%, respectively.

Compared to the first six months of fiscal 2019, net sales from the retail operations segment for the six months ended July 31, 2021 and August 3, 2019 were $2,836.1 million and $2,798.7 million, respectively, increasing $37.4 million or approximately 1% while sales in comparable stores increased approximately 4%.

During the six months ended July 31, 2021, net sales from the construction segment increased $1.3 million or 2.2% compared to the six months ended August 1, 2020 due to an increase in construction activity.

Service Charges and Other Income


		Three Months Ended				Nine Months Ended				Three Months		Nine Months			Three Months Ended				Six Months Ended				Three Months		Six Months
(in thousands of dollars)	(in thousands of dollars)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019		$ Change 2020-2019		$ Change 2020-2019		(in thousands of dollars)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020		$ Change 2021 - 2020		$ Change 2021-2020
Service charges and other income:	Service charges and other income:													Service charges and other income:
Retail operations segment	Retail operations segment													Retail operations segment
Income from Wells Fargo Alliance	Income from Wells Fargo Alliance	$	16,472	$	23,879	$	51,958	$	66,219	$	(7,407)	$	(14,261)	Income from Wells Fargo Alliance	$	17,735	$	14,685	$	35,443	$	35,486	$	3,050	$	(43)
Shipping and handling income	Shipping and handling income	7,917		6,670		28,140		18,908		1,247		9,232		Shipping and handling income	10,223		8,657		18,704		20,224		1,566		(1,520)
Leased department income	Leased department income	212		993		1,075		3,202		(781)		(2,127)		Leased department income	1		491		3		862		(490)		(859)
Other	Other	2,562		2,482		6,600		8,604		80		(2,004)		Other	2,777		2,291		5,200		4,039		486		1,161
		27,163		34,024		87,773		96,933		(6,861)		(9,160)			30,736		26,124		59,350		60,611		4,612		(1,261)
Construction segment	Construction segment	50		1,325		500		2,892		(1,275)		(2,392)		Construction segment	318		15		696		449		303		247
Total service charges and other income	Total service charges and other income	$	27,213	$	35,349	$	88,273	$	99,825	$	(8,136)	$	(11,552)	Total service charges and other income	$	31,054	$	26,139	$	60,046	$	61,060	$	4,915	$	(1,014)

Service charges and other income is composed primarily of income from the Wells Fargo Alliance. Income from the alliance ~~decreased~~increased $3.1 million during the three ~~and nine~~ months ended ~~October~~July 31, ~~2020~~2021 compared to the three ~~and nine~~ months ended ~~November 2, 2019~~August 1, 2020 primarily due to ~~decreases~~increases in finance charges. Income from the alliance decreased slightly for the six months ended July 31, 2021 compared to the six months ended August 1, 2020.

Shipping and handling income increased during the three ~~and nine~~ months ended ~~October~~July 31, ~~2020~~2021 compared to the three ~~and nine~~ months ended ~~November 2, 2019~~August 1, 2020 due to an increase in online shopping. Shipping and handling income decreased during the six months ended July 31, 2021 compared to the six months ended August 1, 2020 primarily due to ~~the~~an increase in online orders in the first quarter of 2020 as customer shopping patterns shifted to dillards.com as COVID-19 infection levels increased and ~~ship-from-store capabilities.~~brick-and-mortar stores were temporarily closed.

Compared to the second quarter of fiscal 2019, shipping and handling income for the three months ended July 31, 2021 and August 3, 2019 was $10.2 million and $6.2 million, respectively, increasing $4.1 million or 66.0%. Shipping and handling income for the six months ended July 31, 2021 and August 3, 2019 was $18.7 million and $12.2 million, respectively, increasing $6.5 million or 52.8%.

Leased department income consisted primarily of commissions from a principal licensed department of an upscale women's apparel vendor located in certain stores. By the end of July 2020, our agreement with this principal licensed department had been terminated. We expect future leased department income to be minimal.

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Gross Profit


(in thousands of dollars)	(in thousands of dollars)	October 31, 2020		November 2, 2019		$ Change		% Change		(in thousands of dollars)	July 31, 2021		August 1, 2020		$ Change		% Change
Gross profit:	Gross profit:									Gross profit:
Three months ended	Three months ended									Three months ended
Retail operations segment	Retail operations segment	$	364,232	$	460,549	$	(96,317)	(20.9)	%	Retail operations segment	$	641,240	$	277,407	$	363,833	131.2	%
Construction segment	Construction segment	1,983		979		1,004		102.6		Construction segment	1,928		1,790		138		7.7
Total gross profit	Total gross profit	$	366,215	$	461,528	$	(95,313)	(20.7)	%	Total gross profit	$	643,168	$	279,197	$	363,971	130.4	%

Nine months ended
Six months ended										Six months ended
Retail operations segment	Retail operations segment	$	737,673	$	1,392,057	$	(654,384)	(47.0)	%	Retail operations segment	$	1,194,241	$	373,441	$	820,800	219.8	%
Construction segment	Construction segment	5,925		1,994		3,931		197.1		Construction segment	3,381		3,942		(561)		(14.2)
Total gross profit	Total gross profit	$	743,598	$	1,394,051	$	(650,453)	(46.7)	%	Total gross profit	$	1,197,622	$	377,383	$	820,239	217.3	%


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019			July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Gross profit as a percentage of segment net sales:	Gross profit as a percentage of segment net sales:									Gross profit as a percentage of segment net sales:
Retail operations segment	Retail operations segment	36.6	%	34.5	%	28.0	%	33.7	%	Retail operations segment	41.7	%	31.1	%	42.1	%	22.7	%
Construction segment	Construction segment	6.5		1.8		6.5		1.3		Construction segment	6.2		6.9		5.4		6.4
Total gross profit as a percentage of net sales	Total gross profit as a percentage of net sales	35.7		33.2		27.2		32.6		Total gross profit as a percentage of net sales	41.0		30.4		41.3		22.1

Gross profit, as a percentage of sales, increased to ~~35.7%~~41.0% from ~~33.2%~~30.4% during the three months ended ~~October~~July 31, ~~2020~~2021 compared to the three months ended ~~November 2, 2019,~~August 1, 2020, respectively.

~~Table of Contents~~

Gross profit from retail operations, as a percentage of sales, increased to 36.6% from 34.5% during the three months ended October 31, 2020 compared to the three months ended November 2, 2019 primarily due to decreased markdowns. Gross margin increased significantly in ladies' accessories and lingerie and home and furniture. Gross margin increased moderately in ladies' apparel, men's apparel and accessories, junior's and children's apparel and shoes. Gross margin was essentially flat in cosmetics.

Gross profit from the construction segment increased 473 basis points of construction sales for the three months ended October 31, 2020 compared to the three months ended November 2, 2019, respectively.

~~Gross profit, as a percentage of sales, decreased to 27.2% from 32.6% during the nine months ended October 31, 2020 compared to the nine months ended November 2, 2019.~~

Gross profit from retail operations, as a percentage of sales, ~~decreased~~increased to ~~28.0%~~41.7% from ~~33.7%~~31.1% during the ~~nine~~three months ended ~~October~~July 31, ~~2020~~2021 compared to the ~~nine~~three months ended ~~November 2, 2019~~August 1, 2020, respectively, primarily due to increased markdowns taken during the second quarter of fiscal 2020 as a result of the impact of the COVID-19 ~~pandemic.~~pandemic as well as better inventory management and stronger customer demand leading to decreased markdowns in the second quarter of fiscal 2021. Gross margin ~~decreased significantly~~ in ~~ladies'~~ladies’ apparel, ~~and shoes. Gross margin decreased moderately in men's~~men’s apparel and accessories, shoes, and ~~junior's~~juniors’ and ~~children's~~children’s apparel all improved significantly, gross margin in cosmetics improved moderately while ~~decreasing slightly~~gross margin in ~~cosmetics. Gross margin increased moderately in ladies'~~ladies’ accessories and lingerie ~~while increasing significantly~~remained essentially flat.

Compared to the second quarter of fiscal 2019, gross profit from retail operations, as a percentage of sales, increased 1,299 basis points of sales to 41.7% during the three months ended July 31, 2021 compared to 28.7% during the three months ended August 3, 2019 primarily due to better inventory management and customer demand leading to decreased markdowns in ~~home and furniture.~~the second quarter of fiscal 2021.

Gross profit from the construction segment ~~increased 511~~decreased 71 basis points of construction sales for the ~~nine~~three months ended ~~October~~July 31, ~~2020~~2021 compared to the ~~nine~~three months ended ~~November 2,~~August 1, 2020.

Gross profit, as a percentage of sales, increased to 41.3% from 22.1% during the six months ended July 31, 2021 compared to the six months ended August 1, 2020.

Gross profit from retail operations, as a percentage of sales, increased to 42.1% from 22.7% during the six months ended July 31, 2021 compared to the six months ended August 1, 2020, respectively, primarily due to increased markdowns taken during the first six months of fiscal 2020 as a result of the impact of the COVID-19 pandemic as well as better inventory management and customer demand leading to decreased markdowns in the first six months of fiscal 2021. Gross margin increased significantly in all product categories except cosmetics which increased moderately.

Compared to the first six months of fiscal 2019, ~~respectively.~~gross profit from retail operations, as a percentage of sales, increased 883 basis points of sales to 42.1% during the six months ended July 31, 2021 compared to 33.3% during the six months ended August 3, 2019 primarily due to better inventory management and customer demand leading to decreased markdowns in the first six months of fiscal 2021.

Table of Contents

Gross profit from the construction segment decreased 103 basis points of construction sales for the six months ended July 31, 2021 compared to the six months ended August 1, 2020.

Inventory decreased ~~22%~~13% in total as of ~~October~~July 31, ~~2020~~2021 compared to ~~November 2, 2019.~~August 1, 2020. A 1% change in the dollar amount of markdowns would have impacted ~~the~~ net ~~loss~~income by approximately $1$2 million and $5$4 million for the three and ~~nine~~six months ended ~~October~~July 31, ~~2020,~~2021, respectively.

Selling, General and Administrative Expenses (“SG&A”)


(in thousands of dollars)	(in thousands of dollars)	October 31, 2020		November 2, 2019		$ Change		% Change		(in thousands of dollars)	July 31, 2021		August 1, 2020		$ Change		% Change
SG&A:	SG&A:									SG&A:
Three months ended	Three months ended									Three months ended
Retail operations segment	Retail operations segment	$	316,738	$	416,707	$	(99,969)	(24.0)	%	Retail operations segment	$	364,212	$	265,801	$	98,411	37.0	%
Construction segment	Construction segment	1,480		1,442		38		2.6		Construction segment	1,656		1,261		395		31.3
Total SG&A	Total SG&A	$	318,218	$	418,149	$	(99,931)	(23.9)	%	Total SG&A	$	365,868	$	267,062	$	98,806	37.0	%

Nine months ended
Six months ended										Six months ended
Retail operations segment	Retail operations segment	$	871,096	$	1,227,588	$	(356,492)	(29.0)	%	Retail operations segment	$	699,355	$	554,358	$	144,997	26.2	%
Construction segment	Construction segment	4,630		4,846		(216)		(4.5)		Construction segment	3,127		3,150		(23)		(0.7)
Total SG&A	Total SG&A	$	875,726	$	1,232,434	$	(356,708)	(28.9)	%	Total SG&A	$	702,482	$	557,508	$	144,974	26.0	%


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019			July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
SG&A as a percentage of segment net sales:	SG&A as a percentage of segment net sales:									SG&A as a percentage of segment net sales:
Retail operations segment	Retail operations segment	31.8	%	31.2	%	33.0	%	29.7	%	Retail operations segment	23.7	%	29.8	%	24.7	%	33.7	%
Construction segment	Construction segment	4.9		2.7		5.0		3.3		Construction segment	5.3		4.9		5.0		5.1
Total SG&A as a percentage of net sales	Total SG&A as a percentage of net sales	31.0		30.1		32.1		28.8		Total SG&A as a percentage of net sales	23.3		29.1		24.2		32.7

SG&A decreased ~~by $99.9 million and increased 93 basis points~~to 23.3% of ~~net~~ sales during the three months ended ~~October~~July 31, ~~2020~~2021 compared to 29.1% of sales during the three months ended ~~November 2, 2019.~~August 1, 2020, while increasing $98.8 million. SG&A from retail operations decreased ~~by $100.0 million and increased 62 basis points~~to 23.7% of ~~net~~ sales during the three months ended October 31, 2020 compared to the three months ended November 2, 2019. The decrease in SG&A dollars was realized across all SG&A categories; however, it was primarily due to decreases in payroll expense. Payroll expense and related payroll taxes for the three months ended ~~October~~July 31, ~~2020 was $207.5 million~~2021 compared to ~~$288.6 million~~29.8% of sales for the three months ended ~~November 2, 2019, a decline of 28.1%, which~~August 1, 2020, while increasing $98.4 million. The increase in SG&A dollars was ~~driven by retail store locations operating at reduced hours, which required fewer sales associates.~~

~~Table of Contents~~

primarily due to increases in payroll expense and related payroll taxes.

SG&A decreased ~~by $356.7 million and increased 328 basis points~~to 24.2% of ~~net~~ sales during the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 compared to 32.7% of sales during the ~~nine~~six months ended ~~November 2, 2019.~~August 1, 2020, while increasing $145.0 million. SG&A from retail operations decreased ~~by $356.5 million and increased 331 basis points~~to 24.7% of ~~net~~ sales ~~during~~for the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 compared to 33.7% of sales for the ~~nine~~six months ended ~~November 2, 2019.~~August 1, 2020, while increasing $145.0 million. The ~~decrease~~increase in SG&A dollars was ~~realized across all SG&A categories; however, the decrease was~~ primarily due to ~~decreases~~increases in payroll ~~expense.~~expense and related payroll taxes.

Payroll expense and related payroll taxes for the ~~nine~~three months ended ~~October~~July 31, ~~2020~~2021 was ~~$560.1~~$246.7 million compared to ~~$854.0~~$168.7 million for the ~~nine~~three months ended ~~November 2, 2019, a decline~~August 1, 2020, increasing $78.0 million. Payroll expense and related payroll taxes for the six months ended July 31, 2021 was $472.1 million compared to $352.6 million for the six months ended August 1, 2020, increasing $119.5 million. During the first six months of ~~34.4%. The~~fiscal 2020, the Company (a) furloughed store associates as stores temporarily closed due to the COVID-19 pandemic and ~~furlough actions were also implemented~~furloughed associates in certain corporate and support facility ~~functions. Stores then re-opened at~~functions and (b) reduced ~~operating hours, requiring fewer sales associates. During the nine months ended October 31, 2020, the Company was also able to reduce~~ payroll expense and related payroll taxes and benefits by $6.1 million through the employee retention credit available under the CARES Act.

Compared to the second quarter of fiscal 2019, SG&A from retail operations for the three months ended July 31, 2021 and August 3, 2019 were $364.2 million (23.7% of sales) and $407.6 million (29.6% of sales), decreasing $43.4 million. SG&A from retail operations for the six months ended July 31, 2021 was $699.4 million (24.7% of sales) compared to $810.9 million (29.0% of sales), decreasing $111.5 million primarily due to decreases in payroll expense and related payroll taxes. During the

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first six months of fiscal 2021, stores were operating at reduced operating hours from the first six months of fiscal 2019, requiring fewer sales associates.

Depreciation and Amortization

(in thousands of dollars) October 31, 2020 November 2, 2019 $ Change % Change
Depreciation and amortization:
Three months ended
Retail operations segment $ 53,290 $ 55,963 $ (2,673) (4.8) %
Construction segment 87 180 (93) (51.7)
Total depreciation and amortization $ 53,377 $ 56,143 $ (2,766) (4.9) %
Nine months ended
Retail operations segment $ 154,806 $ 162,364 $ (7,558) (4.7) %
Construction segment 423 526 (103) (19.6)
Total depreciation and amortization $ 155,229 $ 162,890 $ (7,661) (4.7) %



(in thousands of dollars)	July 31, 2021		August 1, 2020		$ Change		% Change
Depreciation and amortization:
Three months ended
Retail operations segment	$	49,981	$	50,784	$	(803)	(1.6)	%
Construction segment	62		167		(105)		(62.9)
Total depreciation and amortization	$	50,043	$	50,951	$	(908)	(1.8)	%

Six months ended
Retail operations segment	$	96,319	$	101,516	$	(5,197)	(5.1)	%
Construction segment	132		336		(204)		(60.7)
Total depreciation and amortization	$	96,451	$	101,852	$	(5,401)	(5.3)	%

Depreciation and amortization expense decreased ~~$2.8~~$0.9 million and ~~$7.7~~$5.4 million during the three and ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 compared to the three and ~~nine~~six months ended ~~November 2, 2019,~~August 1, 2020 primarily due to the timing and composition of capital expenditures.

Interest and Debt Expense, Net


(in thousands of dollars)	(in thousands of dollars)	October 31, 2020		November 2, 2019		$ Change		% Change		(in thousands of dollars)	July 31, 2021		August 1, 2020		$ Change		% Change
Interest and debt expense (income), net:	Interest and debt expense (income), net:									Interest and debt expense (income), net:
Three months ended	Three months ended									Three months ended
Retail operations segment	Retail operations segment	$	12,167	$	11,562	$	605	5.2	%	Retail operations segment	$	10,782	$	12,885	$	(2,103)	(16.3)	%
Construction segment	Construction segment	(5)		(26)		21		80.8		Construction segment	(11)		(12)		1		8.3
Total interest and debt expense, net	Total interest and debt expense, net	$	12,162	$	11,536	$	626	5.4	%	Total interest and debt expense, net	$	10,771	$	12,873	$	(2,102)	(16.3)	%

Nine months ended
Six months ended										Six months ended
Retail operations segment	Retail operations segment	$	37,343	$	35,104	$	2,239	6.4	%	Retail operations segment	$	22,332	$	25,176	$	(2,844)	(11.3)	%
Construction segment	Construction segment	(38)		(83)		45		54.2		Construction segment	(26)		(33)		7		21.2
Total interest and debt expense, net	Total interest and debt expense, net	$	37,305	$	35,021	$	2,284	6.5	%	Total interest and debt expense, net	$	22,306	$	25,143	$	(2,837)	(11.3)	%

Net interest and debt expense ~~increased $0.6~~decreased $2.1 million and $2.8 million during the three and six months ended ~~October~~July 31, ~~2020~~2021 compared to the three and six months ended ~~November 2, 2019~~ August 1, 2020, respectively, primarily due to ~~an increase in fees associated with the amendment~~a decrease of the credit facility. Net interest and debt expense increased $2.3 million during the nine ended October 31, 2020 compared to the nine months ended November 2, 2019 primarily due to an increase in short termshort-term borrowings under the credit facility. Total weighted average debt ~~increased~~decreased by ~~$10.3~~$217.2 million and ~~$111.8~~$241.3 million during the three and ~~nine~~six months ended ~~October~~July 31, ~~2020, respectively,~~2021 compared to the three and ~~nine~~six months ended ~~November 2, 2019~~August 1, 2020, respectively, primarily due to a decrease of short-term borrowings under the ~~increase of short term borrowings.~~credit facility.

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Other Expense




(in thousands of dollars)	July 31, 2021		August 1, 2020		$ Change		% Change
Other expense:
Three months ended
Retail operations segment	$	2,134	$	2,104	$	30	1.4	%
Construction segment	—		—		—		—
Total other expense	$	2,134	$	2,104	$	30	1.4	%

Six months ended
Retail operations segment	$	7,098	$	4,208	$	2,890	68.7	%
Construction segment	—		—		—		—
Total other expense	$	7,098	$	4,208	$	2,890	68.7	%

Other expense increased $2.9 million during the six months ended July 31, 2021 compared to the six months ended August 1, 2020 primarily due to the write-off of certain deferred financing fees in connection with the amendment and extension of the Company's secured revolving credit facility.

(Gain) Loss ~~(Gain)~~ on Disposal of Assets


(in thousands of dollars)	(in thousands of dollars)	October 31, 2020		November 2, 2019		$ Change		(in thousands of dollars)	July 31, 2021		August 1, 2020		$ Change
Loss (gain) on disposal of assets:
(Gain) loss on disposal of assets:								(Gain) loss on disposal of assets:
Three months ended	Three months ended							Three months ended
Retail operations segment	Retail operations segment	$	2,234	$	303	$	1,931	Retail operations segment	$	(6)	$	45	$	(51)
Construction segment	Construction segment	(13)		1		(14)		Construction segment	(3)		(12)		9
Total loss (gain) on disposal of assets		$	2,221	$	304	$	1,917
Total (gain) loss on disposal of assets								Total (gain) loss on disposal of assets	$	(9)	$	33	$	(42)

Nine months ended
Six months ended								Six months ended
Retail operations segment	Retail operations segment	$	2,261	$	(11,997)	$	14,258	Retail operations segment	$	(24,679)	$	27	$	(24,706)
Construction segment	Construction segment	(26)		1		(27)		Construction segment	(3)		(13)		10
Total loss (gain) on disposal of assets		$	2,235	$	(11,996)	$	14,231
Total (gain) loss on disposal of assets								Total (gain) loss on disposal of assets	$	(24,682)	$	14	$	(24,696)

During the ~~three and nine~~six months ended ~~October~~July 31, ~~2020,~~2021, the Company recorded proceeds of ~~$1.5 million primarily from the sale of one store property, resulting in a loss of $2.2 million that was recorded in loss (gain) on disposal of assets.~~

~~During the three months ended November 2, 2019, the Company recorded a loss of $0.3 million primarily from the sale of one store property. that was recorded in loss (gain) on disposal of assets.~~

Income Taxes

The Company’s estimated federal and state effective income tax rate was approximately 22.8% and 22.5% for the three and six months ended July 31, 2021, respectively. During the three and six months ended July 31, 2021, 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 to be~~was in a net operating loss position for the fiscal ~~year.~~year ended January 30, 2021. The ~~CARES~~Coronavirus Aid, Relief and Economic Security (“CARES”) Act, signed into law on March 27, 2020, allows for net operating loss carryback to years in which the statutory federal income tax rate was 35% rather than the current 21%. The ~~Company’s~~Company's estimated federal and state effective income tax rate was approximately ~~46.9%~~74.3% and 34.8% for the ~~nine~~three and six months ended ~~October 31, 2020.~~August 1, 2020, respectively. During the three and ~~nine~~six months ended ~~October 31,~~August 1, 2020, income tax benefit differed from what would be computed using the current statutory federal income tax rate of 21% primarily due to the recognition of a net tax benefit of ~~$32.4~~$17.4 million and ~~$64.6~~$32.1 million, respectively, related to the rate differential in the carryback ~~year including its impact on changes in estimates of temporary differences for the current and prior~~ year. Income tax benefit for the three and ~~nine~~six months also included the effects of ~~federal tax credits and~~ state and local income taxes.

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The ~~Company’s estimated~~Company expects the fiscal 2021 federal and state effective income tax rate ~~was approximately -88.2%~~to approximate 22% to 23%. This rate may change if results of operations for fiscal 2021 differ from management’s current expectations. Changes in the Company’s assumptions and ~~15.8% for~~judgments can materially affect amounts recognized in the three and nine months ended November 2, 2019, respectively. During the three and nine months ended November 2, 2019, income taxes differed from what would be computed using the statutory federal tax rate primarily due to the effects of federal tax credits and state and local income taxes which included tax benefits recognized of approximately $2.8 million for amended state income tax return filings and related decreases to accrued state income taxes.condensed consolidated financial statements.

~~Due to uncertainty relating to the impacts of COVID-19 on the Company’s business operations, the Company is not providing an expected fiscal 2020 federal and state effective income tax rate.~~

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FINANCIAL CONDITION

A summary of net cash flows for the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019~~August 1, 2020 follows:


		Nine Months Ended							Six Months Ended
(in thousands of dollars)	(in thousands of dollars)	October 31, 2020		November 2, 2019		$ Change		(in thousands of dollars)	July 31, 2021		August 1, 2020		$ Change
Operating Activities	Operating Activities	$	(62,938)	$	22,984	$	(85,922)	Operating Activities	$	492,301	$	(294,509)	$	786,810
Investing Activities	Investing Activities	(50,352)		(47,534)		(2,818)		Investing Activities	(9,101)		(38,084)		28,983
Financing Activities	Financing Activities	(102,663)		(11,427)		(91,236)		Financing Activities	(174,065)		138,384		(312,449)
Total Decrease in Cash, Cash Equivalents and Restricted Cash		$	(215,953)	$	(35,977)	$	(179,976)
Total Increase (Decrease) in Cash and Cash Equivalents								Total Increase (Decrease) in Cash and Cash Equivalents	$	309,135	$	(194,209)	$	503,344

Net cash flows from operations ~~decreased $85.9~~increased $786.8 million during the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 compared to the ~~nine~~six months ended ~~November 2, 2019~~August 1, 2020 due to significant ~~decreases~~increases in net income, primarily due to ~~decreases~~increases in ~~sales,~~gross profit and changes in working capital.

~~The Company took a number~~ Compared to the first six months of ~~actions to enhance liquidity during~~fiscal 2019, net cash flows provided by operations for the ~~nine~~six months ended ~~October~~July 31, ~~2020 as~~2021 were $492.3 million compared to cash flows used in operations for the ~~COVID-19 pandemic progressed, including the following:~~

▪~~Extended vendor payment terms during the first quarter but restored most vendors to standard payment terms by~~six months ended August ~~1, 2020~~

▪~~Canceled, suspended and significantly delayed merchandise shipments~~

▪~~Reduced merchandise purchases during the first, second and third quarters by 33%, 62% and 31%, respectively~~

▪~~Reviewed and reduced discretionary operating and capital expenditures~~

▪~~Reduced payroll expense~~

▪~~Executed aggressive promotional markdowns to clear inventory~~3, 2019 of $18.6 million, increasing $510.9 million.

Wells Fargo owns and manages the Dillard's private label cards under the Wells Fargo Alliance. Under the Wells Fargo Alliance, Wells Fargo establishes and owns private label card accounts for our customers, retains the benefits and risks associated with the ownership of the accounts, provides key customer service functions, including new account openings, transaction authorization, billing adjustments and customer inquiries, receives the finance charge income and incurs the bad debts associated with those accounts.

Pursuant to the Wells Fargo Alliance, we receive ~~on-going~~ongoing cash compensation from Wells Fargo 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 Wells Fargo accounts, the level of balances carried on Wells Fargo accounts by Wells Fargo customers, payment rates on Wells Fargo accounts, finance charge rates and other fees on Wells Fargo accounts, the level of credit losses for the Wells Fargo accounts as well as Wells Fargo'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. The Wells Fargo Alliance expires in fiscal 2024.

The Company received income of ~~$52.0~~$35.4 million and ~~$66.2~~$35.5 million from the Wells Fargo Alliance during the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019,~~August 1, 2020, respectively. The Company ~~is unable to quantify~~cannot reasonably predict whether there will be any ongoing impact or the magnitude of any such impact of the COVID-19 pandemic on the portfolio's future earnings and the ~~on-going~~ongoing cash compensation from the Wells Fargo Alliance.

During the ~~nine~~six months ended ~~October~~July 31, ~~2020,~~2021, the Company received proceeds from insurance of ~~$8.7~~$2.3 million for claims filed for merchandise losses related to storm damage incurred at two stores.

Capital expenditures were ~~$52.1~~$41.2 million and ~~$70.9~~$38.6 million for the ~~nine~~six months ended ~~October~~July 31, ~~2020~~2021 and ~~November 2, 2019,~~August 1, 2020, respectively. The capital expenditures were primarily related to equipment purchases and the ~~remodeling~~continued construction of ~~existing~~two new stores during the current year. The Company has announced plans to open a new store at Mesa Mall in Grand Junction, Colorado during the Fall of 2021 (100,000 square feet). The Company has also announced plans to open a new store at University Place in Orem, Utah in the Spring of 2022 (160,000 square feet). Both opportunities arose from peer closures at those centers.

During the ~~nine~~six months ended ~~October~~July 31, ~~2020,~~2021, the Company received cash proceeds of ~~$1.5 million and recorded a related loss of $2.2 million, primarily for the sale of one store property in Slidell, Louisiana.~~

~~During the nine months ended November 2, 2019, the Company received cash proceeds of $22.0~~$29.3 million and recorded a related gain of ~~$12.0~~$24.7 million, ~~for~~primarily from the sale of three store locations in Boardman, Ohio, Boynton Beach, Florida and Cary, North Carolina. The proceeds from the Cary, North Carolina store sale were being held in escrow for the acquisition of replacement property underproperties: (1) a ~~like-kind exchange agreement. The escrow account was administered by an intermediary. Pursuant to the like-~~

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kind exchange agreement, the cash was restricted for a maximum of 180 days from the date of the property sale pending the acquisition of replacement property. As of November 2, 2019, the acquisitions of a replacement property had not yet occurred; therefore, the proceeds were classified as restricted cash on the condensed consolidated balance sheet. The proceeds from the Boardman, Ohio store sale were previously held in escrow prior to the acquisition of the replacement property120,000 square foot location at ~~Columbia~~Cortana Mall in ~~Columbia, Missouri~~Baton Rouge, Louisiana, which was permanently closed and sold; (2) a 200,000 square foot location at Paradise Valley Mall in Phoenix, Arizona, which was sold during our first fiscal quarter and closed during our second fiscal quarter and (3) a non-operating store property in Knoxville, Tennessee. The Company also plans to close its clearance center at Valle Vista Mall in Harlingen, Texas (100,000 square feet) during the third ~~quarter~~quarter. There were no material costs associated or expected with any of ~~fiscal 2019.~~

During the nine months ended October 31, 2020, the Company opened an 85,000 square foot expansion at Columbia Mall in Columbia, Missouri (dual-anchor location totaling 185,000 square feet). Additionally, the Company replaced a 100,000 square foot leased facility at Richland Fashion Mall in Waco, Texas with a 125,000 square foot owned facility (dual-anchor location totaling 190,000 square feet).

During the nine months ended October 31, 2020, we permanently closed the locations at Central Mall in Lawton, Oklahoma (100,000 square feet); Crossroads Center in Waterloo, Iowa (150,000 square feet); and North Plains Mall in Clovis, New Mexico (62,000 square feet). We announced the upcoming closure of the Paradise Valley Mall location in Phoenix, Arizona (200,000 square feet).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.

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During the six months ended July 31, 2021, the Company received proceeds from insurance of $2.8 million for claims filed for building losses related to storm damage incurred at two stores.

The Company had cash on hand of ~~$61.1~~$669.5 million as of ~~October~~July 31, ~~2020. As~~2021. During the first quarter of fiscal 2020 and as part of our overall liquidity management strategy and for peak working capital requirements, the Company maintained an unsecured credit facility that provided a borrowing capacity of $800 million with a $200 million expansion option ("credit agreement") ~~until the credit agreement was amended in April 2020 (the "amended credit agreement")~~. After giving effect to the amendment, the amended credit agreement became secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries. The amended credit agreement is available to the Company 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 rate of interest on borrowings under the amended credit agreement is the greater of LIBOR or 1.0% plus 1.750%, and the commitment fee for unused borrowings is 0.30% per annum. So long as availability exceeds $100 million and no event of default occurs and is continuing, there are no financial covenant requirements under the amended credit agreement. The Company paid $3.2 million in issuance costs related to the amended credit agreement, which were recorded in other assets on the condensed consolidated balance sheet.

As part of the Company's liquidity strategy during the COVID-19 pandemic, in March 2020, the Company borrowed $779 million under the credit agreement.

The credit agreement ~~which~~ was amended in April 2020 and became secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries (the "2020 amended credit agreement"). The borrowings of $779 million were repaid concurrent with the execution of the 2020 amended credit agreement. During the six months ended August 1, 2020, the Company paid $3.0 million in issuance costs related to the 2020 amended credit agreement, which were recorded in other assets on the condensed consolidated balance sheet.

In April 2021, the Company further amended its secured credit agreement (the “2021 amended credit agreement”). See Note 7, Revolving Credit Agreement, in the "Notes to Condensed Consolidated Financial Statements," in Part I, Item I hereof for additional information. During the six months ended July 31, 2021, the Company paid $3.0 million in issuance costs related to the 2021 amended credit agreement, which were recorded in other assets on the condensed consolidated balance sheet, and the Company recognized a loss on the early extinguishment of debt of $2.8 million for the write-off of certain remaining deferred financing fees related to the 2020 amended credit agreement. This charge was recorded in other expense on the condensed consolidated statement of operations.

At ~~October~~July 31, ~~2020,~~2021, no borrowings ~~of $15.0 million~~ were outstanding, and letters of credit totaling ~~$21.1~~$20.2 million were issued under the 2021 amended credit agreement leaving unutilized availability under the credit facility of ~~$763.9~~$716.0 million. ~~The weighted average interest rate under the credit agreement for the borrowings outstanding at October 31, 2020 was 2.75%.~~

During the ~~nine~~six months ended ~~October~~July 31, ~~2020,~~2021, the Company repurchased ~~2.2~~1.4 million shares of Class A Common Stock at an average price of ~~$42.83~~$125.81 per share for ~~$95.6~~$171.0 million (including the accrual of $6.8 million of share repurchases that had not settled as of July 31, 2021) under the Company's March 2018 Plan. During the six months ended August 1, 2020, the Company repurchased 1.6 million shares of Class A Common Stock at an average price of $47.99 per share for $76.1 million (including the accrual of $3.0 million of share repurchases that had not settled as of August 1, 2020) under the Company's March 2018 Plan. Additionally, the Company paid $7.3 million for share repurchases that had not yet settled but were accrued at February 1, 2020. During the nine months ended November 2, 2019, the Company repurchased 1.7 million shares of Class A Common Stock at an average price of $60.96 per share for $101.5 million under the Company's March 2018 Plan. At ~~October~~July 31, ~~2020, $173.1~~2021, $2.1 million of authorization remained under the March 2018 Plan and $500.0 million of authorization remained under the May 2021 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 I hereof for additional information.

The COVID-19 pandemic has had and may continue to have a significant ~~negative effect~~impact on the Company's ~~liquidity~~business, results of operations and ~~net sales. Due to heightened~~financial position. Because there is still significant uncertainty ~~relating to~~around the ~~impacts~~effects of the COVID-19 pandemic on the ~~Company’s~~Company's business operations, ~~including the duration~~our profitability and ~~impact on overall customer demand, our~~ liquidity ~~net sales and profitability~~ may be further impacted if we are unable to appropriately manage our inventory levels and ~~expenses.~~expenses relative to any change in consumer demand.

The Company expects to finance its operations during fiscal ~~2020~~2021 from cash on hand, cash flows generated from operations and 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 ~~“Contractual Obligations and Commercial~~“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 1, 2020.~~January 30, 2021.

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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.

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NEW ACCOUNTING STANDARDS

For information with respect to new accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 2, Accounting Standards, in the "Notes to Condensed Consolidated Financial Statements," in Part I, Item I 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 remainder of fiscal ~~2020~~2021 and beyond, statements concerning the opening of new stores or the closing of existing stores, statements concerning capital expenditures and sources of liquidity, statements regarding the expected impact of the COVID-19 pandemic and related government responses, including the CARES Act and other subsequently-enacted COVID-19 stimulus packages, statements concerning share repurchases, statements concerning pension contributions, statements regarding the expected phase out of LIBOR 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) the COVID-19 pandemic and its effects on public health, our supply chain, the health and well-being of our employees and customers, and the retail industry in general; other general retail industry conditions and macro-economic ~~conditions;~~conditions including inflation 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 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 consumer spending patterns, debt levels and their ability to meet credit obligations; changes in tax legislation; changes in legislation, affecting such matters as the cost of employee benefits or credit card income; 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 LIBOR and other base borrowing rates; the elimination of LIBOR; potential disruption from terrorist activity and the effect on ongoing consumer confidence; other epidemic, pandemic or public health issues; potential disruption of international trade and supply chain efficiencies; any government-ordered restrictions on the movement of the general public or the mandated or voluntary closing of retail stores in response to the COVID-19 pandemic; world conflict and the possible impact on consumer spending patterns and other economic and demographic changes of similar or dissimilar nature.The Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended ~~February 1, 2020,~~January 30, 2021, contain other information on factors that may affect financial results or cause actual results to differ materially from forward-looking statements.

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Item 3. Quantitative and Qualitative Disclosures About Market ~~Risk~~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 1, 2020.~~January 30, 2021.

Item 4. Controls and ~~Procedures~~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.

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There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended ~~October~~July 31, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal ~~Proceedings~~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 4, 2020,~~September 3, 2021, 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~~Factors.

~~"Item 1A, Risk Factors"~~There have been no material changes in ~~our~~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 1, 2020, as filed with the Securities Exchange Commission on March 31, 2020 includes a discussion of our risk factors. The information presented below updates, and should be read in conjunction with, the risk factors disclosed in our Annual Report on Form 10-K. The effects of the events and circumstances described in the following risk factor may have the additional effect of heightening many of the risks noted in our Annual Report on Form 10-K. Otherwise, except as presented below, there have been no material changes to the risk factors disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended February 1, 2020, as filed with the Securities Exchange Commission on March 31, 2020.

The COVID-19 pandemic and its effects on public health, our supply chain, the health and well-being of our employees and customers, and the retail industry in general, has had, and could continue to have, a material adverse effect on our business, financial condition and results of operations.

In December 2019, a strain of coronavirus, now known as COVID-19, was reported to have surfaced in Wuhan, China. Since that time, the virus has rapidly spread to other countries around the world, including the United States. In response to the pandemic, national and local governments, including those in the regions in which we operate, have taken various measures to attempt to slow the spread of the virus, including travel bans; prohibitions on group events and large gatherings; extended shutdowns of schools, government offices and certain businesses; curfews and recommendations to practice “social distancing.” Accordingly, the Company began closing its stores on March 19, 2020, and all brick-and-mortar store locations were temporarily closed to the public by April 9, 2020.

The Company had reopened all stores as of June 2, 2020. Stores are operating at reduced hours and implementing certain safety measures to ensure the safety of our customers and associates, which may have the effect of discouraging shopping or limiting the occupancy of our stores. These measures, and any additional measures that have been and may continue to be taken in response to the COVID-19 pandemic, have substantially decreased and may continue to decrease, the number of customers that visit our stores and the shopping malls in which our stores are located, which has had, and will likely continue to have a material adverse effect on our business, financial condition and results of operations. All stores are currently open and operating at reduced hours. A very small number of our locations were temporarily closed to in-store shopping due to government mandate. Other local mandates throughout the country require occupancy limits with which we are required to comply. At this time, it is unclear how long these measures may remain in place, what additional measures may be imposed, or when our operations will be restored to the levels that existed prior to the COVID-19 pandemic. A recent surge in reported cases and hospitalizations in the U.S. could result in additional mandated business closures.

In addition, our business depends on consumer discretionary spending, and as such, our results are particularly sensitive to economic conditions and consumer confidence. COVID-19 has significantly impacted economic conditions, resulting in, among other things, unprecedented increases in the number of people seeking jobless benefits and a significant decline in global financial markets. As a result, even when all of our store locations are fully operational, there can be no guarantee that our revenue will return to its pre-COVID-19 levels.

The Company sources a significant portion of its private label and exclusive brand merchandise from countries that have experienced widespread transmission of the virus, including China. Additionally, many of the Company’s branded merchandise vendors may also source a significant portion of their merchandise from these same countries. Manufacturing capacity in those countries has been materially impacted by the pandemic, which has negatively impacted our supply chain. If this continues, we cannot guarantee that we will be able to locate alternative sources of supply for our merchandise on acceptable terms, or at all. If we are unable to adequately source our merchandise or purchase appropriate amounts of merchandise from branded vendors, our business and results of operations may be materially and adversely affected.January 30, 2021.

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Additionally, in the event that the Company were to experience widespread transmission of the virus at one or more of the Company’s stores or other facilities, the Company could suffer reputational harm or other potential liability. Further, the Company’s business operations may be materially and adversely affected if a significant number of the Company’s employees are impacted by the virus.

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

(a) Unregistered Sales of Equity Securities

On February 11, 2021, the Company issued 12,000 shares of Class A Common Stock in exchange for 12,000 shares of Class B Common Stock tendered for conversion pursuant to the Certificate of Incorporation. The transaction was exempt from registration under Section 3(a)(9) of the Securities Act of 1933.


Issuer Purchases of Equity Securities	Issuer Purchases of Equity Securities							Issuer Purchases of Equity Securities
Period	Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs		Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

August 2, 2020 through August 29, 2020		265,985	$	26.94	265,985	$	185,419,113
August 30, 2020 through October 3, 2020		379,299	32.41		379,299	173,124,594
October 4, 2020 through October 31, 2020		—	—		—	173,124,594
May 2, 2021 through May 29, 2021								May 2, 2021 through May 29, 2021	256,927	$	112.86	256,927	$	585,313,262
May 30, 2021 through July 3, 2021								May 30, 2021 through July 3, 2021	65,111	148.34		65,111	575,654,805
July 4, 2021 through July 31, 2021								July 4, 2021 through July 31, 2021	412,429	178.34		412,429	502,103,905
Total	Total	645,284	$	30.16	645,284	$	173,124,594	Total	734,467	$	152.77	734,467	$	502,103,905

In March 2018, the Company's Board of Directors authorized the repurchase of up to $500 million of the Company's Class A Common Stock under an open-ended stock repurchase plan ("March 2018 Plan"). This repurchase plan permits the Company 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 or through privately negotiated transactions. ~~The March 2018 Plan~~This repurchase plan has no expiration date.

During the three months ended ~~October~~July 31, ~~2020,~~2021, the Company repurchased ~~0.6~~0.7 million shares totaling ~~$19.5~~$112.2 million. As of ~~October~~July 31, ~~2020, $173.1~~2021, $2.1 million of authorization remained under the March 2018 Plan.

On May 15, 2021, the Company announced that its Board of Directors approved a new open-ended stock repurchase program authorizing the Company to repurchase up to $500 million of its Class A Common Stock. The Company intends to exhaust the remaining authorization under the March 2018 Plan before repurchasing any shares under the new repurchase program. Reference is made to the discussion in Note 8, Stock Repurchase ~~Program~~Programs, in the “Notes to Condensed Consolidated Financial Statements” in Part I of this Quarterly Report on Form 10-Q, which information is incorporated by reference herein.

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Item 6. ~~Exhibits~~Exhibits.


Number						Description



31.1						Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Co-Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3						Certification of Co-Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

32.2						Certification of Co-Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

32.3						Certification of Co-Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

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~~registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		DILLARD’S, INC.
		(Registrant)


Date:	~~December 4, 2020~~September 3, 2021	/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

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