DILLARD'S, INC.

Previous wording

At February 3, 2024, Dillard’s, Inc. operates 273 retail department stores spanning 29 states and an Internet store at dillards.com. The Company also operates a general contracting construction company, CDI, a portion of whose business includes constructing and remodeling stores for the Company, which is a reportable segment separate from our retail operations.

Current wording

At February 1, 2025, Dillard’s, Inc. operates 272 retail department stores spanning 30 states and an Internet store at dillards.com. The Company also operates a general contracting construction company, CDI, a portion of whose business includes constructing and remodeling stores for the Company, which is a reportable segment separate from our retail operations.

Previous wording

In accordance with the National Retail Federation fiscal reporting calendar and our bylaws, the fiscal 2023 reporting period presented and discussed below ended February 3, 2024 and contained 53 weeks. The fiscal 2022 and 2021 reporting periods presented and discussed below ended January 28, 2023 and January 29, 2022, respectively, and each contained 52 weeks. For comparability purposes, where noted, some of the information discussed below is based upon comparison of the 52 weeks ended January 27, 2024 to the 52 weeks ended January 28, 2023.

Current wording

In accordance with the National Retail Federation fiscal reporting calendar and our bylaws, the fiscal 2024 reporting period presented and discussed below ended February 1, 2025 and contained 52 weeks. The fiscal 2023 reporting period presented and discussed below ended February 3, 2024 and contained 53 weeks. The fiscal 2022 reporting period presented and discussed below ended January 28, 2023 and contained 52 weeks. For comparability purposes, where noted, some of the information discussed below is based upon comparison of the 52 weeks ended February 1, 2025 to the 52 weeks ended February 3, 2024. Additionally, some of the information discussed below is based upon comparison of the 52 weeks ended January 27, 2024 to the 52 weeks ended January 28, 2023.

Previous wording

Total retail sales for the 53 weeks ended February 3, 2024 and 52 weeks ended January 28, 2023 were $6.480 billion and $6.702 billion, respectively. Total retail sales decreased 5% for the 52-week period ended January 27, 2024 compared to the 52-week period ended January 28, 2023. Sales in comparable stores for the same period decreased 4%.

Current wording

Total retail sales for the 52 weeks ended February 1, 2025 and 53 weeks ended February 3, 2024 were $6.219 billion and $6.480 billion, respectively. Total retail sales decreased 2% for the 52-week period ended February 1, 2025 compared to the 52-week period ended February 3, 2024. Sales in comparable stores for the same period decreased 3%.

Previous wording

Consolidated gross margin for fiscal 2023 was 40.3% of sales compared to 42.0% of sales for fiscal 2022. Retail gross margin for fiscal 2023 was 41.8% of sales compared to 43.0% of sales for fiscal 2022.

Current wording

Consolidated gross margin for fiscal 2024 was 39.5% of sales compared to 40.3% of sales for fiscal 2023. Retail gross margin for fiscal 2024 was 41.0% of sales compared to 41.8% of sales for fiscal 2023. Inventory increased 7% at February 1, 2025 compared to February 3, 2024.

Previous wording

Consolidated selling, general and administrative expenses (“operating expenses”)for fiscal 2023 were $1,717.4 million (25.4% of sales) compared to $1,674.3 million (24.4% of sales) for fiscal 2022. The increase in operating expenses is primarily due to increased payroll and payroll-related expenses and the additional week of operations in the 2023 fiscal year.

Current wording

Consolidated selling, general and administrative expenses (“operating expenses”) for fiscal 2024 were $1,731.2 million (26.7% of sales) compared to $1,717.4 million (25.4% of sales) for fiscal 2023. The increase in operating expenses is primarily due to increased payroll and payroll-related expenses largely occurring in the first half of the year. We intensified our expense control efforts in the back half of the year and made notable progress with such.

Previous wording

Included in net income for the prior year (fiscal 2022) is a pretax gain of $21.0 million ($16.4 million after tax or $0.94 per share) primarily related to the sale of three store properties. Also included in net income for fiscal 2022 are two tax-related benefits:

Current wording

Included in net income for the prior year (fiscal 2023) is a pretax gain of $6.1 million ($4.7 million after tax or $0.28 per share) primarily related to the sale of two store properties. Also included in net income for fiscal 2023 are the following tax-related benefits:

Previous wording

Cash flow from operations was $883.6 million for fiscal 2023 and $948.4 million for fiscal 2022. During fiscal 2023, we returned $620.0 million of cash to stockholders in the form of dividends ($338.6 million) and share repurchases ($281.4 million). At February 3, 2024, authorization of $394.0 million remained under the share repurchase program.

Current wording

Cash flow from operations was $714.1 million for fiscal 2024 and $883.6 million for fiscal 2023. During fiscal 2024, we returned $534.8 million of cash to stockholders in the form of dividends and share repurchases. At February 1, 2025, authorization of $273.0 million remained under the share repurchase program.

Previous wording

At February 3, 2024, we had working capital of $1,380.5 million (including cash and cash equivalents and short-term investments totaling $956.3 million) and total debt outstanding of $521.5 million excluding operating lease liabilities.

Current wording

At February 1, 2025, we had working capital of $1,533.2 million (including cash and cash equivalents and short-term investments totaling $1,043.5 million) and total debt outstanding of $521.6 million excluding operating lease liabilities.

Previous wording

At present, a number of economic and geopolitical factors are affecting the U.S. and world economies (including countries from which we source some of our merchandise): inflation and interest rate increases, fluctuating gas prices, uncertainty around shipping costs and shipping capacity and increased U.S. wages in a tight labor market. The extent to which our business will be affected by these factors depends on our customer’s continuing ability and willingness to accept price increases. Accordingly, the related financial impact to fiscal 2024 from these factors cannot be reasonably estimated at this time.

Current wording

At present, a number of economic and geopolitical factors are affecting the U.S. and world economies (including countries from which we source some of our merchandise): trade restrictions (including tariffs), inflation and the continuing impact of elevated United States wages. The extent to which our business will be affected by these factors depends on our customer’s continuing ability and willingness to accept price increases. Accordingly, the related financial impact to fiscal 2025 from these factors cannot be reasonably estimated at this time.

Previous wording

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

Current wording

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.

Previous wording

Service charges and other income. Service charges and other income includes income generated through the 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.

Current wording

Service charges and other income. Service charges and other income includes income generated through the Company’s private label credit card portfolio alliances. These alliances include the former marketing and servicing alliance with Wells Fargo Bank, N.A. (“Wells Fargo Alliance”), which terminated in September 2024, and the Company’s new long-term marketing and servicing alliance with Citibank, N.A (“Citibank Alliance”), which replaced the Wells Fargo Alliance upon its termination. Other income includes rental income, shipping and handling fees and gift card breakage.

Previous wording

The Company’s significant accounting policies are also described in Note 1 in the “Notes to Consolidated Financial Statements” in Item 8 hereof. As disclosed in that note, the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company evaluates its estimates and judgments on an ongoing basis and predicates those estimates and judgments on historical experience and on various other factors that are believed to be reasonable under

Current wording

The Company’s significant accounting policies are also described in Note 1 in the “Notes to Consolidated Financial Statements” in Item 8 hereof. As disclosed in that note, the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company evaluates its estimates and judgments on an ongoing basis and predicates those estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. Since future events and their effects cannot be determined with absolute certainty, actual results could differ from those estimates.

Previous wording

Merchandise inventory. All of the Company’s inventories are valued at the lower of cost or market using the last-in, first-out (“LIFO”) inventory method. Approximately 96% of the Company’s inventories are valued using the LIFO retail inventory method. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are calculated by applying a cost to retail ratio to the retail value of inventories. The retail inventory method is an averaging method that is widely used in the retail industry due to its practicality. Inherent in the retail inventory method calculation are certain significant management judgments including, among others, merchandise markon, markups and markdowns, which significantly impact the ending inventory valuation at cost as well as the resulting gross margins. During periods of deflation, inventory values on the first-in, first-out (“FIFO”) retail inventory method may be lower than the LIFO retail inventory method. Additionally, inventory values at LIFO cost may be in excess of net realizable value. At February 3, 2024 and January 28, 2023, merchandise inventories valued at LIFO, including adjustments as necessary to record inventory at the lower of cost or market, approximated the cost of such inventories using the FIFO retail inventory method. The application of the LIFO retail inventory method did not result in the recognition of any LIFO charges or credits affecting cost of sales for fiscal 2023, 2022 or 2021. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $8 million for fiscal 2023.

Current wording

Merchandise inventory. All of the Company’s inventories are valued at the lower of cost or market using the last-in, first-out (“LIFO”) inventory method. Approximately 95% of the Company’s inventories are valued using the LIFO retail inventory method. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are calculated by applying a cost to retail ratio to the retail value of inventories. The retail inventory method is an averaging method that is widely used in the retail industry due to its practicality. Inherent in the retail inventory method calculation are certain significant management judgments including, among others, merchandise markon, markups and markdowns, which significantly impact the ending inventory valuation at cost as well as the resulting gross margins. During periods of deflation, inventory values on the first-in, first-out (“FIFO”) retail inventory method may be lower than the LIFO retail inventory method. Additionally, inventory values at LIFO cost may be in excess of net

Previous wording

Revenue recognition. The Company’s retail operations segment recognizes revenue upon the sale of merchandise to its customers, net of anticipated returns of merchandise. The asset and liability for sales returns are based on historical evidence of our return rate. We recorded an allowance for sales returns of $21.9 million and $23.1 million and return assets of $12.8 million and $13.3 million as of February 3, 2024 and January 28, 2023, respectively. The return asset and the allowance for sales returns are recorded in the consolidated balance sheets in other current assets and trade accounts payable and accrued expenses, respectively. Adjustments to earnings resulting from revisions to estimates on our sales return provision were not material for fiscal 2023, 2022 and 2021.

Current wording

Revenue recognition. The Company’s retail operations segment recognizes revenue upon the sale of merchandise to its customers, net of anticipated returns of merchandise. The asset and liability for sales returns are based on historical evidence of our return rate. We recorded an allowance for sales returns of $21.5 million and $21.9 million and return assets of $13.0 million and $12.8 million as of February 1, 2025 and February 3, 2024, respectively. The return asset and the allowance for sales returns are recorded in the consolidated balance sheets in other current assets and trade accounts payable and accrued expenses, respectively. Adjustments to earnings resulting from revisions to estimates on our sales return provision were not material for fiscal 2024, 2023 and 2022.

Previous wording

The Company’s share of income under the Wells Fargo Alliance involving the Dillard’s branded private label credit cards is included as a component of service charges and other income. The Company recognized income of $67.2 million, $67.8 million and $74.8 million from the alliance in fiscal 2023, 2022 and 2021, respectively. The Company participates in the marketing of the private label credit cards, which includes the cost of customer reward programs. Through the reward programs, customers earn points that are redeemable for discounts on future purchases. The Company defers a portion of its net sales upon the sale of merchandise to its customer reward program members that is recognized in net sales when the reward is redeemed or expired at a future date.

Current wording

The Company’s share of income under the Citibank Alliance and the former Wells Fargo Alliance involving the Dillard’s branded private label credit cards is included as a component of service charges and other income. The Company recognized income of $54.1 million, $67.2 million and $67.8 million from the alliances in fiscal 2024, 2023 and 2022, respectively. The Company participates in the marketing of the private label credit cards, which includes the cost of customer reward programs. Through the reward programs, customers earn points that are redeemable for discounts on future purchases. The Company defers a portion of its net sales upon the sale of merchandise to its customer reward program members that is recognized in net sales when the reward is redeemed or expired at a future date.

Previous wording

Revenues from CDI construction contracts are generally measured based on the ratio of costs incurred to total estimated contract costs (the “cost-to-cost method”). Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations based on stand-alone selling prices. Construction contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of our contract modifications are for goods and services that are not distinct from the existing contracts; therefore, the modifications are accounted for as if they were part of the existing contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation for which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. The length of each contract varies but is typically nine to eighteen months. The progress towards completion is determined by relating the actual costs of work

Current wording

Revenues from CDI construction contracts are generally measured based on the ratio of costs incurred to total estimated contract costs (the “cost-to-cost method”). Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations based on stand-alone selling prices. Construction contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of our contract modifications are for goods and services that are not distinct from the existing contracts; therefore, the modifications are accounted for as if they were part of the existing contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation for which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. The length of each contract varies but is typically nine to eighteen months. The progress towards completion is determined by relating the actual costs of work performed to date to the current estimated total costs of the respective contracts. Estimated contract losses are recognized in full when determined.

Previous wording

Cooperative advertising allowances are reported as a reduction of advertising expense in the period in which the advertising occurred. If vendor advertising allowances were substantially reduced or eliminated, the Company would likely consider other methods of advertising as well as the volume and frequency of our product advertising, which could increase or decrease our expenditures. We are not able to assess the impact of vendor advertising allowances on creating additional revenues, as such allowances do not directly generate revenues for our stores.

Current wording

Cooperative advertising allowances are reported as a reduction of advertising expense in the period in which the advertising occurred. We are not able to assess the impact of vendor advertising allowances on creating additional revenues, as such allowances do not directly generate revenues for our stores.

Previous wording

Insurance accruals. The Company’s consolidated balance sheets include liabilities with respect to claims for self-insured workers’ compensation (with a self-insured retention of $4 million per claim) and general liability (with a self-insured retention of $2 million per claim). The Company’s retentions are insured through a wholly-owned captive insurance subsidiary. The Company estimates the required liability of such claims, utilizing an actuarial method, based upon various assumptions, which include, but are not limited to, our historical loss experience, projected loss development factors, actual payroll and other data. The required liability is also subject to adjustment in the future based upon the changes in claims experience, including changes in the number of incidents (frequency) and changes in the ultimate cost per incident (severity). As of February 3, 2024 and January 28, 2023, insurance accruals of $41.0 million and $42.5 million, respectively, were recorded in trade accounts payable and accrued expenses and other liabilities. A 10% change in our self-insurance reserve would have affected net income by approximately $3 million for fiscal 2023.

Current wording

Insurance accruals. The Company’s consolidated balance sheets include liabilities with respect to claims for self-insured workers’ compensation (with a self-insured retention of $4 million per claim) and general liability (with a self-insured retention of $2 million per claim). The Company’s retentions are insured through a wholly-owned captive insurance subsidiary. The Company estimates the required liability of such claims, utilizing an actuarial method, based upon various assumptions, which include, but are not limited to, our historical loss experience, projected loss development factors, actual payroll and other data. The required liability is also subject to adjustment in the future based upon the changes in claims experience, including changes in the number of incidents (frequency) and changes in the ultimate cost per incident (severity). As of February 1, 2025 and February 3, 2024, insurance accruals of $40.1 million and $41.0 million, respectively, were recorded in trade accounts payable and accrued expenses and other liabilities. A 10% change in our self-insurance reserve would have affected net income by approximately $3 million for fiscal 2024.

Previous wording

The Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the fair value, the carrying value is reduced to its fair value. Various factors including future sales growth, profit margins and real estate values are included in this analysis. To the

Current wording

The Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the fair value, the carrying value is reduced to its fair value. Various factors including future sales growth, profit margins and real estate values are included in this analysis. To the extent these future projections, the Company’s strategies or market conditions change, the conclusion regarding impairment may differ from the current estimates.

Previous wording

The total amount of unrecognized tax benefits as of February 3, 2024 was $8.1 million, of which, $6.0 million would, if recognized, affect the Company’s effective tax rate. The total amount of unrecognized tax benefits as of January 28, 2023 was $7.0 million, of which $5.3 million would, if recognized, affect the Company’s effective tax rate. The Company does not expect a significant change in unrecognized tax benefits in the next twelve months. The Company classifies accrued interest expense and penalties relating to income tax in the consolidated financial statements as income tax expense. The total amounts of interest and penalties were not material.

Current wording

The total amount of unrecognized tax benefits as of February 1, 2025 was $8.0 million, of which, $5.8 million would, if recognized, affect the Company’s effective tax rate. The total amount of unrecognized tax benefits as of February 3, 2024 was $8.1 million, of which $6.0 million would, if recognized, affect the Company’s effective tax rate. The Company does not expect a significant change in unrecognized tax benefits in the next twelve months. The Company classifies accrued interest expense and penalties relating to income tax in the consolidated financial statements as income tax expense. The total amounts of interest and penalties were not material.

Previous wording

The fiscal tax years that remain subject to examination for the federal tax jurisdiction are 2015, 2016 and 2019 and forward. At this time, the Company does not expect the results from any income tax audit to have a material impact on the Company’s consolidated financial statements.

Current wording

The fiscal tax years that remain subject to examination for the federal tax jurisdiction and major state tax jurisdictions are 2021 and forward. At this time, the Company does not expect the results from any income tax audit to have a material impact on the Company’s consolidated financial statements.

Previous wording

Pension obligations. The discount rate that the Company utilizes for determining future pension obligations is based on the FTSE Above Median Pension yield curve on its annual measurement date as of the end of each fiscal year and is matched to the future expected cash flows of the benefit plans by semi-annual periods. The discount rate increased to 5.1% as of February 3, 2024 from 4.8% as of January 28, 2023. We believe that these assumptions have been appropriate and that, based on these assumptions, the pension liability of $316.5 million is appropriately stated as of February 3, 2024; however, actual results may differ materially from those estimated and could have a material impact on our consolidated financial statements. A further 50 basis point change in the discount rate would increase or decrease the pension liability by approximately $16 million. The Company expects to make a contribution to the pension plan of approximately $7.1 million in fiscal 2024. The Company expects pension expense to be approximately $31.0 million in fiscal 2024.

Current wording

Pension obligations. The discount rate that the Company utilizes for determining future pension obligations is based on the FTSE Above Median Pension yield curve on its annual measurement date as of the end of each fiscal year and is matched to the future expected cash flows of the benefit plans by semi-annual periods. The discount rate increased to 5.6% as of February 1, 2025 from 5.1% as of February 3, 2024. We believe that these assumptions have been appropriate and that, based on these assumptions, the pension liability of $298.9 million is appropriately stated as of February 1, 2025; however, actual results may differ materially from those estimated and could have a material impact on our consolidated financial statements. A 50 basis point change in the discount rate would increase or decrease the pension liability by approximately $15 million. The Company expects to make a contribution to the pension plan of approximately $8.2 million in fiscal 2025. The Company expects pension expense to be approximately $25.9 million in fiscal 2025.

Previous wording

Net sales from the retail operations segment decreased $222.4 million during the 53-week period ended February 3, 2024 compared to the 52-week period ended January 28, 2023, decreasing 3% in total store sales. Sales in comparable stores decreased 4% for the 52-week period ended January 27, 2024 compared to the 52-week period ended January 28, 2023. During the same 52-week periods, sales of juniors’ and children’s apparel, ladies’ accessories and lingerie, men’s apparel and accessories, ladies’ apparel and shoes decreased significantly, while sales of home and furniture decreased moderately. Sales of cosmetics increased moderately.

Current wording

Net sales from the retail operations segment decreased $261.1 million during the 52-week period ended February 1, 2025 compared to the 53-week period ended February 3, 2024, decreasing 4% in total store sales. Sales in comparable stores decreased 3% for the 52-week period ended February 1, 2025 compared to the 52-week period ended February 3, 2024. During the same 52-week periods, sales of men’s apparel and accessories decreased significantly, while sales of shoes, juniors’ and children’s apparel and ladies’ apparel decreased moderately. Sales of ladies’ accessories and lingerie decreased slightly. Sales of home and furniture increased slightly, while sales of cosmetics increased moderately.

Previous wording

The number of sales transactions during the 53-week period ended February 3, 2024 decreased 6% over the 52-week period ended January 28, 2023, while the average dollars per sales transaction increased 3%.

Current wording

The number of sales transactions during the 52-week period ended February 1, 2025 decreased 7% over the 53-week period ended February 3, 2024, while the average dollars per sales transaction increased 3%.

Previous wording

Net sales from the construction segment increased $103.4 million or 61% during fiscal 2023 compared to fiscal 2022 due to an increase in construction activity. The remaining performance obligations related to executed construction contracts totaled $163.7 million, decreasing approximately 13% from January 28, 2023.

Current wording

Net sales from the construction segment decreased $8.4 million or 3% during fiscal 2024 compared to fiscal 2023 due to a decrease in construction activity. The remaining performance obligations related to executed construction contracts totaled $202.8 million at February 1, 2025, increasing approximately 24% from February 3, 2024.

Previous wording

Sales penetration of exclusive brand merchandise for fiscal 2023, 2022 and 2021 was 23.5%, 23.8% and 22.7% of total net sales, respectively.

Current wording

Sales penetration of exclusive brand merchandise for fiscal 2024, 2023 and 2022 was 22.7%, 23.5% and 23.8% of total net sales, respectively.

Previous wording

Service charges and other income is composed primarily of income from the Wells Fargo Alliance. 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. While future cash flows under this new program are difficult to predict, the Company expects income from the new program to initially be less than historical earnings from the Wells Fargo Alliance. The extent to which future cash flows will vary over the term of the new program from historical cash flows cannot be reasonably estimated at this time.

Current wording

Service charges and other income is composed primarily of income from the Citibank Alliance and former Wells Fargo Alliance. During the third quarter of fiscal 2024, the Company transitioned to its new agreement with Citi to provide a credit card program for Dillard’s customers, replacing the existing Wells Fargo Alliance. While future cash flows under this new program are difficult to predict, the Company expects income from the new program to initially be less than historical earnings from the Wells Fargo Alliance. The extent to which future cash flows will vary over the term of the new program from historical cash flows cannot be reasonably estimated at this time. Income from the alliances decreased $13.2 million in fiscal 2024 compared to fiscal 2023.

Previous wording

Gross margin as apercentage of net sales decreased 170 basis points of sales during fiscal 2023 compared to fiscal 2022. Gross margin from retail operations decreased 120 basis points of segment net sales during the same periods. During fiscal 2023, gross margin decreased moderately in men’s apparel and accessories and juniors’ and children’s apparel, while decreasing slightly in shoes. Gross margin was essentially flat in ladies’ apparel, ladies’ accessories and lingerie and cosmetics. Gross margin increased moderately in home and furniture. Retail store inventory decreased 2% at February 3, 2024 compared to January 28, 2023.

Current wording

Consolidated gross margin and gross margin from retail operations decreased 80 basis points of sales during fiscal 2024 compared to fiscal 2023. During fiscal 2024, gross margin decreased moderately in home and furniture and ladies’ apparel, while gross margin decreased slightly in shoes and cosmetics. Gross margin was essentially flat in juniors’ and children’s apparel, men’s apparel and accessories and ladies’ accessories and lingerie. Retail store inventory increased 7% at February 1, 2025 compared to February 3, 2024.

Previous wording

Inflation and rising interest costs, and the related impact on consumer sentiment, 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 trade restrictions, including tariffs, are a concern for management. The extent to which our business will be affected by these factors depends on our customers’ continuing ability and willingness to accept higher costs.

Previous wording

Gross margin from the construction segment decreased 70 basis points of segment net sales during fiscal 2023 compared to fiscal 2022.

Current wording

Gross margin from the construction segment increased 30 basis points of segment net sales during fiscal 2024 compared to fiscal 2023.

Previous wording

SG&A increased $43.1 million and 100 basis points of sales during the 53 weeks ended February 3, 2024 compared to the 52 weeks ended January 28, 2023. The increase in operating expenses is primarily due to increased payroll and payroll-related expenses and the additional week of operations in the 2023 fiscal year.

Current wording

SG&A increased $13.8 million and 130 basis points of sales during the 52 weeks ended February 1, 2025 compared to the 53 weeks ended February 3, 2024. The increase in operating expenses is primarily due to increased payroll and payroll-related expenses, largely occurring in the first half of the year.

Previous wording

Net interest and debt (income) expense improved $35.1 million in fiscal 2023 compared to fiscal 2022 primarily due to an increase in interest income. Total weighted average debt outstanding during fiscal 2023 decreased $41.4 million compared to fiscal 2022 primarily due to a note maturity at the end of fiscal 2022.

Current wording

Net interest and debt (income) expense improved $9.1 million in fiscal 2024 compared to fiscal 2023 primarily due to an increase in interest income. Interest income was $53.5 million and $45.2 million in fiscal 2024 and fiscal 2023, respectively.

Previous wording

Other expense increased $11.0 million in fiscal 2023 compared to fiscal 2022 primarily 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 $5.8 million in fiscal 2024 compared to fiscal 2023 primarily 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

The Company’s estimated federal and state effective income tax rate was 19.4% in fiscal 2023, 19.6% in fiscal 2022 and 20.8% in fiscal 2021. The Company expects the fiscal 2024 federal and state effective income tax rate to approximate 23%.

Current wording

The Company’s estimated federal and state effective income tax rate was 18.7% in fiscal 2024, 19.4% in fiscal 2023 and 19.6% in fiscal 2022. The Company expects the fiscal 2025 federal and state effective income tax rate to approximate 23%.

Previous wording

During fiscal 2022, income taxes included federal and state tax benefits of $19.3 million due to the deduction related to that portion of the Company’s dividends that were paid to the Dillard’s, Inc. Investment and Employee Stock Ownership Plan, including the special dividend of $15.00 per share paid on January 9, 2023. Income taxes also included a net $13.7 million income tax benefit due to the release of valuation allowances primarily related to increases in the expected future utilization of state net operating loss carryforwards.

Current wording

During fiscal 2024, income taxes included federal and state tax benefits of $30.8 million due to the deduction related to that portion of the special dividend of $25.00 per share that was paid to the Dillard’s, Inc. Investment and Employee Stock Ownership Plan on January 6, 2025.

Previous wording

During fiscal 2023, income taxes included federal and state tax benefits of $27.2 million due to the deduction related to that portion of the Company’s dividends that were paid to the Dillard’s, Inc. Investment and Employee Stock Ownership Plan, including the special dividend of $20.00 per share paid on January 8, 2024. Income taxes also included a net $9.8 million income tax benefit due to the release of valuation allowances primarily related to increases in the expected future utilization of state net operating loss carryforwards.

Current wording

During fiscal 2023, income taxes included federal and state tax benefits of $26.1 million due to the deduction related to that portion of the special dividend of $20.00 per share that was paid to the Dillard’s, Inc. Investment and Employee Stock Ownership Plan on January 8, 2024. Income taxes also included a net $9.8 million income tax benefit due to the release of valuation allowances primarily related to increases in the expected future utilization of state net operating loss carryforwards.

Previous wording

On August 16, 2022, the Inflation Reduction Act of 2022 ("the Act") was signed into law. The Act includes, among other provisions, a new 15% corporate alternative minimum tax (“CAMT”), effective January 1, 2023, which has no impact on the Company’s consolidated financial results for the year ended February 3, 2024.

Current wording

On August 16, 2022, the Inflation Reduction Act of 2022 ("the Act") was signed into law. The Act includes, among other provisions, a new 15% corporate alternative minimum tax (“CAMT”), effective January 1, 2023, which had no impact on the Company’s consolidated financial results for the years ended February 1, 2025 and February 3, 2024.

Previous wording

The primary source of the Company’s liquidity is, and historically has been, cash flows from operations. Due to the seasonality of the Company’s business, we have historically realized a significant portion of the cash flows from operating activities during the second half of the fiscal year. Retail operations sales are the key operating cash component, providing 94.3%, 95.8% and 96.2% of total revenues in fiscal 2023, 2022 and 2021, respectively.

Current wording

The primary source of the Company’s liquidity is, and historically has been, cash flows from operations. Due to the seasonality of the Company’s business, we have historically realized a significant portion of the cash flows from operating activities during the second half of the fiscal year. Retail operations sales are the key operating cash component, providing 94.4%, 94.3% and 95.8% of total revenues in fiscal 2024, 2023 and 2022, respectively.

Previous wording

Net cash flows from operations decreased $64.8 million during fiscal 2023 compared to fiscal 2022 primarily due to reduced sales and lower margins.

Current wording

Net cash flows from operations decreased $169.5 million during fiscal 2024 compared to fiscal 2023 primarily due to reduced sales and lower margins.

Previous wording

Operating cash inflows also include the Company’s income and reimbursements from the Wells Fargo Alliance and cash distributions from joint ventures (excluding returns of investments), if any. Operating cash outflows include payments to vendors for inventory, services and supplies, payments to employees and payments of interest and taxes.

Current wording

Operating cash inflows also include the Company’s income from the Citibank Alliance, former Wells Fargo Alliance and cash distributions from joint ventures (excluding returns of investments), if any. Operating cash outflows include net payments to vendors for inventory, services and supplies, payments to employees and payments of interest and taxes.