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What changed in DILLARD'S, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of DILLARD'S, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+201 added−189 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-27)

Top changes in DILLARD'S, INC.'s 2024 10-K

201 paragraphs added · 189 removed · 163 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changePrivate label card customers are sometimes offered private shopping nights, special discounts and advance notice of sale events. Wells Fargo administers the loyalty program that rewards customers for private label card usage. Our earnings depend to a significant extent on the results of operations for the last quarter of our fiscal year.
Biggest changePrivate label card customers are sometimes offered advance notice of sale events. Wells Fargo administers the loyalty program that rewards customers for private label card usage. In January 2024, the Company announced that it entered into a new agreement with Citibank, N.A. (“Citi”) to provide a credit card program for Dillard’s customers, replacing the existing Wells Fargo Alliance.
Training and talent development . The Company develops talent by investing in both formalized classroom training, specialized training for our sales management team, ongoing mentorship programs and on-the-job experience. We seek to create an engaged workforce through open door policies and promotion opportunities.
The Company develops talent by investing in both formalized classroom training, specialized training for our sales management team, ongoing mentorship programs and on-the-job experience. We seek to create an engaged workforce through open door policies and promotion opportunities.
Our customers may also visit us online at our e-Commerce site, dillards.com, gaining company-wide access to in-store merchandise selections across 29 states as well as in our fulfillment and distribution centers. Customers also have the option to buy online and pickup in store or have their orders shipped directly to their desired location.
Our customers may also visit us online at our e-Commerce site, dillards.com, gaining company-wide access to in-store merchandise selections across 30 states as well as in our fulfillment and distribution centers. Customers also have the option to buy online and pickup in store or have their orders shipped directly to their desired location.
Pursuant to the Wells Fargo Alliance, we receive on-going 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. We participate in the marketing of the private label cards, which includes the cost of customer reward programs. The Wells Fargo Alliance expires in November 2024.
Pursuant to the Wells Fargo Alliance, we receive on-going 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. We participate in the marketing of the private label cards, which includes the cost of customer reward programs.
As of December 24, 2022, approximately 72% of the salaried managers at our stores were promoted from hourly store positions. Diversity and inclusion . The Company has a diverse customer base and seeks to achieve that same diversity in its workforce.
As of December 25, 2023, approximately 73% of the salaried managers at our stores were promoted from hourly store positions. Diversity and inclusion . The Company has a diverse customer base and seeks to achieve that same diversity in its workforce.
The following table summarizes the percentage of net sales by segment and major product line: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of Net Sales ​ Fiscal 2022 ​ Fiscal 2021 ​ Fiscal 2020 Retail operations segment: ​ ​ ​ ​ ​ ​ ​ Cosmetics 15 % 14 % 15 % Ladies' apparel 21 21 18 ​ Ladies' accessories and lingerie 14 15 17 ​ Juniors' and children's apparel 9 10 9 ​ Men's apparel and accessories 20 19 18 ​ Shoes 15 15 15 ​ Home and furniture 4 4 5 ​ ​ 98 98 97 ​ Construction segment 2 2 3 ​ Total 100 % 100 % 100 % ​ Additional information regarding our business, results of operations and financial condition, including information pertaining to our reporting segments and the impact of COVID-19 on each of the foregoing, can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 hereof and in Note 2 in the “Notes to Consolidated Financial Statements” in Item 8 hereof.
The following table summarizes the percentage of net sales by segment and major product line: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of Net Sales ​ Fiscal 2023 ​ Fiscal 2022 ​ Fiscal 2021 Retail operations segment: ​ ​ ​ ​ ​ ​ ​ Cosmetics 16 % 15 % 14 % Ladies' apparel 20 21 21 ​ Ladies' accessories and lingerie 14 14 15 ​ Juniors' and children's apparel 9 9 10 ​ Men's apparel and accessories 19 20 19 ​ Shoes 14 15 15 ​ Home and furniture 4 4 4 ​ ​ 96 98 98 ​ Construction segment 4 2 2 ​ Total 100 % 100 % 100 % ​ Additional information regarding our business, results of operations and financial condition, including information pertaining to our reporting segments, can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 hereof and in Note 2 in the “Notes to Consolidated Financial Statements” in Item 8 hereof.
As of December 24, 2022, approximately 75% of our store associates were women, and approximately 54% of our store associates were non-white. In its efforts to promote diversity within our store positions, the Company has developed and made available to store level hiring managers a Diversity and Inclusion training curriculum.
As of December 25, 2023, approximately 74% of our store associates were women, and approximately 55% of our store associates were non-white. In its efforts to promote diversity within our store positions, the Company has developed and made available to store level hiring managers a Diversity and Inclusion training curriculum.
As of January 28, 2023, we operated 277 Dillard’s stores, including 28 clearance centers, and an Internet store offering a wide selection of merchandise including fashion apparel for women, men and children, accessories, cosmetics, home furnishings and other consumer goods.
As of February 3, 2024, we operated 273 Dillard’s stores, including 28 clearance centers, and an Internet store at dillards.com offering a wide selection of merchandise including fashion apparel for women, men and children, accessories, cosmetics, home furnishings and other consumer goods.
We have no long-term purchase commitments or arrangements with any of our suppliers, but we consider our relationships to be strong and mutually beneficial. Our fiscal year ends on the Saturday nearest January 31 of each year. Fiscal 2022, 2021 and 2020 ended on January 28, 2023, January 29, 2022 and January 30, 2021, respectively, and contained 52 weeks each.
We have no long-term purchase commitments or arrangements with any of our suppliers, but we consider our relationships to be strong and mutually beneficial. Our fiscal year ends on the Saturday nearest January 31 of each year.
Human Capital As of December 24, 2022, the Company employed approximately 29,900 associates. Approximately 19,600 were full-time (greater than 35 hours per week) associates, 8,200 were part-time (20-35 hours per week) associates and 2,100 were limited status associates (less than 20 hours per week). 1 None of our associates are represented by a union.
Approximately 20,200 were full-time associates (greater than 35 hours per week), 7,100 were part-time associates (20-35 hours per week) and 2,300 were limited status associates (less than 20 hours per week) . 1 None of our associates are represented by a union.
Our corporate offices are located at 1600 Cantrell Road, Little Rock, Arkansas 72201, telephone: 501-376-5200. ​ ​ ​ 3 Table of Contents
Our corporate offices are located at 1600 Cantrell Road, Little Rock, Arkansas 72201, telephone: 501-376-5200. 1 For purposes of this section, all figures are based on calendar year 2023. 3 Table of Contents
Given the breadth of our employee base, we tailor our human capital management efforts with a view to specific associate populations. Of the Company’s full-time associates, approximately 86% work in the retail stores. We focus on attracting and retaining excellent associates at the store level by providing compensation and benefits packages that are competitive within the applicable market.
Of the Company’s full-time associates, approximately 86% work in the retail stores. We focus on attracting and retaining excellent associates at the store level by providing compensation and benefits packages that are competitive within the applicable market. Training and talent development .
As a department store chain, the Company employs a wide range of associates, including sales associates, management professionals, maintenance professionals, call center associates, distribution center associates, buyers, 1 For purposes of this section, all figures are based on calendar year 2022. 2 Table of Contents advertising and back office personnel.
As a department store chain, the Company employs a wide range of associates, including sales associates, management professionals, maintenance professionals, call center associates, distribution center associates, buyers, advertising and back office personnel. Given the breadth of our employee base, we tailor our human capital management efforts with a view to specific associate populations.
Added
The Dillard’s credit card program offered by Citi will include a new co-branded Mastercard Incorporated card (“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.
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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.
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The term of the 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. Our earnings depend to a significant extent on the results of operations for the last quarter of our fiscal year.
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Fiscal year 2023 ended on February 3, 2024 and contained 53 weeks, and fiscal years 2022 and 2021 ended on January 28, 2023 and January 29, 2022, respectively, and each contained 52 weeks. 2 Table of Contents Human Capital As of December 25, 2023, the Company employed approximately 29,600 associates.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWhile recent tariffs and modifications to trade agreements have not resulted in a material impact on our cash flows, financial condition and results of operations, any additional actions, if ultimately enacted, could negatively impact our ability and the ability of our third-party vendors and suppliers to source products from foreign jurisdictions and could lead to an increase in the cost of goods and adversely affect our profitability.
Biggest changeWhile recent tariffs and modifications to trade agreements have not resulted in a material impact on our cash flows, financial condition and results of operations, any additional actions, if ultimately enacted, could negatively impact our ability and the ability of our third-party vendors and suppliers to source products from foreign jurisdictions and could lead to an increase in the cost of goods and adversely affect our profitability. 8 Table of Contents Other trade restrictions imposed by the United States Government, including increased tariffs or quotas, embargoes, safeguards, and customs restrictions against apparel items, as well as United States or foreign labor strikes, work stoppages, or boycotts, could increase the cost or reduce the supply of merchandise available to us or may require us to modify our current business practices, any of which could adversely affect our profitability.
We have approximately 72 stores along the Gulf and Atlantic coasts that are covered by third-party insurance but are self-insured for property and merchandise losses related to “named storms.” As a result, the repair and replacement costs will be borne by us for damage to any of these stores from “named storms,” which could have an adverse effect on our financial condition or results of operations.
We have approximately 71 stores along the Gulf and Atlantic coasts that are covered by third-party insurance but are self-insured for property and merchandise losses related to “named storms.” As a result, the repair and replacement costs will be borne by us for damage to any of these stores from “named storms,” which could have an adverse effect on our financial condition or results of operations.
Our inability to continue to generate sufficient cash flows to support these activities or the lack of available financing in adequate amounts and on appropriate terms when needed could adversely affect our financial performance including our earnings per share. 5 Table of Contents Our profitability may be adversely impacted by weather conditions.
Our inability to continue to generate sufficient cash flows to support these activities or the lack of available financing in adequate amounts and on appropriate terms when needed could adversely affect our financial performance including our earnings per share. Our profitability may be adversely impacted by weather conditions.
Due to the Company’s concentration of stores in energy producing regions, volatile conditions in these regions could adversely affect the Company’s sales. Consumer purchases of discretionary items and other retail products generally decline during recessionary periods, and also may decline at other times when changes in consumer spending patterns affect us unfavorably.
Due to the Company’s concentration of stores in energy producing regions, volatile conditions in these regions could adversely affect the Company’s sales. Consumer purchases of discretionary items and other retail products generally decline during recessionary periods, and also may decline at other times when 6 Table of Contents changes in consumer spending patterns affect us unfavorably.
The Company cautions that forward-looking statements, as such term is defined in the Private Securities Litigation Reform Act of 1995, contained in this Annual Report on Form 10-K are based on estimates, projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance.
The Company cautions that forward-looking statements, as such term is defined in the Private Securities Litigation Reform Act of 1995, contained in this Annual Report are based on estimates, projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance.
Due to the breadth and complexity of the U.S. healthcare system, and uncertainty regarding legislative or regulatory changes, the Company is not able to fully determine the impact that future healthcare reform will have on our company sponsored medical plans. 12 Table of Contents
Due to the breadth and complexity of the U.S. healthcare system, and uncertainty regarding legislative or regulatory changes, the Company is not able to fully determine the impact that future healthcare reform will have on our company sponsored medical plans.
Wells Fargo may be subject to regulations that may adversely impact its operation of the private label credit card.
Wells Fargo and Citi may be subject to regulations that may adversely impact its operation of the private label credit card.
Our sales and operating results depend in part on our ability to effectively predict and quickly respond to changes in fashion trends and customer preferences. We continuously assess emerging styles and trends and focus on developing a 6 Table of Contents merchandise assortment to meet customer preferences at competitive prices.
Our sales and operating results depend in part on our ability to effectively predict and quickly respond to changes in fashion trends and customer preferences. We continuously assess emerging styles and trends and focus on developing a merchandise assortment to meet customer preferences at competitive prices.
We rely on third-party service providers to provide hardware, software and services necessary to operate our information technology systems, and the same issues could occur at those third parties and have an effect on our operational technology or data.
We rely on third-party service providers to provide hardware, software and services necessary to 11 Table of Contents operate our information technology systems, and the same issues could occur at those third parties and have an effect on our operational technology or data.
The payment methods that we offer also subject us to potential fraud and theft by persons who seek to obtain unauthorized access to or exploit any weaknesses that may exist in the payment systems.
The 10 Table of Contents payment methods that we offer also subject us to potential fraud and theft by persons who seek to obtain unauthorized access to or exploit any weaknesses that may exist in the payment systems.
Disruptions in the supply chain could adversely impact our ability to obtain adequate inventory on a timely basis and result in lost 8 Table of Contents sales, increased costs and an overall decrease in our profits.
Disruptions in the supply chain could adversely impact our ability to obtain adequate inventory on a timely basis and result in lost sales, increased costs and an overall decrease in our profits.
Adjustments are reflected in contract revenues in the period when these estimates are revised. To the extent that these adjustments result in an increase, a reduction or an elimination of previously reported contract profit, we are required to recognize a credit or a charge against current earnings, which could be material.
To the extent that these adjustments result in an increase, a reduction or an elimination of previously reported contract profit, we are required to recognize a credit or a charge against current earnings, which could be material.
Such difficulties could lead to significant expenses or to losses due to disruption in our business. 10 Table of Contents Any failure to maintain the security of the information related to our Company, customers, employees and vendors or the information technology systems on which we rely for our operations could adversely affect our operations, damage our reputation, result in litigation or other legal actions against us, increase our operating costs and materially adversely affect our business and operating results.
Any failure to maintain the security of the information related to our Company, customers, employees and vendors or the information technology systems on which we rely for our operations could adversely affect our operations, damage our reputation, result in litigation or other legal actions against us, increase our operating costs and materially adversely affect our business and operating results.
Additionally, to keep pace with changing technology, we must continuously provide for the design and implementation of new information technology systems and enhancements of our existing systems. We could encounter difficulties in developing new systems or maintaining and upgrading existing systems.
Additionally, to keep pace with changing technology, we must continuously provide for the design and implementation of new information technology systems and enhancements of our existing systems. We could encounter difficulties in developing new systems or maintaining and upgrading existing systems. Such difficulties could lead to significant expenses or to losses due to disruption in our business.
If the income or cash flow that the Company receives from the Wells Fargo Alliance decreases, our operating results and cash flows could be adversely affected.
If the income or cash flow that the Company receives from the Wells Fargo Alliance or from the new agreement with Citi (discussed below) decreases, our operating results and cash flows could be adversely affected.
In the ordinary course of business, we may be involved in lawsuits and regulatory actions. We are impacted by trends in litigation, including, but not limited to, class-action allegations brought under various consumer protection, employment and privacy and information security laws.
Legal and Compliance Risks Litigation with customers, employees and others could harm our reputation and impact operating results. In the ordinary course of business, we may be involved in lawsuits and regulatory actions. We are impacted by trends in litigation, including, but not limited to, class-action allegations brought under various consumer protection, employment and privacy and information security laws.
Additionally, although we diversify our sourcing and production, the failure of any supplier to produce and deliver our goods on time, to meet our quality standards and adhere to our product safety requirements or to meet the requirements of our supplier compliance program or applicable laws, could impact our ability to flow merchandise to our stores or directly to consumers in the right quantities at the right time, which could adversely affect our profitability and could result in damage to our reputation and translate into sales losses.
Additionally, although we diversify our sourcing and production, the failure of any supplier to produce and deliver our goods on time, to meet our quality standards and adhere to our product safety requirements or to meet the requirements of our supplier compliance program or applicable laws, could impact our ability to flow merchandise to our stores or directly to consumers in the right quantities at the right time, which could adversely affect our profitability and could result in damage to our reputation and translate into sales losses. 9 Table of Contents Risks Related to our Long-Term Marketing and Servicing Alliance Reductions in the income and cash flow from our long-term marketing and servicing alliance related to the private label credit cards could impact operating results and cash flows.
Additionally, we are subject to potential liability for environmental conditions on the property that we own or lease. If an existing owned store is not profitable, and we decide to close it, we may be required to record an impairment charge and/or exit costs associated with the disposal of the store. We generally cannot cancel our leases.
If an existing owned store is not profitable, and we decide to close it, we may be required to record an impairment charge and/or exit costs associated with the disposal of the store. We generally cannot cancel our leases.
The occurrence of, or threat of, a natural disaster, climate change, war (including the ongoing conflict in Ukraine and the resulting sanctions imposed on Russia by the U.S. and other countries), acts of violence, acts of terrorism, other armed conflicts, and public health issues (including the recent COVID-19 pandemic, which had a significant negative impact on the Company’s financial position and results of operations during fiscal 2020) could disrupt our operations, disrupt international trade and supply chain efficiencies, suppliers or customers, or result in political or economic instability.
The occurrence of, or threat of, a natural disaster, climate change, war (including the ongoing conflict in Ukraine and the resulting sanctions imposed on Russia by the U.S. and other countries as well as other conflicts in the Middle East), acts of violence, acts of terrorism, other armed conflicts, and public health issues could disrupt our operations, disrupt international trade and supply chain efficiencies, suppliers or customers, or result in political or economic instability.
The Wells Fargo Alliance provides for certain payments to be made by Wells Fargo to the Company, including the Company’s share of earnings under this alliance.
Wells Fargo currently owns and manages the private label credit cards under the Wells Fargo Alliance. The Wells Fargo Alliance provides for certain payments to be made by Wells Fargo to the Company, including the Company’s share of earnings under this alliance.
In addition, changes in credit card use, payment patterns, or default rates could be affected by a variety of economic, legal, social, or 9 Table of Contents other factors over which we have no control and cannot predict with certainty.
In addition, changes in credit card use, payment patterns, or default rates could be affected by a variety of economic, legal, social, or other factors over which we have no control and cannot predict with certainty. Such changes could also negatively impact Wells Fargo’s ability to facilitate consumer credit or increase the cost of credit to the cardholders.
Both the increased cost and lower availability of merchandise, raw materials, fuel and labor may also have an adverse impact on our cash and working capital needs. 7 Table of Contents Third party suppliers on whom we rely to obtain materials and provide production facilities and other third parties with whom we do business may experience financial difficulties due to current and future economic conditions, which may subject them to insolvency risk or may result in their inability or unwillingness to perform the obligations they owe us.
Third party suppliers on whom we rely to obtain materials and provide production facilities and other third parties with whom we do business may experience financial difficulties due to current and future economic conditions, which may subject them to insolvency risk or may result in their inability or unwillingness to perform the obligations they owe us.
Risks Related to Material Sourcing and Supply Fluctuations in the price of merchandise, raw materials, fuel and labor or their reduced availability could increase our cost of goods and negatively impact our financial results.
Our failure to adequately address some or all of these risks could have a material adverse effect on our business, results of operations and financial condition. 7 Table of Contents Risks Related to Material Sourcing and Supply Fluctuations in the price of merchandise, raw materials, fuel and labor or their reduced availability could increase our cost of goods and negatively impact our financial results.
Under this method, estimated contract revenues are measured based on the ratio of costs incurred to total estimated contract costs. Estimated contract losses are recognized in full when determined. Total contract revenues and cost estimates are reviewed and revised at a minimum on a quarterly basis as the work progresses and as change orders are approved.
Our construction segment recognizes contract revenues based on the cost-to-cost method. Under this method, estimated contract revenues are measured based on the ratio of costs incurred to total estimated contract costs. Estimated contract losses are recognized in full when determined.
These types of claims, as well as other types of lawsuits to which we are subject from time to time, can distract management’s attention from core business operations and impact operating results, particularly if a lawsuit results in an unfavorable outcome.
These types of claims, as well as other types of lawsuits to which we are subject from time to time, can distract management’s attention from core business operations and impact operating results, particularly if a lawsuit results in an unfavorable outcome. 12 Table of Contents Risks Related to Construction Operations The cost-to-cost method of accounting that we use to recognize contract revenues for our construction segment may result in material adjustments, which could result in a credit or a charge against our earnings.
A decline in the amount of margin maintenance allowances would either increase cost of sales, which would negatively impact gross margin and operating income, or cause us to reduce merchandise purchases, which may cause a decline in sales.
A decline in the amount of margin maintenance allowances would either increase cost of sales, which would negatively impact gross margin and operating income, or cause us to reduce merchandise purchases, which may cause a decline in sales. 5 Table of Contents A decrease in cash flows from our operations and constraints to accessing other financing sources could limit our ability to fund our operations, capital projects, interest and debt repayments, stock repurchases and dividends.
A decrease in domestic transportation capacity could impair our ability and the ability of our branded vendors to timely deliver merchandise to our distribution centers and stores.
A decrease in domestic transportation capacity could impair our ability and the ability of our branded vendors to timely deliver merchandise to our distribution centers and stores. Both the increased cost and lower availability of merchandise, raw materials, fuel and labor may also have an adverse impact on our cash and working capital needs.
Credit card operations are subject to numerous federal and state laws that impose disclosure and other requirements upon the origination, servicing, and enforcement of credit accounts, and limitations on the amount of finance charges and fees that may be charged by a credit card provider.
Credit card operations are subject to numerous federal and state laws that impose disclosure and other requirements upon the origination, servicing, and enforcement of credit accounts, and limitations on the amount of finance charges and fees that may be charged by a credit card provider, 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, which we expect could have a material adverse effect on the income and cash flows from our private label credit card program.
The regulatory environment surrounding information security, cybersecurity, and privacy is increasingly demanding, with new and changing requirements, such as the California Consumer Privacy Act.
The regulatory environment surrounding information security, cybersecurity, and privacy is increasingly demanding, with new and changing requirements, such as the California Consumer Privacy Act. Security breaches, cyber incidents or allegations that we used personal information in violation of applicable privacy and other laws could result in significant legal and financial exposure.
For example, many disruptions in the global transportation network have occurred in recent years due to the impact of COVID-19 and other factors, including increased shipping costs resulting from increased demand for shipping capacity and the increased cost of fuel.
For example, many disruptions in the global transportation network have occurred recently, including attacks on shipping vessels in the Red Sea and Suez Canal, drought conditions which have lowered the water levels of the Panama Canal, increased shipping costs resulting from increased demand for shipping capacity and the increased cost of fuel.
Additionally, the value of our reputation is based, in part, on subjective perceptions of the quality of our merchandise selections. Isolated incidents involving us or our merchandise that erode trust or confidence could adversely affect our reputation and our business, particularly if the incidents result in significant adverse publicity or governmental investigation or inquiry.
Isolated incidents involving us or persons currently or formerly associated with us (including employees, celebrities, social media influencers, brand affiliates and partners or others who speak publicly about our brand or our products, whether authorized or not) or our merchandise that erode trust or confidence could adversely affect our reputation and our business, particularly if the incidents result in significant adverse publicity or governmental investigation or inquiry.
In addition, damage to the reputation of our private label trade names may generate negative customer sentiment. Our failure to adequately address some or all of these risks could have a material adverse effect on our business, results of operations and financial condition.
In addition, damage to the reputation of our private label trade names may generate negative customer sentiment.
Removed
A decrease in cash flows from our operations and constraints to accessing other financing sources could limit our ability to fund our operations, capital projects, interest and debt repayments, stock repurchases and dividends.
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Additionally, we are subject to potential liability for environmental conditions on the property that we own or lease. Furthermore, we are subject to risks related to poor management of shopping malls, including those malls that may be in financial distress or are currently under receivership.
Removed
Other trade restrictions imposed by the United States Government, including increased tariffs or quotas, embargoes, safeguards, and customs restrictions against apparel items, as well as United States or foreign labor strikes, work stoppages, or boycotts, could increase the cost or reduce the supply of merchandise available to us or may require us to modify our current business practices, any of which could adversely affect our profitability.
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Some malls may be unable or unwilling to refinance debt maturities in the current credit market, leading to further risks related to temporary or new management by financial institutions or others. Such successors may be unable to effectively manage the shopping malls in which we operate.
Removed
Risks Related to our Long-Term Marketing and Servicing Alliance Reductions in the income and cash flow from our long-term marketing and servicing alliance related to the private label credit cards could impact operating results and cash flows. Wells Fargo owns and manages the private label credit cards under the Wells Fargo Alliance.
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Additionally, the value of our reputation is based, in part, on subjective perceptions of the quality of our merchandise selections.
Removed
Such changes could also negatively impact Wells Fargo’s ability to facilitate consumer credit or increase the cost of credit to the cardholders. The Wells Fargo Alliance expires in November 2024.
Added
In addition, the potential for strikes related to labor negotiations at the East Coast and Gulf Coast ports may cause additional supply chain disruptions in 2024.
Removed
If, when the Wells Fargo Alliance expires, Wells Fargo is unable or unwilling to renew and continue owning and managing our proprietary credit cards on similar terms and conditions as exist today or we are unable to quickly and adequately contract with a comparable replacement vendor, then our operating results and cash flows could be adversely affected due to a decrease in private label credit card sales to our cardholding customers and a loss of revenues attributable to payments from Wells Fargo.
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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.
Removed
Security breaches, cyber incidents or allegations that we used personal information in violation of applicable privacy and other laws could result in significant legal and financial exposure. 11 Table of Contents Legal and Compliance Risks Litigation with customers, employees and others could harm our reputation and impact operating results.
Added
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 expect to launch the new program in late summer 2024 for new Dillard’s credit applicants.
Removed
Risks Related to Construction Operations The cost-to-cost method of accounting that we use to recognize contract revenues for our construction segment may result in material adjustments, which could result in a credit or a charge against our earnings. Our construction segment recognizes contract revenues based on the cost-to-cost method.
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The transfer of existing accounts to Citi is expected in the fall of 2024. The term of the 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.
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While future cash flows under the 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.
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The income and cash flow that the Company will receive from the new program with Citi will depend on the same factors that impact the Wells Fargo Alliance as discussed above. Any material decrease could adversely affect our operating results and cash flows.
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Total contract revenues and cost estimates are reviewed and revised at a minimum on a quarterly basis as the work progresses and as change orders are approved. Adjustments are reflected in contract revenues in the period when these estimates are revised.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table summarizes by state of operation the number of retail stores we operate and the corresponding owned and leased footprint at January 28, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Partially ​ ​ ​ ​ ​ ​ ​ ​ Owned ​ Owned ​ ​ ​ ​ ​ ​ ​ ​ Building ​ and ​ ​ Number ​ Owned ​ Leased ​ on Leased ​ Partially Location ​ of stores ​ Stores ​ Stores ​ Land ​ Leased Alabama 9 9 — — — Arkansas 8 8 — — — Arizona 15 14 — 1 — California 3 3 — — — Colorado 8 8 — — — Florida 41 38 1 2 — Georgia 12 9 3 — — Iowa 3 3 — — — Idaho 2 2 — — — Illinois 3 3 — — — Indiana 3 3 — — — Kansas 5 3 — 2 — Kentucky 6 5 1 — — Louisiana 14 13 1 — — Missouri 8 6 1 1 — Mississippi 6 4 1 1 — Montana 2 2 — — — North Carolina 13 13 — — — Nebraska 3 2 1 — — New Mexico 5 3 2 — — Nevada 5 5 — — — Ohio 12 10 2 — — Oklahoma 7 6 1 — — South Carolina 7 7 — — — Tennessee 10 9 1 — — Texas 55 47 5 — 3 Utah 5 5 — — — Virginia 6 5 — 1 — Wyoming 1 1 — — — Total 277 246 20 8 3 ​ ​ 13 Table of Contents At January 28, 2023, we operated the following additional facilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Owned / Facility ​ Location ​ Square Feet ​ Leased Distribution Centers: Mabelvale, Arkansas 400,000 Owned ​ Gilbert, Arizona 295,000 Owned ​ Valdosta, Georgia 370,000 Owned ​ Olathe, Kansas 500,000 Owned ​ Salisbury, North Carolina 355,000 Owned ​ Ft.
Biggest changeThe following table summarizes by state of operation the number of retail stores we operate and the corresponding owned and leased footprint at February 3, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Partially ​ ​ ​ ​ ​ ​ ​ ​ Owned ​ Owned ​ ​ ​ ​ ​ ​ ​ ​ Building ​ and ​ ​ Number ​ Owned ​ Leased ​ on Leased ​ Partially Location ​ of Stores ​ Stores ​ Stores ​ Land ​ Leased Alabama 9 9 — — — Arkansas 8 8 — — — Arizona 14 13 — 1 — California 3 3 — — — Colorado 8 8 — — — Florida 40 37 1 2 — Georgia 12 9 3 — — Iowa 3 3 — — — Idaho 2 2 — — — Illinois 3 3 — — — Indiana 3 3 — — — Kansas 5 3 — 2 — Kentucky 6 5 1 — — Louisiana 14 13 1 — — Missouri 8 6 1 1 — Mississippi 6 4 1 1 — Montana 2 2 — — — North Carolina 13 13 — — — Nebraska 2 2 — — — New Mexico 5 3 2 — — Nevada 5 5 — — — Ohio 12 10 2 — — Oklahoma 7 6 1 — — South Carolina 7 7 — — — Tennessee 10 9 1 — — Texas 55 49 5 — 1 Utah 5 5 — — — Virginia 5 5 — — — Wyoming 1 1 — — — Total 273 246 19 7 1 ​ 15 Table of Contents At February 3, 2024, we operated the following additional facilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Owned / Facility ​ Location ​ Square Feet ​ Leased Distribution Centers: Mabelvale, Arkansas 400,000 Owned ​ Gilbert, Arizona 295,000 Owned ​ Valdosta, Georgia 370,000 Owned ​ Olathe, Kansas 500,000 Owned ​ Salisbury, North Carolina 355,000 Owned ​ Ft.
ITEM 2. PROPERTIES. All of our stores are owned by us or leased from third parties. At January 28, 2023, we operated 277 stores in 29 states totaling approximately 47.3 million square feet of which we owned approximately 43.4 million square feet.
ITEM 2. PROPERTIES. All of our stores are owned by us or leased from third parties. At February 3, 2024, we operated 273 stores in 29 states totaling approximately 46.7 million square feet of which we owned approximately 43.0 million square feet.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of March 27, 2023, neither the Company nor any of its subsidiaries is a party to, nor is any of their property the subject of, any material legal proceedings.
Biggest changeAs of March 29, 2024, neither the Company nor any of its subsidiaries is a party to, nor is any of their property the subject of, any material legal proceedings.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeStockman (4) 66 Vice President 2017 None (1) Mr. Bolte served as Vice President of Logistics from 2007 to 2017. In 2017, he was promoted to Vice President of Information Technology and Logistics. In 2021, he was promoted to Senior Vice President of Information Technology and Logistics. (2) Mrs.
Biggest changeStockman 67 Vice President 2017 None (1) Mr. Bolte served as Vice President of Logistics from 2007 to 2017. In 2017, he was promoted to Vice President of Information Technology and Logistics. In 2021, he was promoted to Senior Vice President of Information Technology and Logistics. ​ 17 Table of Contents PART II
ITEM 4. MINE SAFETY DISCLOSURES . Not applicable. ​ 14 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table lists the names and ages of all executive officers of the Company, the nature of any family relationship between them and the Company’s CEO and all positions and offices with the Company presently held by each person named.
ITEM 4. MINE SAFETY DISCLOSURES . Not applicable. ​ 16 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table lists the names and ages of all executive officers of the Company, the nature of any family relationship between them and the Company’s CEO and all positions and offices with the Company presently held by each person named.
There are no other persons chosen to become executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held Present ​ Name ​ Age ​ Position & Office ​ Office Since ​ Family Relationship to CEO William Dillard, II 78 Director; Chief Executive Officer 1998 Not applicable Alex Dillard 73 Director; President 1998 Brother of William Dillard, II Mike Dillard 71 Director; Executive Vice President 1984 Brother of William Dillard, II Drue Matheny 76 Director; Executive Vice President 1998 Sister of William Dillard, II William Dillard, III 52 Director; Senior Vice President 2015 Son of William Dillard, II Denise Mahaffy 64 Director; Senior Vice President 2015 Sister of William Dillard, II Chris B.
There are no other persons chosen to become executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held Present ​ Name ​ Age ​ Position & Office ​ Office Since ​ Family Relationship to CEO William Dillard, II 79 Director; Chief Executive Officer 1998 Not applicable Alex Dillard 74 Director; President 1998 Brother of William Dillard, II Mike Dillard 72 Director; Executive Vice President 1984 Brother of William Dillard, II Drue Matheny 77 Director; Executive Vice President 1998 Sister of William Dillard, II William Dillard, III 53 Director; Senior Vice President 2015 Son of William Dillard, II Denise Mahaffy 66 Director; Senior Vice President 2015 Sister of William Dillard, II Chris B.
Johnson 51 Senior Vice President; Co-Principal Financial Officer 2015 None Phillip R. Watts 60 Senior Vice President; Co-Principal Financial Officer and Principal Accounting Officer 2015 None Tony Bolte (1) 64 Senior Vice President 2021 None Dean L.
Johnson 52 Senior Vice President; Co-Principal Financial Officer 2015 None Phillip R. Watts 61 Senior Vice President; Co-Principal Financial Officer and Principal Accounting Officer 2015 None Tony Bolte (1) 65 Senior Vice President 2021 None Dean L.
Worley 57 Vice President; General Counsel 2012 None Brant Musgrave 50 Vice President 2014 None Mike Litchford 57 Vice President 2016 None Tom Bolin 60 Vice President 2016 None Annemarie Jazic (2) 39 Vice President 2017 Niece of William Dillard, II Alexandra Lucie (3) 39 Vice President 2017 Niece of William Dillard, II James D.
Worley 58 Vice President; General Counsel 2012 None Brant Musgrave 51 Vice President 2014 None Mike Litchford 58 Vice President 2016 None Tom Bolin 61 Vice President 2016 None Annemarie Jazic 40 Vice President 2017 Niece of William Dillard, II Alexandra Lucie 40 Vice President 2017 Niece of William Dillard, II James D.
Removed
Jazic served as Director of Contemporary Sportswear from 2006 to 2013 and Director of Online Experience from 2013 to 2017. In 2017, she was promoted to Vice President of Online Experience. (3) Mrs.
Removed
Lucie served as a Divisional Merchandise Manager of Ladies’, Juniors’ and Children’s Exclusive Brands from 2010 to 2014 and served as a General Merchandise Manager of Ladies’, Juniors’ and Children’s Exclusive Brands from 2014 to 2017. In 2017, she was promoted to Corporate Vice President of Ladies’, Juniors’ and Children’s Exclusive Brands. (4) Mr.
Removed
Stockman served as General Merchandise Manager of Exclusive Brands from 2004 to 2017. In 2017, he was promoted to Corporate Vice President of Ladies’ Apparel. 15 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRepurchase of Common Stock ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (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 October 30, 2022 through November 26, 2022 ​ — ​ $ — ​ — ​ $ 175,402,174 November 27, 2022 through December 31, 2022 ​ — ​ ​ — ​ — ​ ​ 175,402,174 January 1, 2023 through January 28, 2023 ​ — ​ ​ — ​ — ​ ​ 175,402,174 Total ​ — ​ $ — ​ — ​ $ 175,402,174 ​ In February 2022, the Company’s 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 plan (“February 2022 Stock Plan”).
Biggest changeRepurchase of Common Stock ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (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 October 29, 2023 through November 25, 2023 ​ 52,042 ​ $ 310.55 ​ 52,042 ​ $ 393,996,507 November 26, 2023 through December 30, 2023 ​ — ​ ​ — ​ — ​ ​ 393,996,507 December 31, 2023 through February 3, 2024 ​ — ​ ​ — ​ — ​ ​ 393,996,507 Total ​ 52,042 ​ $ 310.55 ​ 52,042 ​ $ 393,996,507 ​ In May 2023, the Company’s 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 plan (“May 2023 Stock Plan”).
Reference is made to the discussion in Note 9 in the “Notes to Consolidated Financial Statements” in Item 8 of this Annual Report, which information is incorporated by reference herein. ​ 16 Table of Contents Securities Authorized for Issuance under Equity Compensation Plans The information concerning the Company’s equity compensation plans is incorporated herein by reference from Item 12 of this Annual Report under the heading “Equity Compensation Plan Information”.
Reference is made to the discussion in Note 9 in the “Notes to Consolidated Financial Statements” in Item 8 of this Annual Report, which information is incorporated by reference herein. ​ 18 Table of Contents Securities Authorized for Issuance under Equity Compensation Plans The information concerning the Company’s equity compensation plans is incorporated herein by reference from Item 12 of this Annual Report under the heading “Equity Compensation Plan Information”.
While the Company currently expects to continue paying quarterly cash dividends during fiscal 2023, all prospective dividends are subject to and conditional upon the review and approval of and declaration by the Board of Directors.
While the Company currently expects to continue paying quarterly cash dividends during fiscal 2024, all prospective dividends are subject to and conditional upon the review and approval of and declaration by the Board of Directors.
The February 2022 Stock 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 Exchange Act or through privately negotiated transactions. The February 2022 Stock Plan has no expiration date.
The May 2023 Stock 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 Exchange Act or through privately negotiated transactions. The May 2023 Stock Plan has no expiration date.
The cumulative total return assumes $100 invested in the Company’s Class A Common Stock and each of the indices at market close on February 2, 2018 (the last trading day prior to the start of fiscal 2018) and assumes reinvestment of dividends.
The cumulative total return assumes $100 invested in the Company’s Class A Common Stock and each of the indices at market close on February 1, 2019 (the last trading day prior to the start of fiscal 2019) and assumes reinvestment of dividends.
All repurchases of the Company’s Class A Common Stock in fiscal 2022 were made at the market price at the trade date, and all amounts paid to reacquire these shares were allocated to treasury stock. As of January 28, 2023, $175.4 million of authorization remained under the February 2022 Stock Plan.
All repurchases of the Company’s Class A Common Stock in fiscal 2023 were made at the market price at the trade date, and all amounts paid to reacquire these shares were allocated to treasury stock. As of February 3, 2024, $394.0 million of authorization remained under the May 2023 Stock Plan.
Stockholders As of February 25, 2023, there were 2,147 holders of record of the Company’s Class A Common Stock and 4 holders of record of the Company’s Class B Common Stock.
Stockholders As of March 2, 2024, there were 2,157 holders of record of the Company’s Class A Common Stock and 4 holders of record of the Company’s Class B Common Stock.
Apparel Retailers Index as of the last day of each of the Company’s last five fiscal years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2018 2019 2020 2021 2022 Dillard's, Inc. ​ $ 103.57 ​ $ 96.57 ​ $ 141.93 ​ $ 425.39 ​ $ 676.03 S&P 500 ​ 99.94 ​ 121.49 ​ 142.45 ​ 172.36 ​ 160.93 DJ US Apparel Retailers ​ 110.57 ​ 124.93 ​ 133.56 ​ 146.06 ​ 161.37 ​ ​ 17 Table of Contents
Apparel Retailers Index as of the last day of each of the Company’s last five fiscal years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 2020 2021 2022 2023 Dillard's, Inc. ​ $ 93.24 ​ $ 137.03 ​ $ 410.71 ​ $ 652.70 ​ $ 709.75 S&P 500 ​ 121.56 ​ 142.53 ​ 172.46 ​ 161.03 ​ 199.42 DJ US Apparel Retailers ​ 112.99 ​ 120.80 ​ 132.11 ​ 145.96 ​ 167.94 ​ ​ 19 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRESULTS OF OPERATIONS The following table sets forth the results of operations and percentage of net sales, for the periods indicated (percentages may not foot due to rounding): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended ​ ​ January 28, 2023 ​ January 29, 2022 ​ January 30, 2021 ​ (in thousands of dollars) Amount % of Net Sales ​ Amount % of Net Sales ​ Amount % of Net Sales ​ Net sales $ 6,871,081 ​ 100.0 % $ 6,492,993 ​ 100.0 % $ 4,300,895 ​ 100.0 % Service charges and other income ​ 125,134 1.8 ​ 131,274 2.0 ​ 132,290 3.1 ​ ​ 6,996,215 101.8 ​ 6,624,267 102.0 ​ 4,433,185 103.1 Cost of sales ​ 3,983,598 58.0 ​ 3,747,665 57.7 ​ 3,069,063 71.4 Selling, general and administrative expenses ​ 1,674,317 24.4 ​ 1,536,554 23.7 ​ 1,211,483 28.2 Depreciation and amortization ​ 188,440 2.7 ​ 199,321 3.1 ​ 213,378 5.0 Rentals ​ 23,169 0.3 ​ 22,594 0.3 ​ 22,174 0.5 Interest and debt expense, net ​ 30,527 0.4 ​ 43,092 0.7 ​ 49,108 1.1 Other expense ​ 7,744 0.1 ​ 11,366 0.2 ​ 8,417 0.2 (Gain) loss on disposal of assets ​ (21,047) (0.3) ​ (24,688) (0.4) ​ 2,230 0.1 Asset impairment and store closing charges ​ — — ​ — — ​ 10,736 0.2 Income (loss) before income taxes (benefit) ​ 1,109,467 ​ 16.1 ​ ​ 1,088,363 ​ 16.8 ​ ​ (153,404) ​ (3.6) ​ Income taxes (benefit) ​ 217,830 3.2 ​ 225,890 3.5 ​ (81,750) (1.9) Net income (loss) $ 891,637 ​ 13.0 % $ 862,473 ​ 13.3 % $ (71,654) ​ (1.7) % ​ ​ 24 Table of Contents Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2022 Fiscal 2021 Fiscal 2020 Net sales: ​ ​ ​ Retail operations segment ​ $ 6,701,972 ​ $ 6,374,753 ​ $ 4,160,232 Construction segment ​ 169,109 ​ 118,240 ​ 140,663 Total net sales ​ $ 6,871,081 ​ $ 6,492,993 ​ $ 4,300,895 ​ The percent change by segment and product category in the Company’s sales for the past two years is as follows: ​ ​ ​ ​ ​ ​ ​ Percent Change ​ Fiscal 2022 - 2021 Fiscal 2021 - 2020 Retail operations segment ​ Cosmetics 7.5 % 44.1 % Ladies’ apparel 5.7 73.6 ​ Ladies’ accessories and lingerie (0.8) 41.9 ​ Juniors’ and children’s apparel 3.0 61.5 ​ Men’s apparel and accessories 9.7 61.1 ​ Shoes 5.0 49.1 ​ Home and furniture (0.8) 14.6 ​ Construction segment 43.0 (15.9) ​ ​ 2022 Compared to 2021 Net sales from the retail operations segment increased $327.2 million during fiscal 2022 compared to fiscal 2021, an increase of 5%.
Biggest changeThe Company expects pension expense to be approximately $31.0 million in fiscal 2024. ​ 26 Table of Contents RESULTS OF OPERATIONS The following table sets forth the results of operations and percentage of net sales, for the periods indicated (percentages may not foot due to rounding): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended ​ ​ February 3, 2024 ​ January 28, 2023 ​ January 29, 2022 ​ ​ Amount % of Net Sales ​ Amount % of Net Sales ​ Amount % of Net Sales ​ Net sales $ 6,752,053 ​ 100.0 % $ 6,871,081 ​ 100.0 % $ 6,492,993 ​ 100.0 % Service charges and other income ​ 122,367 1.8 ​ 125,134 1.8 ​ 131,274 2.0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 6,874,420 101.8 ​ 6,996,215 101.8 ​ 6,624,267 102.0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales ​ 4,031,108 59.7 ​ 3,983,598 58.0 ​ 3,747,665 57.7 Selling, general and administrative expenses ​ 1,717,415 25.4 ​ 1,674,317 24.4 ​ 1,536,554 23.7 Depreciation and amortization ​ 179,573 2.7 ​ 188,440 2.7 ​ 199,321 3.1 Rentals ​ 21,569 0.3 ​ 23,169 0.3 ​ 22,594 0.3 Interest and debt (income) expense, net ​ (4,600) (0.1) ​ 30,527 0.4 ​ 43,092 0.7 Other expense ​ 18,791 0.3 ​ 7,744 0.1 ​ 11,366 0.2 Gain on disposal of assets ​ (6,053) (0.1) ​ (21,047) (0.3) ​ (24,688) (0.4) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 916,617 ​ 13.6 ​ ​ 1,109,467 ​ 16.1 ​ ​ 1,088,363 ​ 16.8 ​ Income taxes ​ 177,770 2.6 ​ 217,830 3.2 ​ 225,890 3.5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income $ 738,847 ​ 10.9 % $ 891,637 ​ 13.0 % $ 862,473 ​ 13.3 % ​ ​ Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2023 Fiscal 2022 Fiscal 2021 Net sales: ​ ​ ​ Retail operations segment ​ $ 6,479,580 ​ $ 6,701,972 ​ $ 6,374,753 Construction segment ​ 272,473 ​ 169,109 ​ 118,240 Total net sales ​ $ 6,752,053 ​ $ 6,871,081 ​ $ 6,492,993 ​ The percent change by segment and product category in the Company’s sales for the past two years is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ Fiscal 2023 - 2022 ​ Fiscal 2023 - 2022* Fiscal 2022 - 2021 Retail operations segment ​ ​ ​ Cosmetics 4.3 % 3.0 % 7.5 % Ladies’ apparel (4.1) ​ (5.6) 5.7 ​ Ladies’ accessories and lingerie (6.4) ​ (7.7) (0.8) ​ Juniors’ and children’s apparel (7.3) ​ (8.7) 3.0 ​ Men’s apparel and accessories (4.4) ​ (5.8) 9.7 ​ Shoes (3.4) ​ (4.6) 5.0 ​ Home and furniture (1.0) ​ (2.4) (0.8) ​ Construction segment 61.1 ​ 61.1 43.0 ​ * Based upon the 52 weeks ended January 27, 2024 and 52 weeks ended January 28, 2023. ​ 27 Table of Contents 2023 Compared to 2022 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.
Interest and debt expense includes interest, net of interest income from demand deposits and short-term investments 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 .
Interest and debt (income) expense includes interest, net of interest income from demand deposits and short-term investments 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, if any.
Revolving Credit Agreement . The Company maintains a revolving 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 Company maintains a revolving 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.
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 .
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 (income) expense, net .
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”).
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 marketing and servicing alliance with Wells Fargo Bank, N.A. (“Wells Fargo Alliance”).
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 2022, 2021 and 2020.
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.
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 2022, 2021 or 2020. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $8 million for fiscal 2022.
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.
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. The fiscal tax years that remain subject to examination for the federal tax jurisdiction are 2015, 2016 and 2018 and forward.
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. The fiscal tax years that remain subject to examination for the federal tax jurisdiction are 2015, 2016 and 2019 and forward.
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 2023 from these factors cannot be reasonably estimated at this time.
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.
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. The Company was affected by inflation during fiscal 2022.
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. The Company was affected by inflation during fiscal 2023 and 2022.
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.
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.
Fiscal 2023 Outlook The Company expects to finance its operations during fiscal 2023 from cash on hand, cash flows generated from operations and, if necessary, utilization of our revolving credit facility.
Fiscal 2024 Outlook The Company expects to finance its operations during fiscal 2024 from cash on hand, cash flows generated from operations and, if necessary, utilization of our revolving credit facility.
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, 21 Table of Contents markups and markdowns, which significantly impact the ending inventory valuation at cost as well as the resulting gross margins.
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.
Dividends . During fiscal 2022, in addition to our typical quarterly dividends, the Board of Directors declared a special dividend of $15.00 per share that was paid on the Class A and Class B Common Stock of the Company.
Dividends . During fiscal 2023 and 2022, in addition to our typical quarterly dividends, the Board of Directors declared a special dividend of $20.00 per share and $15.00 per share, respectively, that was paid on the Class A Common Stock and Class B Common Stock of the Company.
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.
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 23 Table of Contents the circumstances. Since future events and their effects cannot be determined with absolute certainty, actual results could differ from those estimates.
Other expense includes the interest cost and net actuarial loss components of net periodic benefit costs related to the Company’s unfunded, nonqualified defined benefit plan and charges related to the write off of certain deferred financing fees in connection with the amendment and extension of the Company’s secured revolving credit facility, if any. (Gain) loss on disposal of assets .
Other expense . Other expense includes the interest cost and net actuarial loss components of net periodic benefit costs related to the Company’s unfunded, nonqualified defined benefit plan and charges related to the write off of certain deferred financing fees in connection with the amendment and extension of the Company’s secured revolving credit facility, if any.
The Company receives concessions from vendors through a variety of programs and arrangements, including cooperative advertising, payroll reimbursements and margin maintenance programs. 22 Table of Contents Cooperative advertising allowances are reported as a reduction of advertising expense in the period in which the advertising occurred.
The Company receives concessions from vendors through a variety of programs and arrangements, including cooperative advertising, payroll reimbursements and margin maintenance programs. Cooperative advertising allowances are reported as a reduction of advertising expense in the period in which the advertising occurred.
The Company has the right to defer the payment of interest on the subordinated debentures at any time for a period not to exceed 20 consecutive quarters; however, the Company has no present intention of exercising this right to defer interest payments. During fiscal 2023, the Company expects to accrue interest expense of $15.2 million on its subordinated debentures.
The Company has the right to defer the payment of interest on the subordinated debentures at any time for a period not to exceed 20 consecutive quarters; however, the Company has no present intention of exercising this right to defer interest payments. During fiscal 2024, the Company expects to accrue interest expense of $15.0 million on its subordinated debentures.
Also included in fiscal 2022 net income are two tax-related benefits: ● a federal income tax benefit of $16.3 million ($0.93 per share) due to a deduction related to that portion of the special dividend of $15.00 per share that was paid to the Dillard's, Inc.
Also included in net income for fiscal 2022 are two tax-related benefits: 20 Table of Contents ● a federal income tax benefit of $16.3 million ($0.93 per share) due to a deduction related to that portion of the special dividend of $15.00 per share that was paid to the Dillard's, Inc.
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 95.8%, 96.2% and 93.8% of total revenues in fiscal 2022, 2021 and 2020, respectively.
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.
During fiscal 2022, the Company repurchased 1.7 million shares of Class A Common Stock for $436.6 million at an average price of $255.49 per share, and the Company paid $16.2 million for share repurchases that had not yet settled but were accrued at January 29, 2022.
During fiscal 2022, the Company repurchased 1.7 million shares of Class A Common Stock for $436.6 million at an average price of $255.49 per share, and the Company paid $16.2 million for share repurchases that had not yet settled but were accrued at January 29, 2022. The ultimate disposition of the repurchased stock has not been determined.
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.
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 22 Table of Contents fiscal year that are no longer considered comparable stores; sales in clearance centers; and changes in the allowance for sales returns.
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. In April 2021, the Company amended the credit agreement (the "2021 amendment").
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.
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 $67.8 million, $74.8 million and $78.6 million from the alliance in fiscal 2022, 2021 and 2020, respectively.
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.
While shrinkage has increased in recent years, the differences between the estimated amounts of shrinkage and the actual amounts realized during the past three years have not been material. 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 differences between the estimated amounts of shrinkage and the actual amounts realized during the past three years have not been material. Revenue recognition . The Company’s retail operations segment recognizes revenue upon the sale of merchandise to its customers, net of anticipated returns of merchandise.
If we have to reduce our retail selling prices, the cost of sales on our consolidated statement of operations will correspondingly rise, thus reducing our net income and cash flow. ● Success of brand—The success of our exclusive brand merchandise as well as merchandise we source from national vendors is dependent upon customer fashion preferences and how well we can predict and anticipate trends. ● Sourcing—Our store merchandise selection is dependent upon our ability to acquire appealing products from a number of sources.
If we have to reduce our retail selling prices, the gross margin on our consolidated statement of operations will correspondingly decrease, thus reducing our net income and cash flow. 21 Table of Contents ● Success of brand—The success of our exclusive brand merchandise as well as merchandise we source from national vendors is dependent upon customer fashion preferences and how well we can predict and anticipate trends. ● Sourcing—Our store merchandise selection is dependent upon our ability to acquire appealing products from a number of sources.
At January 28, 2023 and January 29, 2022, 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.
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.
(Gain) loss on disposal of assets includes the net gain or loss on the sale or disposal of property and equipment, as well as gains from insurance proceeds in excess of the cost basis of insured assets, if any. Asset impairment and store closing charges .
Gain on disposal of assets . Gain 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.
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, respectively, on the consolidated balance sheets. Vendor allowances .
We record accounts receivable based on amounts billed to 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, respectively, on the consolidated balance sheets. Vendor allowances .
As of January 28, 2023 and January 29, 2022, insurance accruals of $42.5 million and $39.9 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 2022. Long-lived assets .
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. Long-lived assets .
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. Gross margin from the construction segment decreased 210 basis points of segment net sales.
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. Gross margin from the construction segment decreased 70 basis points of segment net sales during fiscal 2023 compared to fiscal 2022.
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 those statements included under the headings “2023 Guidance” and “Fiscal 2023 Outlook” included in this Management’s Discussion and Analysis and other statements regarding management’s expectations and forecasts for the remainder of fiscal 2023 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, 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, statements regarding the impacts of inflation in fiscal 2023 and statements concerning estimated taxes.
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 those statements included under the headings “2024 Guidance” and “Fiscal 2024 Outlook” included in this Management’s Discussion and Analysis and other 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 regarding our competitive position, statements concerning capital expenditures and sources of liquidity, 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 concerning expectations regarding the payment of dividends, statements regarding the impacts of inflation and rising interest rates in fiscal 2024 and statements concerning estimated taxes.
Financing cash outflows generally include the repayment of borrowings under the revolving credit facility, the repayment of long-term debt, finance lease obligations, the payment of dividends and the purchase of treasury stock. 30 Table of Contents Cash used in financing activities decreased to $769.0 million in fiscal 2022 from $853.8 million in fiscal 2021, primarily due to decreases in treasury stock purchases and cash dividends paid during 2022.
Financing cash outflows generally include the repayment of borrowings under the revolving credit facility, the repayment of long-term debt, finance lease obligations, the payment of dividends and the purchase of treasury stock. Cash used in financing activities decreased to $620.0 million in fiscal 2023 from $769.0 million in fiscal 2022, primarily due to decreases in treasury stock purchases during 2023.
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; 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, 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 33 Table of Contents 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; global 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, and other risks and uncertainties, including those detailed from time to time in our periodic reports filed with the SEC, particularly those set forth under the caption “Item 1A, Risk Factors” in this Annual Report.
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 36 Table of Contents 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 government 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 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 SOFR and other base borrowing rates; potential disruption from terrorist activity and the effect on ongoing consumer confidence; other epidemic, pandemic or public health issues and their effects on public health, our supply chain, the health and well-being of our employees and customers and the retail industry in general; potential disruption of international trade and supply chain efficiencies; global conflicts (including the ongoing conflicts in the Middle East and Ukraine) and the possible impact on consumer spending patterns and other economic and demographic changes of similar or dissimilar nature, and other risks and uncertainties, including those detailed from time to time in our periodic reports filed with the SEC, particularly those set forth under the caption “Item 1A, Risk Factors” in this Annual Report.
Our business will likely be affected by inflation in fiscal 2023, the extent of which depends on our customers’ continuing ability and willingness to accept price increases. 2023 Guidance A summary of management’s estimates of certain financial measures for fiscal 2023 is shown below: ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2023 Fiscal 2022 (in millions of dollars) ​ Estimated ​ Actual Depreciation and amortization ​ $ 180 ​ $ 188 Rentals ​ 22 ​ 23 Interest and debt (income) expense, net ​ (11) ​ 31 Capital expenditures ​ 150 ​ 120 ​ General Net sales .
Our business will likely be affected by inflation in fiscal 2024, the extent of which depends on our customers’ continuing ability and willingness to accept price increases. 2024 Guidance A summary of management’s estimates of certain financial measures for fiscal 2024 is shown below: ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2024 Fiscal 2023 (in millions of dollars) ​ Estimated ​ Actual Depreciation and amortization ​ $ 185 ​ $ 180 Rentals ​ 22 ​ 22 Interest and debt (income) expense, net ​ (8) ​ (5) Capital expenditures ​ 125 ​ 133 ​ General Net sales .
The total amount of unrecognized tax benefits as of January 29, 2022 was $6.7 million, of which $3.9 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 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.
We participate in the marketing of the private label cards, which includes the cost of customer reward programs. The Wells Fargo Alliance expires in November 2024. The Company recognized income of $67.8 million, $74.8 million and $78.6 million from the Wells Fargo Alliance during fiscal 2022, 2021 and 2020, respectively.
We participate in the marketing of the private label cards, which includes the cost of customer reward programs. The Company recognized income of $67.2 million, $67.8 million and $74.8 million from the Wells Fargo Alliance during fiscal 2023, 2022 and 2021, respectively.
The rate of interest on borrowings is LIBOR plus 1.75% if average quarterly availability is less than 50% of the total commitment, as defined in the 2021 amendment ("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 rate of interest on borrowings is Adjusted Daily Simple SOFR, as defined in the 2023 amendment, plus 1.75% if average quarterly availability is less than 50% of the total commitment, as defined in the 2023 amendment ("total commitment"), and the rate of interest on borrowings is Adjusted Daily Simple SOFR plus 1.50% if average quarterly availability is greater than or equal to 50% of the total commitment.
We believe that these assumptions have been appropriate and that, based on these assumptions, the pension liability of $273.1 million is appropriately stated as of January 28, 2023; however, actual results may differ materially from those estimated and could have a material impact on our consolidated financial statements.
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 discussion regarding results of operations and analysis of financial condition for the year ended January 29, 2022 as compared to the year ended January 30, 2021 is included in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended January 29, 2022, including the impact of COVID-19 on those periods.
A discussion regarding results of operations and analysis of financial condition for the year ended January 28, 2023 as compared to the year ended January 29, 2022 is included in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended January 28, 2023.
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. Construction contracts give rise to accounts receivable, contract assets and contract liabilities. We record accounts receivable based on amounts billed to customers.
The progress towards completion is determined by relating the actual costs of work 24 Table of Contents performed to date to the current estimated total costs of the respective contracts. Estimated contract losses are recognized in full when determined. Construction contracts give rise to accounts receivable, contract assets and contract liabilities.
At January 28, 2023, authorization of $175.4 million remained under the share repurchase program. ​ 18 Table of Contents At January 28, 2023, we had working capital of $1,212.9 million (including cash and cash equivalents, restricted cash and short-term investments totaling $809.2 million) and total debt outstanding of $521.4 million excluding operating lease liabilities. ​ Key Performance Indicators We use a number of key indicators of financial condition and operating performance to evaluate our business, including the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2022 Fiscal 2021 Fiscal 2020 Net sales (in millions) ​ $ 6,871.1 ​ $ 6,493.0 ​ $ 4,300.9 ​ Gross margin (in millions) ​ $ 2,887.5 ​ $ 2,745.3 ​ $ 1,231.8 ​ Gross margin as a percentage of net sales ​ 42.0 % 42.3 % 28.6 % Retail gross margin as a percentage of retail net sales ​ 43.0 % 42.9 % 29.4 % Selling, general and administrative expenses as a percentage of net sales ​ 24.4 % 23.7 % 28.2 % Cash flow from operations (in millions) ​ $ 948.4 ​ $ 1,280.0 ​ $ 252.9 ​ Total retail store count at end of period ​ 277 ​ 280 ​ 282 ​ Retail sales per square foot ​ $ 146 ​ $ 138 ​ $ 90 ​ Retail stores sales trend ​ 5 % 53 % (31) % Comparable retail store sales trend ​ 5 % * ​ * ​ Retail store inventory trend ​ 4 % (1) % (26) % Retail merchandise inventory turnover ​ 2.9 ​ 2.9 ​ 2.0 ​ * The Company reported no comparable store sales data for the fiscal year due to the temporary COVID-19-related closures of its brick-and-mortar stores during the first and second quarters of fiscal 2020 as well as the interdependence between in-store and online sales.
At February 3, 2024, authorization of $394.0 million remained under the share repurchase program. ​ 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. ​ Key Performance Indicators We use a number of key indicators of financial condition and operating performance to evaluate our business, including the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2023 ​ Fiscal 2022 Fiscal 2021 Net sales (in millions) ​ $ 6,752.1 ​ ​ $ 6,871.1 ​ $ 6,493.0 ​ Gross margin (in millions) ​ $ 2,720.9 ​ ​ $ 2,887.5 ​ $ 2,745.3 ​ Gross margin as a percentage of net sales ​ 40.3 % ​ 42.0 % 42.3 % Retail gross margin as a percentage of retail net sales ​ 41.8 % ​ 43.0 % 42.9 % Selling, general and administrative expenses as a percentage of net sales ​ 25.4 % ​ 24.4 % 23.7 % Cash flow provided by operations (in millions) ​ $ 883.6 ​ ​ $ 948.4 ​ $ 1,280.0 ​ Total retail store count at end of period ​ 273 ​ ​ 277 ​ 280 ​ Retail sales per square foot ​ $ 143 ​ ​ $ 146 ​ $ 138 ​ Retail stores sales trend ​ (5) % ** 5 % 53 % Comparable retail store sales trend ​ (4) % ** 5 % * ​ Retail store inventory trend ​ (2) % ​ 4 % (1) % Retail merchandise inventory turnover ​ 2.8 ​ ​ 2.9 ​ 2.9 ​ * The Company reported no comparable store sales data for the fiscal year due to the temporary COVID-19-related closures of its brick-and-mortar stores during the first and second quarters of fiscal 2020 as well as the interdependence between in-store and online sales. ** Based upon the 52 weeks ended January 27, 2024 and the 52 weeks ended January 28, 2023.
The asset and liability for sales returns are based on historical evidence of our return rate. We recorded an allowance for sales returns of $23.1 million and $19.6 million and return assets of $13.3 million and $10.8 million as of January 28, 2023 and January 29, 2022, respectively.
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.
Gross margin from retail operations increased 10 basis points of segment net sales during the same periods. During fiscal 2022, gross margin decreased moderately in home and furniture and ladies’ accessories and lingerie, while decreasing slightly in shoes and juniors’ and children’s apparel. Gross margin increased slightly in cosmetics, men’s apparel and accessories and ladies’ apparel.
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.
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 20 Table of Contents centers, employee and promotional discounts, shipping to customers and direct payroll for salon personnel.
Other income includes rental income, shipping and handling fees and gift card 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.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . Dillard’s, Inc. operates 277 retail department stores spanning 29 states and an Internet store.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . At February 3, 2024, Dillard’s, Inc. operates 273 retail department stores spanning 29 states and an Internet store at dillards.com.
Investment and Employee Stock Ownership Plan during the year, and ● a net $13.7 million ($0.78 per share) income tax benefit due to the release of valuation allowances primarily related to state net operating loss carryforwards. ​ Included in net income for the prior year (fiscal 2021) is a pretax gain of $24.7 million ($19.5 million after tax or $0.95 per share) primarily related to the sale of three store properties.
Investment and Employee Stock Ownership Plan during the year, and ● a net $9.8 million ($0.59 per share) income tax benefit due to the release of valuation allowances primarily related to state net operating loss carryforwards. ​ 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.
As of January 28, 2023, the Company had completed the authorized purchases under the March 2018 Stock Plan and the May 2021 Stock Plan, and $175.4 million of authorization remained under the February 2022 Stock Plan.
As of February 3, 2024, the Company had completed the authorized purchases under the March 2018 Stock Plan, the May 2021 Stock Plan, the February 2022 Stock Plan and $394.0 million of authorization remained under the May 2023 Stock Plan.
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 credit agreement. The credit agreement, as amended by the 2021 amendment, matures on April 28, 2026.
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 credit agreement. The credit agreement, as amended by the 2023 amendment, matures on April 28, 2026. 34 Table of Contents No borrowings were outstanding at February 3, 2024.
Store growth can be further hindered by mall attrition and subsequent closure of underperforming properties. 19 Table of Contents 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.
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.
Changes in the Company’s assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets and statements of operations. 23 Table of Contents 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.
Changes in the Company’s assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets and statements of operations. 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.
A further 50 basis point change in the discount rate would increase or decrease the pension liability by approximately $14 million. The Company expects to make a contribution to the pension plan of approximately $6.8 million in fiscal 2023. The Company expects pension expense to be approximately $23.8 million in fiscal 2023.
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.
Included in net income for 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.
Included in net income for 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.
Income Taxes The Company’s estimated federal and state effective income tax rate was 19.6% in fiscal 2022, 20.8% in fiscal 2021 and 53.3% in fiscal 2020. The Company expects the fiscal 2023 federal and state effective income tax rate to approximate 23%.
Income Taxes 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 unsecured notes bear interest at rates ranging from 7.000% to 7.750% with due dates from fiscal 2026 through fiscal 2028. 31 Table of Contents Long-term debt maturities over the next five years are (in millions): ​ ​ ​ ​ Fiscal Year Long-Term Debt Maturities 2023 ​ $ — 2024 ​ — 2025 ​ — 2026 ​ 96.0 2027 ​ 80.0 ​ During fiscal 2022, the Company decreased its net level of outstanding debt by $44.8 million related to the maturity of 7.875% Notes.
Long-term debt maturities over the next five years are (in millions): ​ ​ ​ ​ Fiscal Year Long-Term Debt Maturities 2024 ​ $ — 2025 ​ — 2026 ​ 96.0 2027 ​ 80.0 2028 ​ 145.8 ​ During fiscal 2022, the Company decreased its net level of outstanding debt by $44.8 million related to the maturity of 7.875% Notes.
Total weighted average debt outstanding during fiscal 2022 decreased $3.4 million compared to fiscal 2021 primarily due to a note maturity.
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.
Gross Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2022 Fiscal 2021 Fiscal 2020 ​ Gross margin: ​ ​ ​ ​ ​ ​ ​ Retail operations segment ​ $ 2,878,910 ​ $ 2,736,762 $ 1,223,614 ​ Construction segment ​ 8,573 ​ 8,566 8,218 ​ Total gross margin ​ $ 2,887,483 ​ $ 2,745,328 $ 1,231,832 ​ Gross margin as a percentage of segment net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Retail operations segment ​ ​ 43.0 % ​ 42.9 % ​ 29.4 % Construction segment ​ ​ 5.1 ​ 7.2 5.8 Total gross margin as a percentage of net sales ​ ​ 42.0 ​ 42.3 28.6 ​ 2022 Compared to 2021 Gross margin as a percentage of net sales decreased 30 basis points of sales during fiscal 2022 compared to fiscal 2021.
Gross Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2023 Fiscal 2022 Fiscal 2021 ​ Gross margin: ​ ​ ​ ​ ​ ​ ​ Retail operations segment ​ $ 2,709,071 ​ $ 2,878,910 $ 2,736,762 ​ Construction segment ​ 11,874 ​ 8,573 8,566 ​ Total gross margin ​ $ 2,720,945 ​ $ 2,887,483 $ 2,745,328 ​ Gross margin as a percentage of segment net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Retail operations segment ​ ​ 41.8 % ​ 43.0 % ​ 42.9 % Construction segment ​ ​ 4.4 ​ 5.1 7.2 Total gross margin as a percentage of net sales ​ ​ 40.3 ​ 42.0 42.3 ​ 28 Table of Contents 2023 Compared to 2022 Gross margin as a percentage of net sales decreased 170 basis points of sales during fiscal 2023 compared to fiscal 2022.
During fiscal 2022, the Company purchased certain treasury bills for $245.7 million that are classified as short-term investments. During fiscal 2022, the Company received proceeds of $100.0 million related to maturities of its short-term investments. Financing Activities Our primary source of cash inflows from financing activities is generally borrowings from our $800 million senior secured revolving credit facility.
During fiscal 2023 and 2022, the Company received proceeds of $301.9 million and $100.0 million, respectively, related to maturities of its short-term investments. Financing Activities Our primary source of cash inflows from financing activities is generally borrowings from our $800 million senior secured revolving credit facility.
Fiscal 2021 During fiscal 2021, the Company received 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) loss on disposal of assets.
Fiscal 2022 During fiscal 2022, the Company received proceeds of $25.1 million primarily from the sale of three store properties, resulting in a gain of $21.0 million that was recorded in gain on disposal of assets.
Cash flows for the Company’s most recent three fiscal years were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ (in thousands of dollars) ​ Fiscal 2022 Fiscal 2021 ​ Fiscal 2020 ​ 2022 - 2021 ​ 2021 - 2020 ​ Operating Activities ​ $ 948,391 ​ $ 1,280,020 ​ $ 252,946 ​ ​ (25.9) % ​ 406.0 % Investing Activities ​ (235,853) ​ (69,788) ​ (48,380) ​ (238.0) ​ ​ (44.2) Financing Activities ​ (768,966) ​ (853,812) ​ (121,304) ​ 9.9 ​ ​ (603.9) Total Cash (Used) Provided ​ $ (56,428) ​ $ 356,420 ​ $ 83,262 ​ ​ ​ ​ ​ ​ ​ ​ Operating Activities The primary source of the Company’s liquidity is, and historically has been, cash flows from operations.
Cash flows for the Company’s most recent three fiscal years were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ (in thousands of dollars) ​ Fiscal 2023 Fiscal 2022 ​ Fiscal 2021 ​ 2023 - 2022 ​ ​ 2022 - 2021 ​ Operating activities ​ $ 883,590 ​ $ 948,391 ​ $ 1,280,020 ​ ​ (6.8) % ​ ​ (25.9) % Investing activities ​ (115,594) ​ (235,853) ​ (69,788) ​ (51.0) ​ ​ (238.0) Financing activities ​ (620,040) ​ (768,966) ​ (853,812) ​ 19.4 ​ ​ ​ 9.9 Total cash provided (used) ​ $ 147,956 ​ $ (56,428) ​ $ 356,420 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Activities The primary source of the Company’s liquidity is, and historically has been, cash flows from operations.
The discount rate increased to 4.8% as of January 28, 2023 from 3.0% as of January 29, 2022.
The discount rate increased to 5.1% as of February 3, 2024 from 4.8% as of January 28, 2023.
During fiscal 2021, the Company received proceeds from insurance of $3.1 million for claims filed for building losses related to storm damage incurred at two stores. During fiscal 2022, the Company received proceeds from life insurance of $4.4 million related to one policy. During fiscal 2021, the Company received proceeds from life insurance of $0.7 million related to one policy.
During fiscal 2022, the Company received proceeds from insurance of $0.5 million for a claim filed for building losses related to storm damage incurred at one store. During fiscal 2023, the Company received proceeds from life insurance of $4.5 million related to two policies.
Pursuant to the 2021 amendment, the Company pays a variable rate of interest on borrowings under the credit agreement and a commitment fee to the participating banks.
Effective July 1, 2023, the Company amended the credit agreement (the "2023 amendment") to reflect the changes necessary for the phaseout of LIBOR. Pursuant to the 2023 amendment, the Company pays a variable rate of interest on borrowings under the credit agreement and a commitment fee to the participating banks.
Selling, General and Administrative Expenses (“SG&A”) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2022 Fiscal 2021 Fiscal 2020 SG&A: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Retail operations segment ​ $ 1,666,492 ​ $ 1,529,787 ​ $ 1,205,394 ​ Construction segment ​ 7,825 ​ 6,767 ​ 6,089 ​ Total SG&A ​ $ 1,674,317 ​ $ 1,536,554 ​ $ 1,211,483 ​ SG&A as a percentage of segment net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Retail operations segment ​ ​ 24.9 % ​ 24.0 % ​ 29.0 % Construction segment ​ ​ 4.6 ​ 5.7 4.3 Total SG&A as a percentage of net sales ​ ​ 24.4 ​ 23.7 28.2 ​ 26 Table of Contents 2022 Compared to 2021 SG&A increased $137.8 million, or 9.0%, during fiscal 2022 compared to fiscal 2021, increasing 70 basis points of sales.
Selling, General and Administrative Expenses (“SG&A”) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) ​ Fiscal 2023 Fiscal 2022 Fiscal 2021 SG&A: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Retail operations segment ​ $ 1,707,793 ​ $ 1,666,492 ​ $ 1,529,787 ​ Construction segment ​ 9,622 ​ 7,825 ​ 6,767 ​ Total SG&A ​ $ 1,717,415 ​ $ 1,674,317 ​ $ 1,536,554 ​ SG&A as a percentage of segment net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Retail operations segment ​ ​ 26.4 % ​ 24.9 % ​ 24.0 % Construction segment ​ ​ 3.5 ​ 4.6 5.7 Total SG&A as a percentage of net sales ​ ​ 25.4 ​ 24.4 23.7 ​ 2023 Compared to 2022 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.
Also included in prior year net income is a federal income tax benefit of $18.0 million ($0.88 per share) due to a deduction related to that portion of the special dividend of $15.00 per share that was paid to the Dillard's, Inc.
Also included in net income for fiscal 2023 are two tax-related benefits: ● a federal income tax benefit of $21.1 million ($1.28 per share) due to a deduction related to that portion of the special dividend of $20.00 per share that was paid to the Dillard's, Inc.
Fiscal 2021 During fiscal 2021, income taxes included federal and state tax benefits of $20.1 million due to the deduction related to that portion of the Company’s dividends that were paid to the Dillard’s, Inc.
The Company expects the fiscal 2024 federal and state effective income tax rate to approximate 23%. ​ 30 Table of Contents Fiscal 2023 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.
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. In accordance with the National Retail Federation fiscal reporting calendar and our bylaws, the Company’s fiscal year ends on the Saturday nearest January 31 of each year.
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.
We remain committed to closing under-performing stores where appropriate and may incur future closing costs related to such stores when they close.
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.
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.
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.
During fiscal 2021, the Company made finance lease payments of $0.7 million and no debt matured. During fiscal 2023, the Company expects to accrue interest expense of $24.2 million on its long-term debt. Subordinated Debentures . As of January 28, 2023, the Company had $200 million outstanding of its 7.5% subordinated debentures due August 1, 2038.
During fiscal 2024, the Company expects to accrue interest expense of $23.8 million on its long-term debt. Subordinated Debentures . As of February 3, 2024, the Company had $200 million outstanding of its 7.5% subordinated debentures due August 1, 2038.
Service Charges and Other Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2022 Fiscal 2021 Fiscal 2020 Service charges and other income: ​ ​ ​ ​ ​ ​ Retail operations segment ​ ​ ​ ​ ​ ​ Income from Wells Fargo Alliance ​ $ 67,768 ​ $ 74,780 ​ $ 78,600 Leased department income ​ 2 ​ 6 ​ 1,078 Shipping and handling income ​ 42,505 ​ 41,850 ​ 39,749 Other ​ 14,551 ​ 13,917 ​ 11,648 ​ ​ 124,826 ​ 130,553 ​ 131,075 Construction segment ​ 308 ​ 721 ​ 1,215 Total ​ $ 125,134 ​ $ 131,274 ​ $ 132,290 25 Table of Contents 2022 Compared to 2021 Service charges and other income is composed primarily of income from the Wells Fargo Alliance.
Service Charges and Other Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) ​ Fiscal 2023 Fiscal 2022 Fiscal 2021 Service charges and other income: ​ ​ ​ ​ ​ ​ Retail operations segment ​ ​ ​ ​ ​ ​ Income from Wells Fargo Alliance ​ $ 67,227 ​ $ 67,768 ​ $ 74,780 Shipping and handling income ​ 40,134 ​ 42,505 ​ 41,850 Other ​ 14,719 ​ 14,553 ​ 13,923 ​ ​ 122,080 ​ 124,826 ​ 130,553 Construction segment ​ 287 ​ 308 ​ 721 Total service charges and other income ​ $ 122,367 ​ $ 125,134 ​ $ 131,274 ​ Service charges and other income is composed primarily of income from the Wells Fargo Alliance.
Retail gross margin for fiscal 2022 was a record 43.0% of sales compared to 42.9% of sales for the prior fiscal year. ​ Consolidated selling, general and administrative expenses (“operating expenses”) for fiscal 2022 were $1.674 billion (24.4% of sales) compared to $1.537 billion (23.7% of sales) for fiscal 2021.
Retail gross margin for fiscal 2023 was 41.8% of sales compared to 43.0% of sales for fiscal 2022. ​ 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.
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.
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.
Total retail sales increased 5% for fiscal 2022 compared to the prior fiscal year. Sales in comparable stores for the year increased 5%. ​ Consolidated gross margin for fiscal 2022 was 42.0% of sales compared to 42.3% of sales for fiscal 2021.
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%. ​ Consolidated gross margin for fiscal 2023 was 40.3% of sales compared to 42.0% of sales for fiscal 2022.
These balances, as well as income tax expense, are determined through management’s estimations, interpretation of tax law for multiple jurisdictions and tax planning. If the Company’s actual results differ from estimated results due to changes in tax laws, changes in store locations, settlements of tax audits or tax planning, the Company’s effective tax rate and tax balances could be affected.
If the Company’s actual results differ from estimated results due to changes in tax laws, changes in store locations, settlements of tax audits or tax planning, the Company’s effective tax rate and tax balances could be affected. As such, these estimates may require adjustment in the future as additional information becomes available or as circumstances change.
Sales in comparable stores increased 5% for fiscal 2022 compared to fiscal 2021. During fiscal 2022, sales of men’s apparel and accessories, cosmetics, ladies’ apparel and shoes increased significantly, while sales of juniors’ and children’s apparel increased moderately. Sales of home and furniture and ladies’ accessories and lingerie decreased slightly.
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.
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. 32 Table of Contents COMMERCIAL COMMITMENTS AMOUNT OF COMMITMENT EXPIRATION PER PERIOD ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Total Amounts ​ ​ ​ ​ ​ ​ After Other Commercial Commitments ​ Committed ​ Within 1 year ​ 2 - 3 years ​ 4 - 5 years ​ 5 years $800 million line of credit, none outstanding (1) ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — Standby letters of credit ​ 19,333 ​ 19,033 ​ 300 ​ — ​ — Import letters of credit ​ — ​ — ​ — ​ — ​ — Total commercial commitments ​ $ 19,333 ​ $ 19,033 ​ $ 300 ​ $ — ​ $ — (1) At January 28, 2023, letters of credit totaling $19.3 million were issued under the credit agreement.
COMMERCIAL COMMITMENTS AMOUNT OF COMMITMENT EXPIRATION PER PERIOD ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Total Amounts ​ ​ ​ ​ ​ ​ After Other Commercial Commitments ​ Committed ​ Within 1 year ​ 2 - 3 years ​ 4 - 5 years ​ 5 years $800 million line of credit, none outstanding (1) ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — Standby letters of credit ​ 19,333 ​ 19,033 ​ 300 ​ — ​ — Import letters of credit ​ — ​ — ​ — ​ — ​ — Total commercial commitments ​ $ 19,333 ​ $ 19,033 ​ $ 300 ​ $ — ​ $ — (1) At February 3, 2024, letters of credit totaling $19.3 million were issued under the credit agreement.
The increase of approximately $138 million is primarily due to increases in payroll and payroll-related expenses resulting from a highly competitive wage environment. ​ We reported record net income for fiscal 2022 of $891.6 million, or $50.81 per share, compared to $862.5 million, or $41.88 per share, for fiscal 2021.
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. ​ We reported net income for fiscal 2023 of $738.8 million, or $44.73 per share, compared to $891.6 million, or $50.81 per share, for fiscal 2022.
Depreciation and Amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2022 Fiscal 2021 Fiscal 2020 Depreciation and amortization: ​ ​ ​ ​ ​ ​ ​ ​ ​ Retail operations segment ​ $ 188,227 ​ $ 199,061 ​ $ 212,866 Construction segment ​ 213 ​ 260 ​ 512 Total depreciation and amortization ​ $ 188,440 ​ $ 199,321 ​ $ 213,378 ​ 2022 Compared to 2021 Depreciation and amortization expense decreased $10.9 million during fiscal 2022 compared to fiscal 2021, primarily due to the timing and composition of capital expenditures.
Depreciation and Amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) ​ Fiscal 2023 Fiscal 2022 Fiscal 2021 Depreciation and amortization: ​ ​ ​ ​ ​ ​ ​ ​ ​ Retail operations segment ​ $ 179,315 ​ $ 188,227 ​ $ 199,061 Construction segment ​ 258 ​ 213 ​ 260 Total depreciation and amortization ​ $ 179,573 ​ $ 188,440 ​ $ 199,321 ​ 2023 Compared to 2022 Depreciation and amortization expense decreased $8.9 million during fiscal 2023 compared to fiscal 2022, primarily due to the timing and composition of capital expenditures. 29 Table of Contents Interest and Debt (Income) Expense, Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2023 Fiscal 2022 Fiscal 2021 Interest and debt (income) expense, net: ​ ​ ​ ​ ​ ​ Retail operations segment ​ $ (3,927) ​ $ 30,614 ​ $ 43,131 Construction segment ​ (673) ​ (87) ​ (39) Total interest and debt (income) expense, net ​ $ (4,600) ​ $ 30,527 ​ $ 43,092 ​ 2023 Compared to 2022 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.
To the extent these future projections, the Company’s strategies or market conditions change, the conclusion regarding impairment may differ from the current estimates. Income taxes . Temporary differences arising from differing treatment of income and expense items for tax and financial reporting purposes result in deferred tax assets and liabilities that are recorded on the balance sheet.
Temporary differences arising from differing treatment of income and expense items for tax and financial reporting purposes result in deferred tax assets and liabilities that are recorded on the balance sheet. These balances, as well as income tax expense, are determined through management’s estimations, interpretation of tax law for multiple jurisdictions and tax planning.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed2 unchanged
Biggest changeThe rate of interest on borrowings under the credit agreement is LIBOR plus 1.75% if average quarterly availability is less than 50% of the 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.
Biggest changeThe rate of interest on borrowings under the credit agreement is Adjusted Daily Simple SOFR, as defined in the 2023 amendment, plus 1.75% if average quarterly availability is less than 50% of the total commitment and the rate of interest on borrowings is Adjusted Daily Simple SOFR 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. The Company had no weighted average borrowings under this facility during fiscal 2022.
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. The Company had no weighted average borrowings under this facility during fiscal 2023.
The table presents maturities of the Company’s long-term debt and subordinated debentures along with the related weighted-average interest rates by expected maturity dates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected Maturity Date ​ ​ ​ ​ ​ ​ ​ (fiscal year) ​ ​ ​ ​ ​ (in thousands of dollars) ​ 2023 2024 2025 2026 2027 Thereafter Total Fair Value Long-term debt ​ $ — ​ $ — ​ $ — ​ $ 96,000 ​ $ 80,000 ​ $ 145,354 ​ $ 321,354 ​ $ 338,194 Average fixed interest rate ​ — % ​ — % ​ — % ​ 7.8 % ​ 7.8 % ​ 7.0 % ​ 7.4 % ​ ​ Subordinated debentures ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 200,000 ​ $ 200,000 ​ $ 205,040 Average interest rate ​ — ​ — ​ — ​ — ​ — ​ 7.5 % 7.5 % ​ ​ The Company is exposed to market risk from changes in the interest rates under its $800 million revolving credit agreement, which is secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries.
The table presents maturities of the Company’s long-term debt and subordinated debentures along with the related weighted-average interest rates by expected maturity dates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected Maturity Date ​ ​ ​ ​ ​ ​ ​ (fiscal year) ​ ​ ​ ​ ​ (in thousands of dollars) ​ 2024 2025 2026 2027 2028 Thereafter Total Fair Value Long-term debt ​ $ — ​ $ — ​ $ 96,000 ​ $ 80,000 ​ $ 145,825 ​ $ — ​ $ 321,825 ​ $ 339,394 Average fixed interest rate ​ — % ​ — % ​ 7.8 % ​ 7.8 % ​ 7.0 % ​ — % ​ 7.4 % ​ ​ Subordinated debentures ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 200,000 ​ $ 200,000 ​ $ 205,440 Average interest rate ​ — ​ — ​ — ​ — ​ — ​ 7.5 % 7.5 % ​ ​ The Company is exposed to market risk from changes in the interest rates under its $800 million revolving credit agreement, which is secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries.

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