Table of Contents

​

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

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

For the quarterly period ended OctoberApril 30, 2021

2022

or

​

​

☐

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

☐​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​

DELAWARE

71-0388071

(State or other jurisdiction

(I.R.S. Employer

of incorporation or organization)

​

(I.R.S. Employer

Identification No.)

​

1600 CANTRELL ROAD, LITTLE ROCK, ARKANSAS72201

(Address of principal executive offices)

(Zip Code)

(501)

(501) 376-5200

(Registrant’s telephone number, including area code)


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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock

DDS

New York Stock Exchange


​

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

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

☒

Accelerated filer

☐

Accelerated filerý

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 27, 2021     15,447,941

May 28, 2022     13,537,031

CLASS B COMMON STOCK as of November 27, 2021May 28, 2022       3,986,233


​


​

Table of Contents

Index

DILLARD’S, INC.

​

​

Page

​

​

Page

Number

Number

​

​

​

​

​

​

​

​

​

Condensed Consolidated Balance Sheets as of OctoberApril 30, 2021,2022, January 30,29, 2022 and May 1, 2021 and October 31, 2020

3

​

​

​

​

Condensed Consolidated Statements of OperationsIncome for the Three and Nine Months Ended OctoberApril 30, 20212022 and October 31, 2020May 1, 2021

4

​

​

​

​

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended OctoberApril 30, 20212022 and October 31, 2020May 1, 2021

5

​

​

​

​

Condensed Consolidated Statements of Stockholders'Stockholders’ Equity for the Three and Nine Months Ended OctoberApril 30, 20212022 and October 31, 2020May 1, 2021

6

​

​

​

​

Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended OctoberApril 30, 20212022 and October 31, 2020May 1, 2021

8

7

​

​

​

​

9

8

​

​

​

18

15

​

​

​

31

24

​

​

​

31

24

​

​

​

​

​

​

​

32

25

​

​

​

32

25

​

​

​

33

26

​

​

​

34

27

​

​

​

35

28

​

​

​


2

Table of Contents

PART I. FINANCIAL INFORMATION


Item 1. Financial Statements.


DILLARD’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands)

October 30,
2021		January 30,
2021		October 31,
2020
Assets   
Current assets:   
Cash and cash equivalents$619,721 $360,339 $61,124 
Accounts receivable28,472 36,693 28,406 
Merchandise inventories1,525,860 1,087,763 1,545,264 
Federal and state income taxes99,764 118,439 126,973 
Other current assets102,981 58,706 65,631 
Total current assets2,376,798 1,661,940 1,827,398 
Property and equipment (net of accumulated depreciation and amortization of $2,586,059, $2,466,000 and $2,471,565, respectively)1,218,840 1,289,302 1,348,799 
Operating lease assets41,189 47,612 40,471 
Deferred income taxes34,809 23,453 14,740 
Other assets68,560 70,208 74,581 
Total assets$3,740,196 $3,092,515 $3,305,989 
Liabilities and stockholders’ equity   
Current liabilities:   
Trade accounts payable and accrued expenses$1,285,786 $758,363 $1,031,806 
Current portion of finance lease liabilities180 695 849 
Current portion of operating lease liabilities11,432 13,819 12,775 
Other short-term borrowings— — 15,000 
Total current liabilities1,297,398 772,877 1,060,430 
Long-term debt365,982 365,849 365,814 
Finance lease liabilities— — 180 
Operating lease liabilities29,293 33,392 27,412 
Other liabilities283,323 279,389 271,324 
Subordinated debentures200,000 200,000 200,000 
Commitments and contingencies000
Stockholders’ equity:   
Common stock1,240 1,240 1,240 
Additional paid-in capital955,198 954,131 952,522 
Accumulated other comprehensive loss(33,350)(34,935)(29,768)
Retained earnings5,002,074 4,471,269 4,407,532 
Less treasury stock, at cost(4,360,962)(3,950,697)(3,950,697)
Total stockholders’ equity1,564,200 1,441,008 1,380,829 
Total liabilities and stockholders’ equity$3,740,196 $3,092,515 $3,305,989 


​

​

​

​

​

​

​

​

​

​

​

​

    

April 30,

    

January 29,

    

May 1,

​

​

2022

​

2022

​

2021

Assets

 

​

  

 

​

  

 

​

  

Current assets:

 

​

  

 

​

  

 

​

  

Cash and cash equivalents

​

$

862,173

​

$

716,759

​

$

615,920

Accounts receivable

​

 

30,920

​

 

39,777

​

 

33,941

Merchandise inventories

​

 

1,364,975

​

 

1,080,178

​

 

1,306,508

Federal and state income taxes

​

 

—

​

 

—

​

 

73,461

Other current assets

​

 

96,193

​

 

77,937

​

 

79,004

​

​

​

​

​

​

​

​

​

​

Total current assets

​

 

2,354,261

​

 

1,914,651

​

 

2,108,834

​

​

​

​

​

​

​

​

​

​

Property and equipment (net of accumulated depreciation and amortization of $2,554,485, $2,517,915 and $2,488,446, respectively)

​

 

1,170,265

​

 

1,190,151

​

 

1,257,254

Operating lease assets

​

 

39,743

​

 

42,941

​

 

47,716

Deferred income taxes

​

 

29,115

​

 

28,931

​

 

24,815

Other assets

​

 

65,424

​

 

68,883

​

 

69,041

​

​

​

​

​

​

​

​

​

​

Total assets

​

$

3,658,808

​

$

3,245,557

​

$

3,507,660

​

​

​

​

​

​

​

​

​

​

Liabilities and stockholders’ equity

​

 

  

​

 

  

​

 

  

Current liabilities:

​

 

  

​

 

  

​

 

  

Trade accounts payable and accrued expenses

​

$

1,163,293

​

$

886,233

​

$

1,075,534

Current portion of long-term debt

​

 

44,800

​

 

44,800

​

 

—

Current portion of finance lease liabilities

​

 

—

​

 

—

​

 

527

Current portion of operating lease liabilities

​

​

11,344

​

​

11,712

​

​

12,960

Federal and state income taxes

​

 

99,288

​

 

23,441

​

 

—

​

​

​

​

​

​

​

​

​

​

Total current liabilities

​

 

1,318,725

​

 

966,186

​

 

1,089,021

​

​

​

​

​

​

​

​

​

​

Long-term debt

​

 

321,274

​

 

321,247

​

 

365,884

Operating lease liabilities

​

 

28,512

​

 

30,969

​

 

34,536

Other liabilities

​

 

277,964

​

 

275,937

​

 

280,522

Subordinated debentures

​

 

200,000

​

 

200,000

​

 

200,000

Commitments and contingencies

​

 

  

​

 

  

​

 

  

Stockholders’ equity:

​

 

  

​

 

  

​

 

  

Common stock

​

 

1,240

​

 

1,240

​

 

1,240

Additional paid-in capital

​

 

956,653

​

 

956,653

​

 

954,131

Accumulated other comprehensive loss

​

 

(22,617)

​

 

(22,798)

​

 

(34,406)

Retained earnings

​

 

5,275,371

​

 

5,027,922

​

 

4,626,243

Less treasury stock, at cost

​

 

(4,698,314)

​

 

(4,511,799)

​

 

(4,009,511)

​

​

​

​

​

​

​

​

​

​

Total stockholders’ equity

​

 

1,512,333

​

 

1,451,218

​

 

1,537,697

​

​

​

​

​

​

​

​

​

​

Total liabilities and stockholders’ equity

​

$

3,658,808

​

$

3,245,557

​

$

3,507,660

​

See notes to condensed consolidated financial statements.

​

3

Table of Contents

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

INCOME

(Unaudited)

(In Thousands, Except Per Share Data)

 Three Months EndedNine Months Ended
 October 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
Net sales$1,480,999 $1,024,899 $4,379,920 $2,730,598 
Service charges and other income30,913 27,213 90,959 88,273 
 1,511,912 1,052,112 4,470,879 2,818,871 
Cost of sales796,276 658,684 2,497,575 1,987,000 
Selling, general and administrative expenses393,191 318,218 1,095,673 875,726 
Depreciation and amortization50,188 53,377 146,639 155,229 
Rentals4,947 5,115 15,157 16,304 
Interest and debt expense, net10,550 12,162 32,856 37,305 
Other expense2,134 2,105 9,232 6,313 
(Gain) loss on disposal of assets(4)2,221 (24,686)2,235 
Income (loss) before income taxes254,630 230 698,433 (261,241)
Income taxes (benefit)57,300 (31,620)157,200 (122,550)
Net income (loss)$197,330 $31,850 $541,233 $(138,691)
Earnings (loss) per share:    
Basic and diluted$9.81 $1.43 $25.76 $(6.05)

​

​

​

​

​

​

​

​

​

    

Three Months Ended

​

​

April 30,

    

May 1,

​

​

2022

​

2021

Net sales

​

$

1,611,668

​

$

1,328,543

Service charges and other income

​

 

31,114

​

 

28,992

​

​

​

​

​

​

​

​

​

 

1,642,782

​

 

1,357,535

​

​

​

​

​

​

​

Cost of sales

​

 

861,437

​

 

774,089

Selling, general and administrative expenses

​

 

400,773

​

 

336,614

Depreciation and amortization

​

 

46,209

​

 

46,408

Rentals

​

 

5,079

​

 

5,111

Interest and debt expense, net

​

 

10,562

​

 

11,535

Other expense

​

 

1,936

​

 

4,964

Gain on disposal of assets

​

 

(7,237)

​

 

(24,673)

​

​

​

​

​

​

​

Income before income taxes

​

 

324,023

​

 

203,487

Income taxes

​

 

72,930

​

 

45,240

​

​

​

​

​

​

​

Net income

​

$

251,093

​

$

158,247

​

​

​

​

​

​

​

Earnings per share:

​

 

  

​

 

  

Basic and diluted

​

$

13.68

​

$

7.25

​

See notes to condensed consolidated financial statements.

​

4

Table of Contents

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In Thousands)

 Three Months EndedNine Months Ended
 October 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
Net income (loss)$197,330 $31,850 $541,233 $(138,691)
Other comprehensive income:    
Amortization of retirement plan and other retiree benefit adjustments (net of tax of $168, $138, $505 and $414, respectively)528 430 1,585 1,291 
Comprehensive income (loss)$197,858 $32,280 $542,818 $(137,400)


​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

​

April 30,

​

May 1,

​

    

2022

    

2021

Net income

​

$

251,093

​

$

158,247

Other comprehensive income:

 

​

  

 

​

  

Amortization of retirement plan and other retiree benefit adjustments (net of tax of $58 and $168, respectively)

 

​

181

 

​

529

​

​

​

​

​

​

​

Comprehensive income

​

$

251,274

​

$

158,776

​

See notes to condensed consolidated financial statements.

​


5

Table of Contents

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'STOCKHOLDERS’ EQUITY

(Unaudited)

(In Thousands, Except Share and Per Share Data)

Three Months Ended October 30, 2021
  Accumulated
Other
Comprehensive
Loss		   
 Common StockAdditional
Paid-in
Capital		Retained
Earnings		Treasury
Stock		 
 Total
Balance, July 31, 2021$1,240 $955,198 $(33,878)$4,808,737 $(4,121,718)$1,609,579 
Net income— — — 197,330 — 197,330 
Other comprehensive income— — 528 — — 528 
Purchase of 1,230,705 shares of treasury stock— — — — (239,244)(239,244)
Cash dividends declared:
     Common stock, $0.20 per share— — — (3,993)— (3,993)
Balance, October 30, 2021$1,240 $955,198 $(33,350)$5,002,074 $(4,360,962)$1,564,200 


​

Three Months Ended October 31, 2020
  Accumulated
Other
Comprehensive
Loss		   
 Common StockAdditional
Paid-in
Capital		Retained
Earnings		Treasury
Stock		 
 Total
Balance, August 1, 2020$1,240 $952,522 $(30,198)$4,378,988 $(3,931,238)$1,371,314 
Net income— — — 31,850 — 31,850 
Other comprehensive income— — 430 — — 430 
Purchase of 645,284 shares of treasury stock— — — — (19,459)(19,459)
Cash dividends declared:
     Common stock, $0.15 per share— — — (3,306)— (3,306)
Balance, October 31, 2020$1,240 $952,522 $(29,768)$4,407,532 $(3,950,697)$1,380,829 


​

Nine Months Ended October 30, 2021
  Accumulated
Other
Comprehensive
Loss		   
 Common StockAdditional
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— — — 541,233 — 541,233 
Other comprehensive income— — 1,585 — — 1,585 
Issuance of 9,000 shares under equity plans— 1,067 — — — 1,067 
Purchase of 2,590,065 shares of treasury stock— — — — (410,265)(410,265)
Cash dividends declared:
     Common stock, $0.50 per share— — — (10,428)— (10,428)
Balance, October 30, 2021$1,240 $955,198 $(33,350)$5,002,074 $(4,360,962)$1,564,200 


​

6

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended April 30, 2022

​

    

​

​

    

​

​

    

Accumulated

    

​

​

    

​

    

​

​

​

​

​

Additional

​

Other

​

​

​

​

​

​

​

​

​

​

Common

​

Paid-in

​

Comprehensive

​

Retained

​

Treasury

​

​

​

​

Stock

​

Capital

​

Loss

​

Earnings

​

Stock

​

Total

Balance, January 29, 2022

​

$

1,240

​

$

956,653

​

$

(22,798)

​

$

5,027,922

​

$

(4,511,799)

​

$

1,451,218

Net income

​

 

—

​

 

—

​

 

—

​

 

251,093

​

 

—

​

 

251,093

Other comprehensive income

​

 

—

​

 

—

​

 

181

​

 

—

​

 

—

​

 

181

Purchase of 735,117 shares of treasury stock

​

 

—

​

 

—

​

 

—

​

 

—

​

 

(186,515)

​

 

(186,515)

Cash dividends declared:

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

Common stock, $0.20 per share

​

 

—

​

 

—

​

 

—

​

 

(3,644)

​

 

—

​

 

(3,644)

Balance, April 30, 2022

​

$

1,240

​

$

956,653

​

$

(22,617)

​

$

5,275,371

​

$

(4,698,314)

​

$

1,512,333

​

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended May 1, 2021

​

    

​

    

​

    

Accumulated 

    

​

    

​

    

​

​

​

​

​

Additional 

​

Other 

​

​

​

​

​

​

​

​

Common 

​

Paid-in 

​

Comprehensive

​

Retained 

​

Treasury 

​

​

​

​

Stock

​

Capital

​

 Loss

​

Earnings

​

Stock

​

Total

Balance, January 30, 2021

​

$

1,240

​

$

954,131

​

$

(34,935)

​

$

4,471,269

​

$

(3,950,697)

​

$

1,441,008

Net income

​

 

—

​

 

—

​

 

—

​

 

158,247

​

 

—

​

 

158,247

Other comprehensive income

​

 

—

​

 

—

​

 

529

​

 

—

​

 

—

​

 

529

Purchase of 624,893 shares of treasury stock

​

 

—

​

 

—

​

 

—

​

 

—

​

 

(58,814)

​

 

(58,814)

Cash dividends declared:

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

Common stock, $0.15 per share

​

 

—

​

 

—

​

 

—

​

 

(3,273)

​

 

—

​

 

(3,273)

Balance, May 1, 2021

​

$

1,240

​

$

954,131

​

$

(34,406)

​

$

4,626,243

​

$

(4,009,511)

​

$

1,537,697

​

Nine Months Ended October 31, 2020
  Accumulated
Other
Comprehensive
Loss		   
 Common StockAdditional
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 plans1 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 

See notes to condensed consolidated financial statements.

​




7

6

Table of Contents

DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

 Nine Months Ended
 October 30,
2021		October 31,
2020
Operating activities:  
Net income (loss)$541,233 $(138,691)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:  
Depreciation and amortization of property and other deferred cost148,319 157,335 
(Gain) loss on disposal of assets(24,686)2,235 
Proceeds from insurance2,902 8,659 
Loss on early extinguishment of debt2,830 — 
Changes in operating assets and liabilities:  
Decrease in accounts receivable8,221 17,754 
Increase in merchandise inventories(438,097)(80,257)
Increase in other current assets(49,214)(13,680)
(Increase) decrease in other assets(2,492)456 
Increase in trade accounts payable and accrued expenses and other liabilities528,087 145,745 
Increase (decrease) in income taxes10,980 (162,494)
Net cash provided by (used in) operating activities728,083 (62,938)
Investing activities:  
Purchase of property and equipment and capitalized software(79,748)(52,100)
Proceeds from disposal of assets29,293 1,533 
Proceeds from insurance3,801 — 
Distribution from joint venture1,475 215 
Net cash used in investing activities(45,179)(50,352)
Financing activities:  
Principal payments on long-term debt and finance lease liabilities(515)(885)
Issuance cost of line of credit(3,008)(3,230)
Increase in short-term borrowings— 15,000 
Cash dividends paid(9,734)(10,669)
Purchase of treasury stock(410,265)(102,879)
Net cash used in financing activities(423,522)(102,663)
Increase (decrease) in cash and cash equivalents259,382 (215,953)
Cash and cash equivalents, beginning of period360,339 277,077 
Cash and cash equivalents, end of period$619,721 $61,124 
Non-cash transactions:  
Accrued capital expenditures$7,168 $6,038 
Stock awards1,067 797 
Lease assets obtained in exchange for new operating lease liabilities4,536 4,084 


​

​

​

​

​

​

​

​

​

    

Three Months Ended

​

​

April 30,

    

May 1,

​

​

2022

​

2021

Operating activities:

 

​

  

 

​

  

Net income

​

$

251,093

​

$

158,247

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

​

 

  

​

 

  

Depreciation and amortization of property and other deferred cost

​

 

46,606

​

 

47,241

Gain on disposal of assets

​

 

(7,237)

​

 

(24,673)

Proceeds from insurance

​

 

—

​

 

1,755

Loss on early extinguishment of debt

​

 

—

​

 

2,830

Changes in operating assets and liabilities:

​

 

  

​

 

  

Decrease in accounts receivable

​

 

8,857

​

 

2,752

Increase in merchandise inventories

​

 

(284,797)

​

 

(218,745)

Increase in other current assets

​

 

(18,468)

​

 

(23,113)

Increase in other assets

​

 

(447)

​

 

(461)

Increase in trade accounts payable and accrued expenses and other liabilities

​

 

293,551

​

 

311,416

Increase in income taxes

​

 

76,024

​

 

45,164

​

​

​

​

​

​

​

Net cash provided by operating activities

​

 

365,182

​

 

302,413

​

​

​

​

​

​

​

Investing activities:

​

 

  

​

 

  

Purchase of property and equipment and capitalized software

​

 

(27,312)

​

 

(16,850)

Proceeds from disposal of assets

​

 

8,090

​

 

29,276

Proceeds from insurance

​

 

4,438

​

 

1,757

​

​

​

​

​

​

​

Net cash (used in) provided by investing activities

​

 

(14,784)

​

 

14,183

​

​

​

​

​

​

​

Financing activities:

​

 

  

​

 

  

Principal payments on long-term debt and finance lease liabilities

​

 

—

​

 

(168)

Issuance cost of line of credit

​

 

—

​

 

(2,733)

Cash dividends paid

​

 

(3,879)

​

 

(3,300)

Purchase of treasury stock

​

 

(201,105)

​

 

(54,814)

​

​

​

​

​

​

​

Net cash used in financing activities

​

 

(204,984)

​

 

(61,015)

​

​

​

​

​

​

​

Increase in cash and cash equivalents

​

 

145,414

​

 

255,581

Cash and cash equivalents, beginning of period

​

 

716,759

​

 

360,339

​

​

​

​

​

​

​

Cash and cash equivalents, end of period

​

$

862,173

​

$

615,920

​

​

​

​

​

​

​

Non-cash transactions:

​

 

  

​

 

  

Accrued capital expenditures

​

$

6,667

​

$

8,808

Accrued purchase of treasury stock

​

​

1,643

​

​

4,000

Lease assets obtained in exchange for new operating lease liabilities

​

 

—

​

 

3,815

​

See notes to condensed consolidated financial statements.

​

8

7

Table of Contents

DILLARD’S, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of Dillard’s, Inc. (the “Company”) have been prepared in accordance with the rules of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended OctoberApril 30, 20212022 are not necessarily indicative of the results that may be expected for the fiscal year ending January 29, 202228, 2023 due to, among other factors, the seasonal nature of the business and the ongoing effect of the COVID-19 pandemic.


business.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 202129, 2022 filed with the SEC on March 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 impact the United States and global economies. The COVID-19 pandemic has had and 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 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, and by June 2, 2020 all Dillard's store locations had been re-opened. Following our re-opening, a very small number of our locations were temporarily closed to in-store shopping due to government mandate.

All stores are currently open and are operating at reduced hours from fiscal 2019 operating hours. While the availability of vaccinations has led to re-openings across the country and the easing of restrictions, the continuing financial impact of COVID-19 to fiscal 2021 cannot be reasonably estimated at this time.


2022.

Note 2. Accounting Standards

Recently Adopted Accounting Pronouncements

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued 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 adoption of this update did not have a material impact on 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
9
Table of Contents
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'sCompany’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.

8

Table of Contents

The following table summarizes the percentage of net sales by segment and major product line:

 Three Months EndedNine Months Ended
 October 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
Retail operations segment  
Cosmetics13 %14 %13 %14 %
Ladies’ apparel22 20 23 21 
Ladies’ accessories and lingerie14 15 15 15 
Juniors’ and children’s apparel11 10 10 10 
Men’s apparel and accessories20 18 19 18 
Shoes16 16 15 15 
Home and furniture3 4 3 4 
 99 97 98 97 
Construction segment1 3 2 3 
Total100 %100 %100 %100 %


​

​

​

​

​

​

​

​

    

Three Months Ended

 

​

​

April 30,

​

May 1,

​

​

​

2022

    

2021

 

Retail operations segment

​

  

​

  

 

Cosmetics

​

14

%  

14

%

Ladies’ apparel

 

23

 

23

​

Ladies’ accessories and lingerie

 

13

 

15

​

Juniors’ and children’s apparel

 

11

 

11

​

Men’s apparel and accessories

 

19

 

17

​

Shoes

 

15

 

15

​

Home and furniture

 

3

 

3

​

​

 

98

 

98

​

Construction segment

 

2

 

2

​

Total

​

100

%  

100

%


​

10
Table of Contents

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

(in thousands of dollars)Retail
Operations		ConstructionConsolidated
Three Months Ended October 30, 2021   
Net sales from external customers$1,460,184 $20,815 $1,480,999 
Gross profit682,317 2,406 684,723 
Depreciation and amortization50,122 66 50,188 
Interest and debt expense (income), net10,557 (7)10,550 
Income before income taxes254,152 478 254,630 
Total assets3,703,257 36,939 3,740,196 
Three Months Ended October 31, 2020
Net sales from external customers$994,588 $30,311 $1,024,899 
Gross profit364,232 1,983 366,215 
Depreciation and amortization53,290 87 53,377 
Interest and debt expense (income), net12,167 (5)12,162 
(Loss) income before income taxes(232)462 230 
Total assets3,279,241 26,748 3,305,989 
Nine Months Ended October 30, 2021
Net sales from external customers$4,296,316 $83,604 $4,379,920 
Gross profit1,876,558 5,787 1,882,345 
Depreciation and amortization146,441 198 146,639 
Interest and debt expense (income), net32,889 (33)32,856 
Income before income taxes697,140 1,293 698,433 
Total assets3,703,257 36,939 3,740,196 
Nine Months Ended October 31, 2020
Net sales from external customers$2,638,831 $91,767 $2,730,598 
Gross profit737,673 5,925 743,598 
Depreciation and amortization154,806 423 155,229 
Interest and debt expense (income), net37,343 (38)37,305 
(Loss) income before income taxes(262,598)1,357 (261,241)
Total assets3,279,241 26,748 3,305,989 

​

​

​

​

​

​

​

​

​

​

​

​

    

Retail 

    

​

​

    

​

​

(in thousands of dollars)

​

Operations

​

Construction

​

Consolidated

Three Months Ended April 30, 2022

​

 

  

​

 

  

​

 

  

Net sales from external customers

​

$

1,580,799

​

$

30,869

​

$

1,611,668

Gross margin

​

 

748,444

​

 

1,787

​

 

750,231

Depreciation and amortization

​

 

46,151

​

 

58

​

 

46,209

Interest and debt expense (income), net

​

 

10,569

​

 

(7)

​

 

10,562

Income (loss) before income taxes

​

 

324,142

​

 

(119)

​

 

324,023

Total assets

​

 

3,617,164

​

 

41,644

​

 

3,658,808

​

​

​

​

​

​

​

​

​

​

Three Months Ended May 1, 2021

​

 

  

​

 

  

​

 

  

Net sales from external customers

​

$

1,296,736

​

$

31,807

​

$

1,328,543

Gross margin

​

 

553,001

​

 

1,453

​

 

554,454

Depreciation and amortization

​

 

46,338

​

 

70

​

 

46,408

Interest and debt expense (income), net

​

 

11,550

​

 

(15)

​

 

11,535

Income before income taxes

​

 

203,198

​

 

289

​

 

203,487

Total assets

​

 

3,460,352

​

 

47,308

​

 

3,507,660

​

Intersegment construction revenues of $12.0$10.0 million and $4.1$4.3 million for the three months ended OctoberApril 30, 20212022 and October 31, 2020, respectively, and $28.6 million and $22.3 million for the nine months ended October 30,May 1, 2021, and October 31, 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'sDillard’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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

April 30,

​

January 29,

​

May 1,

​

January 30,

(in thousands of dollars)

    

2022

    

2022

    

2021

    

2021

Contract liabilities

​

$

71,779

​

$

80,421

​

$

61,367

​

$

68,021

​

Retail
(in thousands of dollars)October 30,
2021		January 30,
2021		October 31,
2020		February 1,
2020
Contract liabilities$59,718 $68,021 $54,684 $75,229 

9



11

Table of Contents

During the ninethree months ended OctoberApril 30, 20212022 and October 31, 2020,May 1, 2021, the Company recorded $35.4$25.2 million and $39.7$18.1 million, respectively, in revenue that was previously included in the retail operations contract liability balances of $68.0$80.4 million and $75.2$68.0 million at January 29, 2022 and January 30, 2021, and February 1, 2020, 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
(in thousands of dollars)October 30,
2021		January 30,
2021		October 31,
2020		February 1,
2020
Accounts receivable$18,586 $25,094 $18,689 $28,522 
Costs and estimated earnings in excess of billings on uncompleted contracts2,333 450 781 2,179 
Billings in excess of costs and estimated earnings on uncompleted contracts6,521 4,685 5,808 5,737 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Construction

    

​

​

    

​

​

    

​

​

    

​

​

​

​

April 30,

​

January 29,

​

May 1,

​

January 30,

(in thousands of dollars)

​

2022

​

2022

​

2021

​

2021

Accounts receivable

​

$

20,895

​

$

25,912

​

$

24,064

​

$

25,094

Costs and estimated earnings in excess of billings on uncompleted contracts

​

 

3,342

​

 

2,847

​

 

1,195

​

 

450

Billings in excess of costs and estimated earnings on uncompleted contracts

​

 

7,511

​

 

6,298

​

 

4,941

​

 

4,685

​

During the ninethree months ended OctoberApril 30, 20212022 and October 31, 2020,May 1, 2021, the Company recorded $4.1$5.8 million and $4.9$3.7 million, respectively, in revenue that was previously included in billings in excess of costs and estimated earnings on uncompleted contracts of $4.7$6.3 million and $5.7$4.7 million at January 29, 2022 and January 30, 2021, and February 1, 2020, respectively.

The remaining performance obligations related to executed construction contracts totaled $84.2$96.1 million, $76.2$93.9 million and $97.2$54.4 million at OctoberApril 30, 2022, January 29, 2022 and May 1, 2021, January 30, 2021 and October 31, 2020, 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 EndedNine Months Ended
 October 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
Net income (loss)$197,330 $31,850 $541,233 $(138,691)
Weighted average shares of common stock outstanding20,109 22,264 21,009 22,930 
Basic and diluted earnings (loss) per share$9.81 $1.43 $25.76 $(6.05)

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

    

April 30,

    

May 1,

​

​

2022

​

2021

Net income

​

$

251,093

​

$

158,247

​

​

​

​

​

​

​

Weighted average shares of common stock outstanding

​

 

18,351

​

 

21,837

​

​

​

​

​

​

​

Basic and diluted earnings per share

​

$

13.68

​

$

7.25

​

The Company maintains a capital structure in which common stock is the only equity security issued and outstanding, and there were no0 shares of preferred stock, stock options, other dilutive securities or potentially dilutive securities issued or outstanding during the three and nine months ended OctoberApril 30, 20212022 and October 31, 2020.

May 1, 2021.


​


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 OctoberApril 30, 2021,2022, letters of credit totaling $20.1$19.3 million were issued under the Company’s revolving credit facility. See Note 7, Revolving Credit Agreement, for additional information.


10


12
Table of Contents

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 $1.6 million and $4.8 million to the Pension Plan during the three and nine months ended OctoberApril 30, 2021, respectively,2022 and expects to make additional contributions to the Pension Plan of approximately $1.6$4.8 million during the remainder of fiscal 2021.

2022.

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

 Three Months EndedNine Months Ended
 October 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
Components of net periodic benefit costs:    
Service cost$1,067 $1,090 $3,201 $3,270 
Interest cost1,438 1,536 4,312 4,608 
Net actuarial loss696 568 2,090 1,705 
Net periodic benefit costs$3,201 $3,194 $9,603 $9,583 

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

    

April 30,

    

May 1,

​

​

2022

​

2021

Components of net periodic benefit costs:

​

​

​

​

​

​

Service cost

​

$

1,019

​

$

1,067

Interest cost

​

 

1,697

​

 

1,437

Net actuarial loss

​

 

239

​

 

697

Net periodic benefit costs

​

$

2,955

​

$

3,201

​

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

The Company maintained an unsecuredmaintains a credit facility that provided a borrowing capacity of $800 million with a $200 million expansion option ("(“credit agreement"agreement”) until the credit agreement was amended in April 2020 (the "2020 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.


In April 2021, the Company further amended its secured credit agreement (the "2021 amended credit agreement"). The borrowing capacity remained at $800 million, subject to certain limitations as outlined in the 2021 amended credit agreement, with a $200 million expansion 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 credit agreement provides a borrowing capacity of $800 million, subject to certain limitations as outlined in the credit agreement, with a $200 million expansion option.

In April 2021, the Company amended the credit agreement (the "2021 amendment"). Pursuant to the 2021 amendment, 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 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 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 $80 million and certain events of default have not occurred and are not continuing, there are no financial covenant requirements under the 2021 amended credit agreement. The 2021 amended credit agreement, as amended by the 2021 amendment, matures on April 28, 2026.


At OctoberApril 30, 2021, no2022, 0 borrowings were outstanding, and letters of credit totaling $20.1$19.3 million were issued under the 2021 amended credit agreement leaving unutilized availability under the credit facility of $779.9$780.7 million.



Note 8. Stock Repurchase Programs

In March 2018, the Company'sCompany announced that its Board of Directors authorizedapproved a stock repurchase program authorizing the Company to repurchase of up to $500 million of its Class A Common Stock ("March 2018 Stock Plan"). In May 2021, the Company’sCompany announced that its Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $500 million of its Class A Common Stock ("May 2021 Stock Plan"). In February 2022, the Company announced that its Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $500 million of its Class A Common Stock under an open-ended stock repurchase plan ("March 2018 Plan"(“February 2022 Stock Plan”).The March 2018February 2022 Stock Plan permittedpermits the Company to repurchase its Class A Common Stock in the open market,

11

Table of Contents

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 had no

13
Table of Contents
expiration date. During the nine months ended October 30, 2021, the Company completed the authorized purchases under the March 2018 Plan.

In May 2021, the Company's Board of Directors authorized the repurchase of up to $500 million of the Company’s Class A Common Stock under a new open-ended stock repurchase plan ("May 2021 Plan"). The May 2021 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 October 30, 2021, $262.9 million of authorization remained under the May 2021 Plan.

transactions.

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

 Three Months EndedNine Months Ended
 October 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
Cost of shares repurchased$239,244 $19,459 $410,265 $95,556 
Number of shares repurchased1,231 645 2,590 2,231 
Average price per share$194.40 $30.16 $158.40 $42.83 


​

​

​

​

​

​

​

​

​

    

Three Months Ended

​

​

April 30,

    

May 1,

​

​

2022

​

2021

Cost of shares repurchased

​

$

186,515

​

$

58,814

Number of shares repurchased

​

 

735

​

 

625

Average price per share

​

$

253.72

​

$

94.12

​

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

As of April 30, 2022, the Company had completed the authorized purchases under the March 2018 Stock Plan and the May 2021 Stock Plan, and $425.5 million of authorization remained under the February 2022 Stock Plan.


​


Note 9. Income Taxes


During the three and nine months ended OctoberApril 30, 2022 and May 1, 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 was in a net operating loss position for the fiscal year 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 income tax rate was 35% rather than the current 21%. During the three and nine months ended October 31, 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 million and $64.6 million, respectively, related to the rate differential in the carryback year. Income tax benefit for the three and nine months also included the effects of state and local 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 EndedNine Months EndedAffected Line Item in the Statement Where Net Income Is Presented
Details about AOCL ComponentsOctober 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
Defined benefit pension plan items     
Amortization of actuarial losses$696 $568 $2,090 $1,705 Total before tax (1)
 168 138 505 414 Income tax expense
 $528 $430 $1,585 $1,291 Total net of tax
Leases

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



14
Table of Contents
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
 Three Months EndedNine Months Ended
October 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
Beginning balance$33,878 $30,198 $34,935 $31,059 
Amounts reclassified from AOCL(528)(430)(1,585)(1,291)
Ending balance$33,350 $29,768 $33,350 $29,768 

Note 12. Leases

The Company leases retail stores, office space and equipment under operating leases. As of OctoberApril 30, 2021,2022, January 30,29, 2022, and May 1, 2021, and October 31, 2020, right-of-use operating lease assets, which are recorded in operating lease assets in the condensed consolidated balance sheets, totaled $41.2$39.7 million, $47.6$42.9 million and $40.5$47.7 million, respectively, and operating lease liabilities, which are recorded in current portion of operating lease liabilities and operating lease liabilities, totaled $40.7$39.9 million, $47.2$42.7 million and $40.2$47.5 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. 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 of five or to 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 exercising the 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'sCompany’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.


12

15

Table of Contents

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

    

April 30,

    

January 29,

    

May 1,

(in thousands of dollars)

​

Classification - Condensed Consolidated Balance Sheets

​

2022

​

2022

​

2021

Assets

​

​

​

​

​

​

​

​

​

​

​

Finance lease assets

 

Property and equipment, net (a)

​

$

—

​

$

—

​

$

185

Operating lease assets

 

Operating lease assets

​

 

39,743

​

 

42,941

​

 

47,716

Total leased assets

​

​

​

$

39,743

​

$

42,941

​

$

47,901

​

​

​

​

​

​

​

​

​

​

​

​

Liabilities

 

  

​

 

  

​

 

  

​

 

  

Current

 

  

​

 

  

​

 

  

​

 

  

Finance

 

Current portion of finance lease liabilities

​

$

—

​

$

—

​

$

527

Operating

 

Current portion of operating lease liabilities

​

 

11,344

​

 

11,712

​

 

12,960

Noncurrent

 

  

​

 

  

​

 

  

​

 

  

Finance

 

Finance lease liabilities

​

 

—

​

 

—

​

 

—

Operating

 

Operating lease liabilities

​

 

28,512

​

 

30,969

​

 

34,536

Total lease liabilities

 

  

​

$

39,856

​

$

42,681

​

$

48,023

(in thousands of dollars)Classification - Condensed Consolidated Balance SheetsOctober 30,
2021		January 30,
2021		October 31,
2020
Assets
Finance lease assets
Property and equipment, net (a)
$62 $247 $353 
Operating lease assetsOperating lease assets41,189 47,612 40,471 
Total leased assets$41,251 $47,859 $40,824 
Liabilities
Current
     FinanceCurrent portion of finance lease liabilities$180 $695 $849 
     OperatingCurrent portion of operating lease liabilities11,432 13,819 12,775 
Noncurrent
     FinanceFinance lease liabilities— — 180 
     OperatingOperating lease liabilities29,293 33,392 27,412 
Total lease liabilities$40,905 $47,906 $41,216 
(a)Finance lease assets are recorded net of accumulated amortization of $14.5 million, $14.3 million and $14.2$14.4 million as of October 30, 2021, January 30, 2021 and October 31, 2020, respectively.May 1, 2021.

​

​

​

​

​

​

​

​

​

​

​

    

​

    

​

​

​

​

​

Lease Cost

​

​

    

Three Months Ended

(in thousands of dollars)

​

Classification - Condensed Consolidated Statements of Income

​

April 30, 2022

​

May 1, 2021

Operating lease cost (a)

 

Rentals

​

$

5,079

​

$

5,111

Finance lease cost

 

  

​

 

  

​

 

  

Amortization of leased assets

 

Depreciation and amortization

​

 

—

​

 

62

Interest on lease liabilities

 

Interest and debt expense, net

​

 

—

​

 

14

Net lease cost

 

  

​

$

5,079

​

$

5,187

Lease CostThree Months EndedNine Months Ended
(in thousands of dollars)Classification - Condensed Consolidated Statements of OperationsOctober 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
Operating lease cost (a)
Rentals$4,947 $5,115 $15,157 $16,304 
Finance lease cost
     Amortization of leased assetsDepreciation and amortization61 106 185 317 
     Interest on lease liabilitiesInterest and debt expense, net5 44 29 186 
Net lease cost$5,013 $5,265 $15,371 $16,807 

(a)Includes short term lease costs of $0.5$1.2 million and $0.5$0.4 million for the three months ended April 30, 2022 and $1.4 million and $1.5 million for the nine months ended October 30,May 1, 2021, and October 31, 2020, respectively, and variable lease costs, including contingent rent, of $0.3 million and $0.4 million for the three months ended April 30, 2022 and $1.0 million and $1.1 million for the nine months ended October 30,May 1, 2021, and October 31, 2020, respectively.

Maturities of Lease Liabilities

​

​

​

​

​

​

​

​

​

​

​

(in thousands of dollars)

    

Operating

    

Finance

    

​

​

Fiscal Year

​

Leases

​

Leases

​

Total

2022 (excluding the three months ended April 30, 2022)

​

$

10,317

​

$

0

​

$

10,317

2023

​

 

10,959

​

 

0

​

 

10,959

2024

​

 

6,289

​

 

0

​

 

6,289

2025

​

 

5,507

​

 

0

​

 

5,507

2026

​

 

3,809

​

 

0

​

 

3,809

After 2026

​

 

10,748

​

 

0

​

 

10,748

Total minimum lease payments

​

 

47,629

​

 

0

​

 

47,629

Less amount representing interest

​

 

(7,773)

​

 

0

​

 

(7,773)

Present value of lease liabilities

​

$

39,856

​

$

0

​

$

39,856

​

(in thousands of dollars)
Fiscal Year
Operating
Leases		Finance
Leases		Total
2021 (excluding the nine months ended October 30, 2021)$3,153 $181 $3,334 
202213,174 — 13,174 
20239,500 — 9,500 
20244,830 — 4,830 
20254,170 — 4,170 
After 202514,296 — 14,296 
Total minimum lease payments49,123 181 49,304 
Less amount representing interest(8,398)(1)(8,399)
Present value of lease liabilities$40,725 $180 $40,905 

13



16

Table of Contents

Lease Term and Discount Rate

​

​

​

​

​

​

October

April 30,
2021

​

​

2022

Weighted-average remaining lease term

​

Operating leases

6.0

5.8

years

     Finance leases0.3 years

Weighted-average discount rate

​

Operating leases

6.2 

6.1

%

     Finance leases9.5 %


​

Other Information

Nine Months Ended
(in thousands of dollars)October 30,
2021		October 31,
2020
Cash paid for amounts included in the measurement of lease liabilities
     Operating cash flows from operating leases$12,962 $14,490 
     Operating cash flows from finance leases29 186 
     Financing cash flows from finance leases515 885 


​

​

​

​

​

​

​

​

​

    

Three Months Ended

​

​

April 30,

    

May 1,

(in thousands of dollars)

​

2022

​

2021

Cash paid for amounts included in the measurement of lease liabilities

 

​

  

 

​

  

Operating cash flows from operating leases

​

$

3,485

​

$

4,244

Operating cash flows from finance leases

​

 

—

​

 

14

Financing cash flows from finance leases

​

​

—

​

​

168


​

​

​

Note 13. (Gain) Loss11. Gain on Disposal of Assets


During the ninethree months ended OctoberApril 30, 2022, the Company recorded proceeds of $8.1 million primarily from the sale of 1 store property, resulting in a gain of $7.2 million that was recorded in gain on disposal of assets.

During the three months ended May 1, 2021, the Company recorded proceeds of $29.3 million primarily from the sale of 3 store properties, resulting in a gain of $24.7 million that was recorded in (gain) lossgain on disposal of assets.


​

During the three and nine months ended October 31, 2020, the Company recorded proceeds of $1.5 million primarily from the sale of 1 store property, resulting in a loss of $2.2 million that was recorded in (gain) loss on disposal of assets.


Note 14.12. 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 approximates their carrying values at OctoberApril 30, 20212022 due to the short-term maturities of these instruments. The fair value of the Company’s long-term debt at OctoberApril 30, 20212022 was approximately $429$398 million. The carrying value of the Company’s long-term debt at OctoberApril 30, 20212022 was $366$366.1 million. The fair value of the Company’s subordinated debentures at OctoberApril 30, 20212022 was approximately $217$218 million. The carrying value of the Company’s subordinated debentures at OctoberApril 30, 20212022 was $200 million.

​

​

​


14


Note 15.  Subsequent Event


On November 18, 2021, the Company announced that its Board of Directors declared a special dividend of $15.00 per share. The dividend is payable on the Class A and Class B Common Stock of the Company on December 15, 2021 to shareholders of record as of November 29, 2021.

17
Table of Contents

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

29, 2022.

EXECUTIVE OVERVIEW


In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to impact the United States and global economies.

The COVID-19 pandemic has had and 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, and by June 2, 2020 all Dillard's store locations had been re-opened. Following our re-opening, a very small number of our locations were temporarily closed to in-store shopping due to government mandate. All stores are currently open and are operating at reduced hours from fiscal 2019 operating hours. While the availability of vaccinations has led to re-openings across the country and the easing of restrictions, the continuing financial impact of COVID-19 to fiscal 2021 cannot be reasonably estimated at this time.

The Company'sCompany’s results for the three months ended OctoberApril 30, 20212022 improved significantly compared to the three months ended October 31, 2020, marking a third sequential record quarterly performance. The strong consumer demand that began inMay 1, 2021. Positive customer response to the first quarter continued through the second and third quarters, leadingCompany’s merchandise selections led to a 48%23% increase in comparable retailstore sales for the third quarter of 2021 compared to the third quarter of 2020 and a 12% increase compared to the third quarter of 2019.

prior year first quarter.

Retail gross margin increased significantly to 46.7%a record high of 47.3% during the three months ended OctoberApril 30, 20212022 compared to 36.6%42.6% during the three months ended October 31, 2020. TheMay 1, 2021. As a result of the robust sales momentum throughout the quarter, the Company attributes this improvement to continuedexperienced strong consumer demand combinedsell through of its merchandise with better inventory management which led to decreased markdownsnotably less promotional and markdown activity compared to the prior year thirdfirst quarter. Accordingly,The Company continued its efforts to control inventory during the Company reduced inventory by approximately 1%quarter. Inventory increased 4% at April 30, 2022 compared to May 1, 2021 following a 17% decrease in the prior year thirdfirst quarter.

Selling, general and administrative expenses ("(“SG&A"&A”) increased to $393.2$400.8 million (26.5%(24.9% of sales) compared to $318.2$336.6 million (31.0%(25.3% of sales) for the prior year third quarter primarily due to decreases in payroll expense in the prior year third quarter as store traffic, while recovering, was not to pre-pandemic levels.first quarter. Increased retail sales during the thirdfirst quarter of 2022 compared to the first quarter of 2021 compared to the third quarter of 2020 provided supportleverage for these increased expenses as SG&A declined 450from retail operations improved 60 basis points of sales. The dollar increase in SG&A expense is primarily due to inflationary wage pressure in a highly competitive employment environment.

The Company reported net income of $197.3$251.1 million ($9.8113.68 per share) compared to net income of $31.9$158.2 million ($1.437.25 per share) for the prior year thirdfirst quarter.


Included in net income for the quarterthree months ended October 31, 2020 is a net tax benefit of $32.4 million ($1.46 per share) related to The Coronavirus Aid, Relief and Economic Security ("CARES") Act, signed into law on March 27, 2020, which allowed for net operating loss carryback to years in which the federal income tax rate was 35%. Also included in net income for the quarterApril 30, 2022 is a pretax lossgain on disposal of $2.2assets of $7.2 million ($1.45.6 million after tax or $0.06$0.31 per share) primarily related to the sale of a store property.

During Included in net income for the three months ended OctoberMay 1, 2021 is a pretax gain on disposal of assets of $24.7 million ($19.2 million after tax or $0.88 per share) primarily related to the sale of three store properties.

Cash flows provided by operating activities were $365.2 million for the three months ended April 30, 2021, the2022. The Company repurchased 1.20.7 million shares of its outstanding Class A Common Stock for $239.2$186.5 million under its stock repurchase plans authorized byduring the Company's Board of Directors in March 2018 (the "March 2018 Plan") and May 2021 (the "May 2021 Plan"). As of Octoberthree months ended April 30, 2021, the Company had completed the authorized purchases under the March 2018 Plan, and $262.92022. At April 30, 2022, $425.5 million of authorization remained under the May 2021 Plan.


Company’s open stock repurchase plan.

As of OctoberApril 30, 2021,2022, the Company had working capital of $1,079.4$1,035.5 million (including cash and cash equivalents of $619.7$862.2 million) and $566.0$566.1 million of total debt outstanding, excluding financeoperating lease liabilities, and operating lease liabilities, with noincluding one scheduled maturities untildebt maturity of $44.8 million at the end of fiscal 2022.  Cash flows provided by operating activities were $728.1 million for the nine months ended October 30, 2021. 


On November 18, 2021, the Company announced that its Board of Directors declared a special dividend of $15.00 per share. The dividend is payable on the Class A and Class B Common Stock of the Company on December 15, 2021 to shareholders of record as of November 29, 2021.

The Company maintained 280 Dillard'sDillard’s stores, including 3029 clearance centers, and an internet store at Octoberas of April 30, 2021.


18
Table2022.

At present, a number of Contents

Weeconomic and geopolitical factors are affecting the U.S. and world economies (including countries from which we source a significant portionsome of our private labelmerchandise): rising gas prices (in part due to the war in Ukraine and exclusive brand merchandise from countries that have experienced widespread transmission of the 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 impactedresulting sanctions imposed on Russia by the pandemicU.S. and other countries), increased shipping costs with reduced shipping capacity, U.S. port slowdowns, increasing U.S. wages in some countries the pandemic continues to negatively impact our supply chain with shipping delaysa tight labor market as well as increased shipping costs.

Additionally, disruptions insome continuing effects from the global transportation network,COVID-19 pandemic. The extent to which began in fiscal 2020, have continued throughout fiscal 2021, and it is unclear when these issuesour business will be resolved. The 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 unable to quantify the effects ofaffected by these factors depends on our customer’s ability and willingness to accept price increases and our ability to receive merchandise timely. Accordingly, the Company's resultsrelated financial impact to fiscal 2022 from these factors cannot be reasonably estimated at this time.

15

Table of operations and inventory position for fiscal 2021.Contents


With regard to operational staffing, management is particularly focused on the existing tight labor market, seeking to hire permanent and seasonal talent across multiple functions. In addition to existing labor market pressures, the Occupational Safety and Health Administration ("OSHA") issued an Emergency Temporary Standard ("ETS") on November 5, 2021 requiring all employers with 100 or more employees to mandate COVID-19 vaccination or testing effective January 4, 2022. Implementation of the ETS has been suspended pending further developments in litigation filed against OSHA. The Company continues to monitor the status of the litigation and the potential impact of the ETS on retaining and hiring employees and additional costs that may be incurred if this standard goes into effect.


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

 

​

​

April 30,

    

May 1,

 

​

​

2022

​

2021

 

Net sales (in millions)

​

$

1,611.7

​

$

1,328.5

​

Retail stores sales trend

​

 

22

%  

 

73

%

Comparable retail stores sales trend

​

 

23

%  

 

*

​

Gross margin (in millions)

​

$

750.2

​

$

554.5

​

Gross margin as a percentage of net sales

​

 

46.5

%  

 

41.7

%

Retail gross margin as a percentage of retail net sales

​

 

47.3

%  

 

42.6

%

Selling, general and administrative expenses as a percentage of net sales

​

 

24.9

%  

 

25.3

%

Cash flow provided by operations (in millions)

​

$

365.2

​

$

302.4

​

Total retail store count at end of period

​

 

280

​

 

281

​

Retail sales per square foot

​

$

34

​

$

28

​

Retail store inventory trend

​

 

4

%  

 

(17)

%

Annualized retail merchandise inventory turnover

​

 

2.7

​

 

2.5

​

 Three Months Ended
 October 30,
2021		October 31,
2020
Net sales (in millions)$1,481.0 $1,024.9 
Retail stores sales trend47 %(25)%
Comparable retail stores sales trend48 %(24)%
Gross profit (in millions)$684.7 $366.2 
Gross profit as a percentage of net sales46.2 %35.7 %
Retail gross profit as a percentage of net sales46.7 %36.6 %
Selling, general and administrative expenses as a percentage of net sales26.5 %31.0 %
Cash flow provided by (used in) operations (in millions)*$728.1 $(62.9)
Total retail store count at end of period280 282 
Retail sales per square foot$31 $21 
Retail store inventory trend(1)%(22)%
Annualized retail merchandise inventory turnover2.5 1.8 

*Cash flow from operations The Company reported no comparable store sales data is for the ninethree months ended October 30,May 1, 2021 due to the temporary COVID-19-related closures of its brick-and-mortar stores during the first quarter of fiscal 2020 as well as the interdependence between in-store and October 31, 2020.

online sales.


​

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 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.


19

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

breakage.

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.

16

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, data processing and other equipment 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 commitment fees and borrowings, if any, under the Company’s credit agreement. Interest and debt expense also includes the amortization of financing costs and interest on finance lease obligations.


Other expense.Other expense includes the interest cost and net actuarial loss components of net periodic benefit costs related to the Company'sCompany’s unfunded, nonqualified defined benefit plan and charges related to the write-offwrite off of certain deferred financing fees in connection with the amendment and extension of the Company's secured revolving credit facility, if any.

(Gain) loss

Gain on disposal of assets.  (Gain) lossGain 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


On March 5, 2021, the U.K. Financial Conduct Authority, which regulates LIBOR, announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative: (a) immediately after December 31, 2021, in the case of the 1-week and 2-month U.S. dollar settings; and (b) immediately after June 30, 2023, in the case of the remaining U.S. dollar settings. Going forward, we intendThe 2021 amendment to work with our lenders to use a suitable alternative reference rate for the 2021 amended credit agreement the Wells Fargo Allianceincluded an approach to replace LIBOR with a SOFR-based rate. We have not yet transitioned to a SOFR-based rate and any other applicable agreements. We will continue to monitor, assess and plan for the phase outreplacement of LIBOR.


LIBOR with an alternative rate. We also intend to work with the Wells Fargo Alliance and any other applicable agreements to determine a suitable alternative reference rate.

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.






20

17

Table of Contents

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 EndedNine Months Ended
 October 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
Net sales100.0 %100.0 %100.0 %100.0 %
Service charges and other income2.1 2.7 2.1 3.2 
 102.1 102.7 102.1 103.2 
Cost of sales53.8 64.3 57.0 72.8 
Selling, general and administrative expenses26.5 31.0 25.0 32.1 
Depreciation and amortization3.4 5.2 3.3 5.7 
Rentals0.3 0.5 0.3 0.6 
Interest and debt expense, net0.7 1.2 0.8 1.4 
Other expense0.1 0.2 0.2 0.2 
(Gain) loss on disposal of assets— 0.2 (0.6)0.1 
Income (loss) before income taxes17.2 — 15.9 (9.6)
Income taxes (benefit)3.9 (3.1)3.6 (4.5)
Net income (loss)13.3 %3.1 %12.4 %(5.1)%


​

​

​

​

​

​

​

​

​

Three Months Ended

 

​

    

April 30,

    

May 1,

 

​

​

2022

​

2021

 

Net sales

​

100.0

%  

100.0

%

Service charges and other income

 

1.9

 

2.2

​

​

​

​

​

​

​

​

 

101.9

 

102.2

​

​

​

​

​

​

​

Cost of sales

 

53.5

 

58.3

​

Selling, general and administrative expenses

 

24.9

 

25.3

​

Depreciation and amortization

 

2.9

 

3.5

​

Rentals

 

0.3

 

0.4

​

Interest and debt expense, net

 

0.7

 

0.9

​

Other expense

 

0.1

 

0.4

​

Gain on disposal of assets

 

(0.4)

 

(1.9)

​

​

​

​

​

​

​

Income before income taxes

 

20.1

 

15.3

​

Income taxes

 

4.5

 

3.4

​

​

​

​

​

​

​

Net income

​

15.6

%  

11.9

%


​

Net Sales

 Three Months Ended 
(in thousands of dollars)October 30,
2021		October 31,
2020		$ Change
Net sales:   
Retail operations segment$1,460,184 $994,588 $465,596 
Construction segment20,815 30,311 (9,496)
Total net sales$1,480,999 $1,024,899 $456,100 


​

​

​

​

​

​

​

​

​

​

​

​

    

Three Months Ended

    

​

​

​

​

April 30,

​

May 1,

​

​

​

(in thousands of dollars)

​

2022

​

2021

​

$ Change

Net sales:

 

​

  

 

​

  

 

​

  

Retail operations segment

​

$

1,580,799

​

$

1,296,736

​

$

284,063

Construction segment

​

 

30,869

​

 

31,807

​

 

(938)

Total net sales

​

$

1,611,668

​

$

1,328,543

​

$

283,125

​

The percent change in the Company’s sales by segment and product category for the three months ended OctoberApril 30, 20212022 compared to the three months ended October 31, 2020May 1, 2021 as well as the sales percentage by segment and product category to total net sales for the three months ended OctoberApril 30, 20212022 are as follows:

​

​

​

​

​

​

​

​

    

% Change

    

% of

 

​

​

2022 - 2021

​

Net Sales

 

Retail operations segment

 

  

 

  

​

Cosmetics

 

14.8

%  

14

%

Ladies’ apparel

 

26.3

 

23

​

Ladies’ accessories and lingerie

 

7.4

 

13

​

Juniors’ and children’s apparel

 

26.8

 

11

​

Men’s apparel and accessories

 

33.1

 

19

​

Shoes

 

22.3

 

15

​

Home and furniture

 

11.7

 

3

​

​

​

​

 

98

​

Construction segment

 

(2.9)

 

2

​

Total

​

​

 

100

%  

​

 % Change
2021 - 2020		% of
Net Sales
Retail operations segment  
Cosmetics31.6 %13 %
Ladies’ apparel61.2 22 
Ladies’ accessories and lingerie29.1 14 
Juniors’ and children’s apparel65.0 11 
Men’s apparel and accessories60.5 20 
Shoes44.4 16 
Home and furniture8.1 3 
  99 
Construction segment(31.3)1 
Total 100 %

18

21

Net sales from the retail operations segment increased $466$284.1 million, or approximately 47%22%, and sales in comparable stores increased approximately 48%,23% during the three months ended OctoberApril 30, 20212022 compared to the three months ended October 31, 2020, primarily due to the impact of the COVID-19 pandemic.May 1, 2021. Sales in all product categories increased significantly over the thirdfirst quarter last year.


Compared to the third quarter of fiscal 2019, net sales from the retail operations segment for

For the three months ended OctoberApril 30, 2022 compared to the three months ended May 1, 2021, the number of sales transactions increased by 14% and November 2, 2019 were $1,460.2 million and $1,334.2 million, respectively, increasing $126.0 million or approximately 9% whilethe average dollars per sales in comparable storestransaction increased approximately 12%by 5%.


We recorded a return asset of $11.0$14.7 million and $7.5$12.4 million and an allowance for sales returns of $22.3$30.3 million and $12.5$23.1 million as of OctoberApril 30, 2022 and May 1, 2021, and October 31, 2020, respectively.

During the three months ended OctoberApril 30, 2021,2022, net sales from the construction segment decreased $9.5$0.9 million, or approximately 31%3%, compared to the three months ended October 31, 2020May 1, 2021 due to a decrease in construction activity. The remaining performance obligations related to executed construction contracts totaled $84.2$96.1 million as of OctoberApril 30, 2021,2022, increasing approximately 10%2% from January 30,29, 2022 and increasing approximately 77% from May 1, 2021, and decreasing approximately 13% from October 31, 2020, respectively. We expect these remaining performance obligations to be earned over the next nine to eighteen months.


​

 Nine Months Ended 
(in thousands of dollars)October 30,
2021		October 31,
2020		$ Change
Net sales:   
Retail operations segment$4,296,316 $2,638,831 $1,657,485 
Construction segment83,604 91,767 (8,163)
Total net sales$4,379,920 $2,730,598 $1,649,322 

The percent change in the Company's sales by segment and product category for the nine months ended October 30, 2021 compared to the nine months ended October 31, 2020 as well as the sales percentage by segment and product category to total net sales for the nine months ended October 30, 2021 are as follows:

 % Change
2021 - 2020		% of
Net Sales
Retail operations segment  
Cosmetics48.9 %13 %
Ladies’ apparel79.3 23 
Ladies’ accessories and lingerie53.6 15 
Juniors’ and children’s apparel69.6 10 
Men’s apparel and accessories69.9 19 
Shoes61.5 15 
Home and furniture22.3 3 
  98 
Construction segment(8.9)2 
Total 100 %

Net sales from the retail operations segment increased $1,657.5 million, or approximately 63%, during the nine months ended October 30, 2021 compared to the nine months ended October 31, 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 nine months of 2020 as well as the interdependence between in-store and online sales. Sales in all product categories increased significantly over the first nine months of fiscal 2020.

Compared to the first nine months of fiscal 2019, net sales from the retail operations segment for the nine months ended October 30, 2021 and November 2, 2019 were $4,296.3 million and $4,132.9 million, respectively, increasing $163.4 million or approximately 4% while sales in comparable stores increased approximately 7%.
22
During the nine months ended October 30, 2021, net sales from the construction segment decreased $8.2 million, or approximately 9%, compared to the nine months ended October 31, 2020 due to a decrease in construction activity.

Service Charges and Other Income

 Three Months EndedNine Months EndedThree MonthsNine Months
(in thousands of dollars)October 30,
2021		October 31, 2020October 30,
2021		October 31,
2020		$ Change 2021 - 2020$ Change 2021-2020
Service charges and other income:      
Retail operations segment      
Income from Wells Fargo Alliance$18,701 $16,472 $54,143 $51,958 $2,229 $2,185 
Shipping and handling income9,672 7,917 28,376 28,140 1,755 236 
Leased department income1 212 4 1,075 (211)(1,071)
Other2,664 2,562 7,865 6,600 102 1,265 
 31,038 27,163 90,388 87,773 3,875 2,615 
Construction segment(125)50 571 500 (175)71 
Total service charges and other income$30,913 $27,213 $90,959 $88,273 $3,700 $2,686 


​

Service charges

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three

​

    

Three Months Ended

    

 Months

​

​

April 30,

​

May 1,

​

$ Change

(in thousands of dollars)

​

2022

    

2021

​

2022-2021

Service charges and other income:

​

  

​

​

  

​

​

  

​

Retail operations segment

​

  

​

​

  

​

​

  

​

Income from Wells Fargo Alliance

​

$

17,174

​

$

17,707

​

$

(533)

Shipping and handling income

​

 

10,222

​

 

8,480

​

 

1,742

Other

​

 

3,654

​

 

2,427

​

 

1,227

​

​

 

31,050

​

 

28,614

​

 

2,436

Construction segment

​

 

64

​

 

378

​

 

(314)

Total service charges and other income

​

$

31,114

​

$

28,992

​

$

2,122

​

Shipping and otherhandling income is composed primarily of income from the Wells Fargo Alliance. Income from the alliance increased $2.2$1.7 million during the three months ended OctoberApril 30, 20212022 compared to the three months ended October 31, 2020 primarily due to decreases in credit losses. Income from the alliance increased $2.2 million during the nine months ended October 30,May 1, 2021 compared to the nine months ended October 31, 2020 primarily due to decreases in credit losses.


Shipping and handling income increased during the three and nine months ended October 30, 2021 compared to the three and nine months ended October 31, 2020, respectively, due to an increase in online shopping. The smaller increase for the nine-month period compared to the three-month period was primarily due to 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 brick-and-mortar stores were temporarily closed.

Compared to the third quarter of fiscal 2019, shipping and handling income for the three months ended October 30, 2021 and November 2, 2019 was $9.7 million and $6.7 million, respectively, increasing $3.0 million or 45.0%. Shipping and handling income for the nine months ended October 30, 2021 and November 2, 2019 was $28.4 million and $18.9 million, respectively, increasing $9.5 million or 50.1%.

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.

Gross Profit

(in thousands of dollars)October 30,
2021		October 31,
2020		$ Change% Change
Gross profit:    
Three months ended    
Retail operations segment$682,317 $364,232 $318,085 87.3 %
Construction segment2,406 1,983 423 21.3 
Total gross profit$684,723 $366,215 $318,508 87.0 %
Nine months ended    
Retail operations segment$1,876,558 $737,673 $1,138,885 154.4 %
Construction segment5,787 5,925 (138)(2.3)
Total gross profit$1,882,345 $743,598 $1,138,747 153.1 %
Margin


​

23

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

April 30,

    

May 1,

    

​

​

    

​

 

(in thousands of dollars)

​

2022

​

2021

​

$ Change

​

% Change

​

Gross margin:

​

  

​

​

  

​

​

  

​

​

  

 

Three months ended

​

 

  

​

 

  

​

 

  

 

​

​

Retail operations segment

​

$

748,444

​

$

553,001

​

$

195,443

 

35.3

%

Construction segment

​

 

1,787

​

 

1,453

​

 

334

 

23.0

​

Total gross margin

​

$

750,231

​

$

554,454

​

$

195,777

 

35.3

%

Table of Contents​

 Three Months EndedNine Months Ended
 October 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
Gross profit as a percentage of segment net sales:
    
Retail operations segment46.7 %36.6 %43.7 %28.0 %
Construction segment11.6 6.5 6.9 6.5 
Total gross profit as a percentage of net sales46.2 35.7 43.0 27.2 

​

​

​

​

​

​

​

    

Three Months Ended

 

​

​

April 30,

​

May 1,

 

​

​

2022

    

2021

​

Gross margin as a percentage of segment net sales:

​

  

​

  

 

Retail operations segment

​

47.3

%  

42.6

%

Construction segment

 

5.8

 

4.6

​

Total gross margin as a percentage of net sales

 

46.5

 

41.7

​

​

Gross profit,margin, as a percentage of sales, increased to 46.2%46.5% from 35.7%41.7% during the three months ended OctoberApril 30, 20212022 compared to the three months ended October 31, 2020,May 1, 2021, respectively.


19

Table of Contents

Gross profitmargin from retail operations, as a percentage of sales, increased to 46.7%47.3% from 36.6%42.6% during the three months ended OctoberApril 30, 20212022 compared to the three months ended October 31, 2020, respectively, primarily dueMay 1, 2021, respectively. Management attributes the substantial improvement in gross margin to increased markdowns taken during the third quarter of fiscal 2020 as a result of the impact of the COVID-19 pandemic as well as better inventory management and strongerpositive customer demand leading to decreased markdowns in the third quarter of fiscal 2021. Gross margin increased significantly in all product categories except cosmetics which increased moderately.


Comparedresponse to the third quarter of fiscal 2019, gross profit from retail operations, as a percentage of sales, increased 1,221 basis points of sales to 46.7% during the three months ended October 30, 2021 compared to 34.5% during the three months ended November 2, 2019 primarily due to bettercompany’s merchandise assortment combined with continued inventory management and customer demand leading to decreased markdowns in the third quarter of fiscal 2021.

Gross profit, as a percentage of sales, increased to 43.0% from 27.2% during the nine months ended October 30, 2021 compared to the nine months ended October 31, 2020, respectively.

Gross profit from retail operations, as a percentage of sales, increased to 43.7% from 28.0% during the nine months ended October 30, 2021 compared to the nine months ended October 31, 2020, respectively, primarily due to increased markdowns taken during the first nine 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 nine monthsquarter of fiscal 2021.2022. Gross margin increased significantly in all product categories exceptladies’ apparel and men’s apparel and accessories. Gross margin increased moderately in shoes and juniors’ and children’s apparel. Gross margin increased slightly in home and furniture and cosmetics, whichwhile remaining flat in ladies’ accessories and lingerie.

Inventory increased moderately.


Compared to the first nine months of fiscal 2019, gross profit from retail operations, as a percentage of sales, increased 1000 basis points of sales to 43.7% during the nine months ended October 30, 2021 compared to 33.7% during the nine months ended November 2, 2019 primarily due to better inventory management and customer demand leading to decreased markdowns in the first nine months of fiscal 2021.

Inventory decreased 1%4% in total as of OctoberApril 30, 20212022 compared to October 31, 2020.May 1, 2021. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $1 million and $5 million for the three and nine months ended OctoberApril 30, 2021, respectively.

Management is monitoring2022.

We source a significant portion of our private label and exclusive brand merchandise from countries that continue to be impacted by the continuingCOVID-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 in some countries the pandemic continues to negatively impact our supply chain, issues, particularly with regard toresulting in shipping delays andas well as increased shipping costs.

Additionally, disruptions continue in the global transportation network.


24
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. Further shipping delays may occur if the ongoing west coast port labor contract negotiations fail.

The United States is also currently experiencing a shortage of truck drivers, trucks and truck parts, which may impact overall costs of transportation and the timely delivery of merchandise.

At present, while monitoring all of these situations closely, management is unable to quantify the effects of these factors on the Company's results of operations and inventory position for fiscal 2022.

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

(in thousands of dollars)October 30,
2021		October 31,
2020		$ Change% Change
SG&A:    
Three months ended    
Retail operations segment$391,463 $316,738 $74,725 23.6 %
Construction segment1,728 1,480 248 16.8 
Total SG&A$393,191 $318,218 $74,973 23.6 %
Nine months ended    
Retail operations segment$1,090,818 $871,096 $219,722 25.2 %
Construction segment4,855 4,630 225 4.9 
Total SG&A$1,095,673 $875,726 $219,947 25.1 %


​

 Three Months EndedNine Months Ended
 October 30,
2021		October 31,
2020		October 30,
2021		October 31,
2020
SG&A as a percentage of segment net sales:    
Retail operations segment26.8 %31.8 %25.4 %33.0 %
Construction segment8.3 4.9 5.8 5.0 
Total SG&A as a percentage of net sales26.5 31.0 25.0 32.1 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

April 30,

    

May 1,

    

​

​

    

​

 

(in thousands of dollars)

​

2022

​

2021

​

$ Change

​

% Change

​

SG&A:

​

​

​

​

​

​

​

​

��

​

​

 

Three months ended

​

 

  

​

 

  

​

 

  

 

  

​

Retail operations segment

​

$

398,869

​

$

335,143

​

$

63,726

 

19.0

%

Construction segment

​

 

1,904

​

 

1,471

​

 

433

 

29.4

​

Total SG&A

​

$

400,773

​

$

336,614

​

$

64,159

 

19.1

%

​

​

​

​

​

​

​

​

    

Three Months Ended

 

​

​

April 30,

​

May 1,

 

​

​

2022

    

2021

​

SG&A as a percentage of segment net sales:

​

​

​

​

 

Retail operations segment

​

25.2

%  

25.8

%

Construction segment

 

6.2

 

4.6

​

Total SG&A as a percentage of net sales

 

24.9

 

25.3

​

​

SG&A decreased to 26.5%24.9% of sales during the three months ended OctoberApril 30, 20212022 compared to 31.0%25.3% of sales during the three months ended October 31, 2020,May 1, 2021, while increasing $75.0$64.2 million. SG&A from retail operations decreased to 26.8%25.2% of sales for the three months ended OctoberApril 30, 20212022 compared to 31.8%25.8% of sales for the three months ended October 31, 2020,May 1, 2021, while increasing $74.7$63.7 million. The dollar increase in SG&A dollars wasoperating expenses is primarily due to increasesincreased payroll and payroll-related expenses in payroll expensethe current highly competitive wage environment. The Company remains focused on hiring, developing and related payroll taxes.retaining talented associates.


20

SG&A decreased to 25.0%

Table of sales during the nine months ended October 30, 2021 compared to 32.1% of sales during the nine months ended October 31, 2020, while increasing $219.9 million. SG&A from retail operations decreased to 25.4% of sales for the nine months ended October 30, 2021 compared to 33.0% of sales for the nine months ended October 31, 2020, while increasing $219.7 million. The increase in SG&A dollars was primarily due to increases in payroll expense and related payroll taxes.Contents


Payroll expense and related payroll taxes for the three months ended OctoberApril 30, 20212022 was $261.5$272.3 million compared to $207.5$225.4 million for the three months ended October 31, 2020,May 1, 2021, increasing $53.9$46.9 million. Payroll

Other Expense

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

April 30,

    

May 1,

    

​

​

    

​

 

(in thousands of dollars)

​

2022

​

2021

​

$ Change

​

% Change

​

Other expense:

​

​

​

​

​

​

​

​

​

​

​

 

Three months ended

​

 

  

​

 

  

​

 

  

 

  

​

Retail operations segment

​

$

1,936

​

$

4,964

​

$

(3,028)

 

(61.0)

%

Construction segment

​

 

—

​

 

—

​

 

—

 

—

​

Total other expense

​

$

1,936

​

$

4,964

​

$

(3,028)

 

(61.0)

%

​

Other expense and related payroll taxes for the nine months ended October 30, 2021 was $733.5decreased $3.0 million compared to $560.1 million for the nine months ended October 31, 2020, increasing $173.4 million. During the first nine months of fiscal 2020, the Company (a) furloughed store associates as stores temporarily closed due to the COVID-19 pandemic and furloughed associates in certain corporate and support facility functions and (b) reduced 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 third quarter of fiscal 2019, SG&A from retail operations forduring the three months ended OctoberApril 30, 2021 and November 2, 2019 were $391.5 million (26.8% of sales) and $416.7 million (31.2% of sales), respectively, decreasing $25.2 million. SG&A from retail operations for the nine months ended October 30, 2021 was $1,090.8 million (25.4% of sales) compared to $1,227.6 million (29.7% of sales) for the nine months ended November 2, 2019, decreasing $136.8 million primarily due to decreases in payroll expense and related payroll taxes. The Company continues to operate with reduced operating hours and fewer associates. With regard to operational staffing, management is particularly focused on the existing tight labor market, seeking to hire permanent and seasonal talent across multiple functions.

25
Depreciation and Amortization
(in thousands of dollars)October 30,
2021		October 31,
2020		$ Change% Change
Depreciation and amortization:    
Three months ended    
Retail operations segment$50,122 $53,290 $(3,168)(5.9)%
Construction segment66 87 (21)(24.1)
Total depreciation and amortization$50,188 $53,377 $(3,189)(6.0)%
Nine months ended    
Retail operations segment$146,441 $154,806 $(8,365)(5.4)%
Construction segment198 423 (225)(53.2)
Total depreciation and amortization$146,639 $155,229 $(8,590)(5.5)%

Depreciation and amortization expense decreased $3.2 million and $8.6 million during the three and nine months ended October 30, 20212022 compared to the three and nine months ended October 31, 2020 primarily due to the timing and composition of capital expenditures.

Interest and Debt Expense, Net
(in thousands of dollars)October 30,
2021		October 31,
2020		$ Change% Change
Interest and debt expense (income), net:    
Three months ended    
Retail operations segment$10,557 $12,167 $(1,610)(13.2)%
Construction segment(7)(5)(2)(40.0)
Total interest and debt expense, net$10,550 $12,162 $(1,612)(13.3)%
Nine months ended    
Retail operations segment$32,889 $37,343 $(4,454)(11.9)%
Construction segment(33)(38)5 13.2 
Total interest and debt expense, net$32,856 $37,305 $(4,449)(11.9)%
Net interest and debt expense decreased $1.6 million and $4.4 million during the three and nine months ended October 30,May 1, 2021 compared to the three and nine months ended October 31, 2020, respectively, primarily due to a decrease of short-term borrowings under the credit facility. Total weighted average debt decreased by $75.7 million and $186.1 million during the three and nine months ended October 30, 2021 compared to the three and nine months ended October 31, 2020, respectively, primarily due to a decrease of short-term borrowings under the credit facility.

26
Other Expense
(in thousands of dollars)October 30,
2021		October 31,
2020		$ Change% Change
Other expense:    
Three months ended    
Retail operations segment$2,134 $2,105 $29 1.4 %
Construction segment— — — — 
Total other expense$2,134 $2,105 $29 1.4 %
Nine months ended    
Retail operations segment$9,232 $6,313 $2,919 46.2 %
Construction segment— — — — 
Total other expense$9,232 $6,313 $2,919 46.2 %

Other expense increased $2.9 million during the nine months ended October 30, 2021 compared to the nine months ended October 31, 2020 primarily due to the write-off of certain deferred financing fees in connection with the amendment and extension of the Company'sCompany’s secured revolving credit facility.

(Gain) Lossfacility during the first quarter of fiscal 2021.

Gain on Disposal of Assets

(in thousands of dollars)October 30,
2021		October 31,
2020		$ Change
(Gain) loss on disposal of assets:   
Three months ended   
Retail operations segment$(4)$2,234 $(2,238)
Construction segment— (13)13 
Total (gain) loss on disposal of assets$(4)$2,221 $(2,225)
Nine months ended   
Retail operations segment$(24,683)$2,261 $(26,944)
Construction segment(3)(26)23 
Total (gain) loss on disposal of assets$(24,686)$2,235 $(26,921)


​

​

​

​

​

​

​

​

​

​

​

​

    

April 30,

    

May 1,

    

​

​

(in thousands of dollars)

​

2022

​

2021

​

​

$ Change

(Gain) loss on disposal of assets:

​

​

​

​

​

​

​

  

​

Three months ended

​

 

  

​

 

  

​

 

  

Retail operations segment

​

$

(7,240)

​

$

(24,673)

​

$

17,433

Construction segment

​

 

3

​

 

—

​

 

3

Total gain on disposal of assets

​

$

(7,237)

​

$

(24,673)

​

$

17,436

​

During the ninethree months ended OctoberApril 30, 2022, the Company recorded proceeds of $8.1 million primarily from the sale of one store property, resulting in a gain of $7.2 million that was recorded in gain on disposal of assets.

During the three months ended May 1, 2021, the Company recorded proceeds of $29.3 million primarily from the sale of three store properties, resulting in a gain of $24.7 million that was recorded in (gain) lossgain on disposal of assets.


During the three and nine months ended October 31, 2020, 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 (gain) loss on disposal of assets.

Income Taxes


The Company’s estimated federal and state effective income tax rate was approximately 22.5% and 22.2% for the three and nine months ended OctoberApril 30, 2021.2022 and May 1, 2021, respectively. During the three and nine months ended OctoberApril 30, 2022 and May 1, 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 was in a net operating loss position for the fiscal year ended January 30, 2021. The 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 estimated federal and state effective income tax rate was approximately 46.9% for the nine months ended October 31, 2020. During the three and nine months ended October 31, 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 million and $64.6 million, respectively, related to the rate differential in the carryback year. Income tax benefit for the three and nine months also included the effects of state and local income taxes.

27

The Company expects the fiscal 20212022 federal and state effective income tax rate to approximate 20% to 21%22%. This rate includes an expected federal income tax benefit due to a one-time deduction related to that portion of the special dividend of $15 per share to be paid to the Dillard's, Inc. Investment and Employee Stock Ownership Plan. This rate may change if results of operations for fiscal 20212022 differ from management’s current expectations. Changes in the Company’s assumptions and judgments can materially affect amounts recognized in the condensed consolidated financial statements.


21


Table of Contents

FINANCIAL CONDITION

A summary of net cash flows for the ninethree months ended OctoberApril 30, 2022 and May 1, 2021 and October 31, 2020 follows:

 Nine Months Ended 
(in thousands of dollars)October 30,
2021		October 31,
2020		$ Change
Operating Activities$728,083 $(62,938)$791,021 
Investing Activities(45,179)(50,352)5,173 
Financing Activities(423,522)(102,663)(320,859)
Total Increase (Decrease) in Cash and Cash Equivalents$259,382 $(215,953)$475,335 

​

​

​

​

​

​

​

​

​

​

​

​

    

Three Months Ended

    

​

​

​

​

April 30,

​

May 1,

​

​

​

(in thousands of dollars)

​

2022

    

2021

​

$ Change

Operating Activities

​

$

365,182

​

$

302,413

​

$

62,769

Investing Activities

 

​

(14,784)

 

​

14,183

 

​

(28,967)

Financing Activities

 

​

(204,984)

 

​

(61,015)

 

​

(143,969)

Total Increase in Cash and Cash Equivalents

​

$

145,414

​

$

255,581

​

$

(110,167)

​

Net cash flows from operations increased $791.0$62.8 million during the ninethree months ended OctoberApril 30, 20212022 compared to the ninethree months ended October 31, 2020May 1, 2021 due to significant increases in net income, primarily due to increases in gross profit, and changes in working capital. Compared to the first nine months of fiscal 2019, net cash flows provided by operations were $728.1 million for the nine months ended October 30, 2021 and $23.0 million for the nine months ended November 2, 2019, an increase of $705.1 million.


margin.

Wells Fargo owns and manages the Dillard'sDillard’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 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 receivedrecognized income of $54.1$17.2 million and $52.0$17.7 million from the Wells Fargo Alliance during the ninethree months ended OctoberApril 30, 2022 and May 1, 2021, and October 31, 2020, respectively.  The Company 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 ongoing cash compensation from the Wells Fargo Alliance.

During the ninethree months ended October 30,May 1, 2021, and October 31, 2020, the Company received proceeds from insurance of $2.9$1.8 million and $8.7 million, respectively, for claims filed for merchandise losses related to storm damage incurred at two stores.


Capital expenditures were $79.7$27.3 million and $52.1$16.9 million for the ninethree months ended OctoberApril 30, 20212022 and October 31, 2020,May 1, 2021, respectively. The capital expenditures were primarily related to equipment purchases, and the continued construction of twoone new stores duringstore and the current year.remodeling of existing stores. During the ninethree months ended OctoberApril 30, 2021,2022, the Company opened a new store at Mesa MallUniversity Place in Grand Junction, Colorado (100,000Orem, Utah (160,000 square feet). The Company has also announced plans to openreplace a new storeleased building at University PlaceWestgate Mall in Orem, UtahAmarillo, Texas with a newly remodeled owned facility in the Springfall of 2022 (160,000 square feet). Both opportunities arose from peer closures at those centers. 


2022.

During the ninethree months ended OctoberApril 30, 2021,2022, the Company received cash proceeds of $29.3$8.1 million and recorded a related gain of $24.7$7.2 million, primarily from the sale of three store properties: (1) a 120,000 square foot location at Cortana Mall in Baton Rouge, Louisiana, which was permanently closed and sold; (2) a 200,000 square foot location at Paradise Valley MallProvo Towne Centre in Phoenix, Arizona,Provo, Utah, which was sold during our first fiscal quarter and closed during our second fiscal quarter and (3) a

28
non-operating store property in Knoxville, Tennessee.May 2022. The Company also closed its leased clearance center at Valle VistaUniversity Square Mall in Harlingen, Texas (100,000Tampa, Florida (80,000 square feet) during the third quarter.first quarter of fiscal 2022. The Company has announced the upcoming closure of its leased location at the Sikes Center in Wichita Falls, Texas (150,000 square feet). There were no material costs associated or expected with any of 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.

During the ninethree months ended October 31, 2020,May 1, 2021, the Company received cash proceeds of $1.5$29.3 million and recorded a lossrelated gain of $2.2$24.7 million, primarily forfrom the sale of onethree store property in Slidell, Louisiana.

properties.

During the ninethree months ended OctoberApril 30, 2022, the Company received life insurance proceeds of $4.4 million related to one policy. During the three months ended May 1, 2021, the Company received proceeds from insurance of $3.8$1.8 million for claims filed for building losses related to storm damage incurred at two stores.


The Company had cash on hand of $619.7$862.2 million as of OctoberApril 30, 2021.  During the first quarter of fiscal 2020 and as part of our overall liquidity management strategy and2022. The Company maintains a credit facility (“credit agreement”) for peakgeneral corporate purposes including, among other uses, working capital requirements,financing, the Company maintained an unsecuredissuance of letters of credit, facility that providedcapital expenditures and, subject to certain restrictions, the repayment of existing indebtedness and share repurchases. The credit agreement provides a borrowing capacity of $800 million, subject to certain limitations as outlined in the credit agreement, with a $200 million expansion option ("credit agreement"). 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 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 nine months ended October 31, 2020, the Company paid $3.2 million in issuance costs related to the 2020 amended credit agreement, which were recorded in other assets on the condensed consolidated balance sheet.

option.

In April 2021, the Company further amended its securedthe credit agreement (the “2021 amended credit agreement”amendment”). See Note 7, Revolving Credit Agreement, in the "Notes“Notes to Condensed Consolidated Financial Statements,"” in Part I, Item I hereof for additional information. During the ninethree months ended October 30,May 1, 2021, the Company paid $3.0$2.7 million in issuance costs related to the 2021 amended credit agreement,amendment, 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

22

Table of Contents

financing fees related to the 2020 amended creditprevious agreement. This charge was recorded in other expense on the condensed consolidated statement of operations.


income.

At OctoberApril 30, 2021,2022, no borrowings were outstanding, and letters of credit totaling $20.1$19.3 million were issued under the 2021 amended credit agreement leaving unutilized availability under the credit facility of $779.9$780.7 million.


During the ninethree months ended OctoberApril 30, 2021,2022, the Company repurchased 2.60.7 million shares of Class A Common Stock at an average price of $158.40$253.72 per share for $410.3$186.5 million (including the accrual of $1.6 million of share repurchases that had not settled as of April 30, 2022) under its stock repurchase plans. During the nine months ended October 31, 2020,plans, and the Company (a) repurchased 2.2 million shares of Class A Common Stock at an average price of $42.83 per share for $95.6 million under its stock repurchase plan and (b) paid $7.3$16.2 million for share repurchases that had not yet settled but were accrued at FebruaryJanuary 29, 2022. During the three months ended May 1, 2020. As of October 30, 2021, the Company repurchased 0.6 million shares of Class A Common Stock at an average price of $94.12 per share for $58.8 million (including the accrual of $4.0 million of share repurchases that had completed the authorized purchasesnot settled as of May 1, 2021) under the March 2018 Plan, and $262.9its stock repurchase plan. As of April 30, 2022, $425.5 million of authorization remained under the May 2021 Plan.Company’s open stock repurchase plan. The ultimate disposition of the repurchased stock has not been determined. See Note 8, Stock Repurchase Programs, in the "Notes“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 impact on the Company's business, results of operations and financial position. Because there is still significant uncertainty around the effects of the COVID-19 pandemic on the Company's business operations, our profitability and liquidity may be further impacted if we are unable to appropriately manage our inventory levels and expenses relative to any change in consumer demand.

The Company expects to finance its operations during fiscal 20212022 from cash on hand, cash flows generated from operations and, if necessary, through the 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.

On November 18, 2021, the Company announced that its Board of Directors declared a special dividend of $15.00 per share. The dividend is payable on the Class A and Class B Common Stock of the Company on December 15, 2021 to shareholders of record as of November 29, 2021. The Company expects to fund the dividend from cash flows from operations.

There have been no material changes in the information set forth under caption “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 January 30, 2021. 

29,
2022.

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.


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“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 20212022 and beyond, statements concerning the opening of new stores or the closing of existing stores, statements regarding our competitive position, 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 concerning changes in loss trends, settlements and other costs related to our self-insurance programs, statements regarding the expected phase out of LIBOR, statements concerning expectations regarding the payment of dividends,

23

Table of Contents

statements regarding the impacts of inflation in fiscal 2022 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 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 and interest rates on 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 the Company’s ability to meet labor needs amid nationwide labor shortages and an intense competition for talent,talent; changes in consumer spending patterns, debt levels and their ability to meet credit obligations; high levels of unemployment; 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; worldglobal conflicts (including the recent conflict in Ukraine) and the possible impact on consumer spending patterns and other economic and demographic changes of similar or dissimilar nature. The Company'sCompany’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended January 30, 2021,29, 2022, contain other information on factors that may affect financial results or cause actual results to differ materially from forward-looking statements.

30

Item 3. Quantitative and Qualitative Disclosures About Market 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 January 30, 2021.

29, 2022.

​

Item 4. Controls and 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.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended OctoberApril 30, 20212022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

​

31

24

Table of Contents

PART II. OTHER INFORMATION


Item 1. Legal 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 DecemberJune 3, 2021,2022, 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.


There have been no material changes in 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 January 30, 2021.29, 2022.

​

32

25

Table of Contents

Item

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

(c)Purchases of Equity Securities

(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. Additionally, on August 10, 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. These transactions were exempt from registration under Section 3(a)(9) of the Securities Act of 1933.

(c)

Issuer Purchases of Equity Securities

Issuer Purchases of Equity Securities
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 1, 2021 through August 28, 202151,631 $195.50 51,631 $492,010,087 
August 29, 2021 through October 2, 2021801,715 194.27 801,715 336,264,571 
October 3, 2021 through October 30, 2021377,359 194.52 377,359 262,859,316 
Total1,230,705 $194.40 1,230,705 $262,859,316 


​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

    

​

​

    

(c) Total Number of Shares   

    

(d) Approximate Dollar Value of  

​

​

​

​

​

​

​

Purchased as Part

​

Shares that May

​

​

(a) Total Number 

​

​

​

​

of Publicly

​

Yet Be Purchased 

​

​

of Shares 

​

(b) Average Price 

​

Announced Plans 

​

Under the Plans 

Period

​

Purchased

​

Paid per Share

​

or Programs

​

or Programs

January 30, 2022 through February 26, 2022

​

462,748

​

$

244.56

​

462,748

​

$

498,854,110

February 27, 2022 through April 2, 2022

​

140,770

​

​

249.49

​

140,770

​

​

463,732,753

April 3, 2022 through April 30, 2022

​

131,599

​

​

290.47

​

131,599

​

​

425,507,216

Total

​

735,117

​

$

253.72

​

735,117

​

$

425,507,216

​

In March 2018,May 2021, the Company'sCompany’s Board of Directors authorized the repurchase of up to $500 million of the Company'sCompany’s Class A Common Stock under an open-ended stock repurchase plan ("March 2018 Plan"(“May 2021 Stock Plan”). In May 2021,February 2022, 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 ("May 2021 Plan"(“February 2022 Stock Plan”). During the three months ended OctoberApril 30, 2021,2022, the Company repurchased 1.20.7 million shares totaling $239.2$186.5 million under its stock repurchase plans. As of OctoberApril 30, 2021,2022, the Company had completed the authorized purchases under the March 2018May 2021 Stock Plan, and $262.9$425.5 million of authorization remained under the May 2021February 2022 Stock Plan.

Reference is made to the discussion in Note 8, Stock Repurchase 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.

​


33

26

Table of Contents

Item 6. Exhibits.

Number

Description

Number​

​

Description​

31.1

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

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)

​

​

​



34

27

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

​

​

DILLARD’S, INC.

​

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DILLARD’S, INC.

(Registrant)

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(Registrant)​

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Date:

June 3, 2022

Date:December 3, 2021

/s/ Phillip R. Watts

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Phillip R. Watts

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Senior Vice President, Co-Principal Financial Officer and Principal Accounting Officer

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/s/ Chris B. Johnson

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Chris B. Johnson

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Senior Vice President and Co-Principal Financial Officer

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