DILLARDS INC

Previous wording

For the three months ended May 4, 2024, the Company reported net income of $180.0 million ($11.09 per share) compared to net income of $201.5 million ($11.85 per share) for the prior year first quarter. Included in net income for the three months ended April 29, 2023 is a pretax gain of $1.8 million ($1.4 million after tax or $0.08 per share) primarily related to the sale of a store property.

Current wording

For the three months ended August 3, 2024, the Company reported net income of $74.5 million ($4.59 per share) compared to net income of $131.5 million ($7.98 per share) for the three months ended July 29, 2023.

Previous wording

Selling, general and administrative (“SG&A”) expenses for the three months ended May 4, 2024 increased to $426.7 million (27.5% of sales) from $406.4 million (25.7% of sales) for the prior year first quarter. The increase of $20.3 million is primarily the result of increased payroll expenses.

Current wording

Selling, general and administrative (“SG&A”) expenses for the three months ended August 3, 2024 increased to $433.7 million (29.1% of sales) from $412.5 million (26.3% of sales) for the prior year second quarter. The increase of $21.2 million was primarily due to increased payroll expenses.

Previous wording

Net cash provided by operating activities was $244.4 million for the three months ended May 4, 2024 compared to $280.9 million for the prior year first quarter.

Current wording

Net cash provided by operating activities was $176.0 million for the six months ended August 3, 2024 compared to $397.9 million for the prior year six-month period.

Previous wording

As of May 4, 2024, the Company had working capital of $1,577.9 million (including cash and cash equivalents of $817.8 million and short-term investments of $347.2 million) and $521.5 million of total debt outstanding, including $321.5 million of long-term debt and $200.0 million of subordinated debentures.

Current wording

As of August 3, 2024, the Company had working capital of $1,673.2 million (including cash and cash equivalents of $946.7 million and short-term investments of $123.8 million) and $521.5 million of total debt outstanding, including $321.5 million of long-term debt and $200.0 million of subordinated debentures.

Previous wording

The Company operated 274 Dillard’s stores, including 29 clearance centers, and an internet store as of May 4, 2024.

Current wording

The Company operated 273 Dillard’s stores, including 28 clearance centers, and an internet store as of August 3, 2024.

Previous wording

Net sales from the retail operations segment decreased $22.3 million, or approximately 1%, and sales in comparable stores decreased approximately 2% during the three months ended May 4, 2024 compared to the three months ended April 29, 2023. Sales in men’s apparel and accessories decreased significantly, while sales in juniors’ and children’s apparel and shoes decreased moderately. Sales in ladies’ apparel and home and furniture decreased slightly, while sales in ladies’ accessories and lingerie remained essentially flat. Sales in cosmetics increased significantly.

Current wording

Net sales from the retail operations segment decreased $72.1 million, or approximately 5%, and sales in comparable stores decreased approximately 5% during the three months ended August 3, 2024 compared to the three months ended July 29, 2023. Sales in men’s apparel and accessories, shoes and ladies’ apparel decreased significantly, while sales in juniors’ and children’s apparel and ladies’ accessories and lingerie decreased moderately. Sales in home and furniture increased slightly, while sales in cosmetics increased moderately.

Previous wording

The number of sales transactions decreased by 5% for the three months ended May 4, 2024 compared to the three months ended April 29, 2023, while the average dollars per sales transaction increased by 4%.

Current wording

The number of sales transactions decreased 8% for the three months ended August 3, 2024 compared to the three months ended July 29, 2023, while the average dollars per sales transaction increased 3%.

Previous wording

We recorded a return asset of $13.5 million and $13.9 million and an allowance for sales returns of $27.2 million and $27.8 million as of May 4, 2024 and April 29, 2023, respectively.

Current wording

We recorded a return asset of $11.5 million and $11.4 million and an allowance for sales returns of $20.1 million and $20.3 million as of August 3, 2024 and July 29, 2023, respectively.

Previous wording

During the three months ended May 4, 2024, net sales from the construction segment decreased $12.6 million, or approximately 18%, compared to the three months ended April 29, 2023, due to a decrease in construction activity. The remaining performance obligations related to executed construction contracts totaled $187.0 million as of May 4, 2024, increasing approximately 14% from February 3, 2024 and decreasing approximately 7% from April 29, 2023, respectively. We expect these remaining performance obligations to be satisfied over the next nine to eighteen months.

Current wording

During the three months ended August 3, 2024, net sales from the construction segment decreased $5.3 million, or approximately 8%, compared to the three months ended July 29, 2023 due to a decrease in construction activity. The remaining performance obligations related to executed construction contracts totaled $234.0 million as of August 3, 2024, increasing approximately 43% from February 3, 2024 and increasing approximately 11% from July 29, 2023, respectively. We expect these remaining performance obligations to be satisfied over the next nine to eighteen months.

Previous wording

Service charges and other income is composed primarily of income from the Wells Fargo Alliance. Income from the alliance decreased $5.2 million partially due to increases in credit losses.

Current wording

Service charges and other income is composed primarily of income from the Wells Fargo Alliance. Income from the alliance decreased $4.5 million and $9.8 million for the three and six months ended August 3, 2024 compared to July 29, 2023, respectively, partially due to increases in credit losses and decreases in finance charge income due to lower receivable balances.

Previous wording

Gross margin, as a percentage of sales, increased to 44.6% from 43.7% during the three months ended May 4, 2024 compared to the three months ended April 29, 2023.

Current wording

Gross margin, as a percentage of sales, decreased to 37.6% from 38.8% during the three months ended August 3, 2024 compared to the three months ended July 29, 2023, respectively.

Previous wording

Gross margin from retail operations, as a percentage of sales, increased to 46.2% from 45.6% during the three months ended May 4, 2024 compared to the three months ended April 29, 2023. Gross margin increased moderately in home and furniture and ladies’ accessories and lingerie, while increasing slightly in men’s apparel and accessories, ladies’ apparel and juniors’ and children’s apparel. Gross margin remained essentially flat in shoes and cosmetics.

Current wording

Gross margin from retail operations, as a percentage of sales, decreased to 39.1% from 40.4% during the three months ended August 3, 2024 compared to the three months ended July 29, 2023, respectively. Gross margin decreased moderately in ladies’ apparel, home and furniture, ladies’ accessories and lingerie and shoes, while decreasing slightly in juniors’ and children’s apparel and cosmetics. Gross margin remained essentially flat in men’s apparel and accessories.

Previous wording

Total inventory decreased 2% at May 4, 2024 compared to April 29, 2023. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $1 million for the three months ended May 4, 2024.

Current wording

Total inventory was essentially flat at August 3, 2024 compared to July 29, 2023. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $2 million and $3 million for the three and six months ended August 3, 2024, respectively.

Previous wording

Inflation and rising interest costs continue to be a concern for management. The extent to which our business will be affected by inflation and rising interest costs depends on our customers’ continuing ability and willingness to accept price increases.

Current wording

Inflation and higher interest costs continue to be a concern for management. The extent to which our business will be affected by inflation and higher interest costs depends on our customers’ continuing ability and willingness to accept higher prices.

Previous wording

SG&A increased to 27.5% of sales during the three months ended May 4, 2024 from 25.7% of sales during the three months ended April 29, 2023, an increase of $20.3 million. SG&A from retail operations increased to 28.4% of sales for the three months ended May 4, 2024 from 26.7% of sales for the three months ended April 29, 2023, an increase of $19.7 million.

Current wording

SG&A increased to 29.1% of sales during the three months ended August 3, 2024 from 26.3% of sales during the three months ended July 29, 2023, an increase of $21.1 million. SG&A from retail operations increased to 30.2% of sales for the three months ended August 3, 2024 from 27.4% of sales for the three months ended July 29, 2023, an increase of $20.3 million.

Previous wording

The dollar increase in operating expenses in the three month period is primarily due to increased payroll expense. Payroll and payroll-related expenses for the three months ended May 4, 2024 were $302.2 million compared to $282.3 million for the three months ended April 29, 2023, increasing $19.9 million.

Current wording

The dollar increase in operating expenses in both the three and six-month periods is primarily due to increased payroll expense. Payroll and payroll-related expenses for the three months ended August 3, 2024 were $304.3 million compared to $290.8 million for the three months ended July 29, 2023, increasing $13.5 million. Payroll and payroll-related expenses for the six months ended August 3, 2024 were $606.5 million compared to $573.1 million for the six months ended July 29, 2023, increasing $33.4 million. The Company is working to better align expenses with sales performance.

Previous wording

Net interest and debt (income) expense improved $3.7 million during the three months ended May 4, 2024 compared to the three months ended April 29, 2023, primarily due to an increase in interest income. Interest income was $13.6 million and $10.0 million for the three months ended May 4, 2024 and April 29, 2023, respectively.

Current wording

Net interest and debt (income) expense improved $4.1 million and $7.7 million during the three and six months ended August 3, 2024 compared to the three and six months ended July 29, 2023, primarily due to an increase in interest income. Interest income was $13.7 million and $10.0 million for the three months ended August 3, 2024 and July 29, 2023, respectively, and interest income was $27.3 million and $20.0 million for the six months ended August 3, 2024 and July 29, 2023, respectively.

Previous wording

Other expense increased $1.5 million during the three months ended May 4, 2024 compared to the three months ended April 29, 2023 due to an increase in the interest cost and the amortization of the net actuarial loss related to the Company’s Pension Plan.

Current wording

Other expense increased $1.5 million and $2.9 million during the three and six months ended August 3, 2024 compared to the three and six months ended July 29, 2023 due to an increase in the interest cost and the amortization of the net actuarial loss related to the Company’s Pension Plan.

Previous wording

During the three months ended April 29, 2023, the Company recorded proceeds of $1.9 million primarily from the sale of one store property, resulting in a gain of $1.8 million that was recorded in gain on disposal of assets.

Current wording

During the six months ended July 29, 2023, the Company recorded proceeds of $2.2 million primarily from the sale of one store property, resulting in a gain of $2.0 million that was recorded in gain on disposal of assets.

Previous wording

The Company’s estimated federal and state effective income tax rate was approximately 23.3% and 23.4% for the three months ended May 4, 2024 and April 29, 2023, respectively. During the three months ended May 4, 2024 and April 29, 2023, 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.

Current wording

The Company’s estimated federal and state effective income tax rate was approximately 23.3% and 23.4% for the three and six months ended August 3, 2024 and July 29, 2023, respectively. During the three and six months ended August 3, 2024 and July 29, 2023, 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.

Previous wording

A summary of net cash flows for the three months ended May 4, 2024 and April 29, 2023 follows:

Current wording

A summary of net cash flows for the six months ended August 3, 2024 and July 29, 2023 follows:

Previous wording

Net cash flows from operations decreased $36.6 million during the three months ended May 4, 2024 compared to the three months ended April 29, 2023. This decrease was driven by increased payroll and payroll-related expenses.

Current wording

Net cash flows from operations decreased $221.9 million during the six months ended August 3, 2024 compared to the six months ended July 29, 2023. This decrease was driven by changes in income taxes payable, decreases in gross margin and increases in SG&A costs. The decrease in cash flow from changes in income taxes payable was primarily due to the Internal Revenue Service’s postponement of certain tax-filing and tax-payment deadlines at the end of the second quarter of fiscal 2023 for taxpayers affected by severe storms and tornadoes occurring in certain counties in Arkansas in early 2023.

Previous wording

Wells Fargo owns and manages the Dillard’s private label cards under the Wells Fargo Alliance. The Company recognized income of $11.6 million and $16.9 million from the Wells Fargo Alliance during the three months ended May 4, 2024 and April 29, 2023, respectively.

Current wording

Wells Fargo owns and manages the Dillard’s private label cards under the Wells Fargo Alliance. The Company recognized income of $24.4 million and $34.1 million from the Wells Fargo Alliance during the six months ended August 3, 2024 and July 29, 2023, respectively.

Previous wording

will replace the existing co-branded card. Additionally, Citi will provide customer service functions and support certain Dillard’s marketing and loyalty program activities related to the new program. The companies expect to launch the new program in late summer 2024 for new Dillard’s credit applicants. The transfer of existing accounts to Citi is expected in the fall of 2024. The term of the new Citi agreement is 10 years with automatic extensions for successive two-year terms unless the agreement is terminated by a party in accordance with the terms and conditions of the agreement.

Current wording

In January 2024, the Company announced that it entered into a new agreement with Citi to provide a credit card program for Dillard’s customers, replacing the existing Wells Fargo Alliance. The Dillard’s credit card program offered by Citi will include a new co-branded Mastercard as well as a private label credit card. The new co-branded Mastercard will replace the existing co-branded card. Additionally, Citi will provide customer service functions and support certain Dillard’s marketing and loyalty program activities related to the new program. The companies launched the new program on August 19, 2024 for new Dillard’s credit applicants. The transfer of existing accounts to Citi is expected in the fall of 2024. The term of the new Citi agreement is 10 years with automatic extensions for successive two-year terms unless the agreement is terminated by a party in accordance with the terms and conditions of the agreement.

Previous wording

Capital expenditures were $35.2 million and $32.3 million for the three months ended May 4, 2024 and April 29, 2023, respectively. The capital expenditures were primarily related to equipment purchases, the continued construction of new stores and the remodeling of existing stores. During the three months ended May 4, 2024, the Company opened a new location at The Empire Mall in Sioux Falls, South Dakota (140,000 square feet) marking its 30 th state of operation. During the three months ended April 29, 2023, the Company opened a 100,000 square foot expansion at Gateway Mall in Lincoln, Nebraska.

Current wording

Capital expenditures were $61.1 million and $63.8 million for the six months ended August 3, 2024 and July 29, 2023, respectively. The capital expenditures were primarily related to equipment purchases, the continued construction of new stores and the remodeling of existing stores. During the six months ended August 3, 2024, the Company opened a new location at The Empire Mall in Sioux Falls, South Dakota (140,000 square feet) marking its 30 th state of operation. During the six months ended July 29, 2023, the Company opened a 100,000 square foot expansion at Gateway Mall in Lincoln, Nebraska.

Previous wording

The Company has announced the upcoming closure of its Eastwood Mall Clearance Center in Niles, Ohio (120,000 square feet) in June of 2024. There are no material costs associated or expected with this store closure. We remain committed to closing under-performing stores where appropriate and may incur future closing costs related to such stores when they close.

Current wording

During the six months ended August 3, 2024, the Company closed its Eastwood Mall Clearance Center in Niles, Ohio (120,000 square feet). There were no material costs associated with this store closure. We remain committed to closing under-performing stores where appropriate and may incur future closing costs related to such stores when they close.

Previous wording

During the three months ended April 29, 2023, the Company received cash proceeds of $1.9 million and recorded a related gain of $1.8 million, primarily from the sale of one store property.

Current wording

During the six months ended July 29, 2023, the Company received cash proceeds of $2.2 million and recorded a related gain of $2.0 million, primarily from the sale of one store property.

Previous wording

During the three months ended May 4, 2024 and April 29, 2023, the Company purchased certain treasury bills for $245.9 million and $97.5 million, respectively, that are classified as short-term investments. During the three months ended May 4, 2024 and April 29, 2023, the Company received proceeds of $50.0 million and $150.0 million, respectively, related to maturities of these short-term investments.

Current wording

During the six months ended August 3, 2024 and July 29, 2023, the Company purchased certain treasury bills for $319.5 million and $148.1 million, respectively, that are classified as short-term investments. During the six months ended August 3, 2024 and July 29, 2023, the Company received proceeds of $350.9 million and $150.0 million, respectively, related to maturities of these short-term investments.

Previous wording

The Company had cash and cash equivalents of $817.8 million as of May 4, 2024. The Company maintains a credit facility (“credit agreement”) 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 is secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries and provides a borrowing capacity of $800 million, subject to certain limitations as outlined in the credit agreement, with a $200 million expansion option. See Note 7,Revolving Credit Agreement, in the “Notes to Condensed Consolidated Financial Statements,” in Part I, Item 1 hereof for additional information. At May 4, 2024, no borrowings were outstanding, and letters of credit totaling $25.8 million were issued under the credit agreement leaving unutilized availability of $774.2 million.

Current wording

The Company had cash and cash equivalents of $946.7 million as of August 3, 2024. The Company maintains a credit facility (“credit agreement”) 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 is secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries and provides a borrowing capacity of $800 million, subject to certain limitations as outlined in the credit agreement, with a $200 million expansion option. See Note 7,Revolving Credit Agreement, in the “Notes to Condensed Consolidated Financial Statements,” in Part I, Item 1 hereof for additional information. At August 3, 2024, no borrowings were outstanding, and letters of credit totaling $25.3 million were issued under the credit agreement leaving unutilized availability of $774.7 million.

Previous wording

During the three months ended May 4, 2024, no share repurchases were made under the Company’s stock repurchase plan. During the three months ended April 29, 2023, the Company repurchased 0.4 million shares of Class A Common Stock at an average price of $318.66 per share for $113.8 million (including the accrual of $10.7 million of share repurchases that had not settled as of April 29, 2023) under its stock repurchase plans. As of May 4, 2024, $394.0 million of authorization remained under the 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 to Condensed Consolidated Financial Statements,” in Part I, Item 1 hereof for additional information.

Current wording

During the six months ended August 3, 2024, no share repurchases were made under the Company’s stock repurchase plan. During the six months ended July 29, 2023, the Company repurchased 0.7 million shares of Class A Common Stock at an average price of $303.98 per share for $217.3 million under the Company’s stock repurchase plans. As of August 3, 2024, $394.0 million of authorization remained under the 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 to Condensed Consolidated Financial Statements,” in Part I, Item 1 hereof for additional information.

Previous wording

On August 16, 2022, the Inflation Reduction Act of 2022 ("the Act") was signed into law. Under the Act, the Company’s share repurchases after December 31, 2022 are subject to a 1% excise tax. During the three months ended

Current wording

On August 16, 2022, the Inflation Reduction Act of 2022 ("the Act") was signed into law. Under the Act, the Company’s share repurchases after December 31, 2022 are subject to a 1% excise tax. During the six months ended July 29, 2023, the Company accrued $2.2 million of excise tax related to its share repurchase programs as an additional cost of treasury shares.

Previous wording

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 2024 and beyond, statements regarding the launch of our new credit program and transfer of existing accounts to Citi, statements concerning the opening of new stores or the closing of existing stores, statements concerning capital expenditures, dividends and sources of liquidity, statements concerning share repurchases, statements concerning pension contributions, statements regarding the impacts of inflation and rising interest rates in fiscal 2024 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) general retail industry conditions and macro-economic conditions including inflation, rising interest rates, a potential U.S. Federal government shutdown, economic recession 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; changes in consumer spending patterns, debt levels and their ability to meet credit obligations; high levels of unemployment; changes in tax legis…

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Current wording

facts; and (c) statements about the Company’s future occurrences, plans and objectives, including statements regarding management’s expectations and forecasts for the 52-week period ended February 1, 2025 and beyond, statements regarding the launch of our new credit program and transfer of existing accounts to Citi, statements concerning the opening of new stores or the closing of existing stores, statements concerning capital expenditures, dividends and sources of liquidity, statements concerning share repurchases, statements concerning pension contributions, statements regarding the impacts of inflation and higher interest rates in fiscal 2024 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) general retail industry conditions and macro-economic conditions including inflation, higher interest rates, a potential U.S. Federal government shutdown, economic recession 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; changes in consumer spending patterns, debt levels and their ability to meet credit obligations; high levels of unemployment; changes in tax legislation (including the Inflation Reduction Act of 2022); changes in legislation and governmental regulations, affecting such matters as the cost of employee benefits or credit card income, such as the Consumer Financial Protection Bureau’s recent amendment to Regulation Z to limit the dollar amounts credit card companies can charge for late fees; adequate and stable availability and pricing of materials, production facilities and labor from which the Comp…

Excerpt shortened here; the source contains the full paragraph.