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What changed in DILLARD'S, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of DILLARD'S, INC.'s 2022 and 2023 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 2023 report.

+193 added−219 removedSource: 10-K (2023-03-27) vs 10-K (2022-03-29)

Top changes in DILLARD'S, INC.'s 2023 10-K

193 paragraphs added · 219 removed · 162 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe following table summarizes the percentage of net sales by segment and major product line: Percentage of Net Sales Fiscal 2021 Fiscal 2020 Fiscal 2019 Retail operations segment: Cosmetics 14 % 15 % 14 % Ladies' apparel 21 18 22 Ladies' accessories and lingerie 15 17 15 Juniors' and children's apparel 10 9 9 Men's apparel and accessories 19 18 18 Shoes 15 15 15 Home and furniture 4 5 4 98 97 97 Construction segment 2 3 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.
Biggest changeThe 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 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.
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.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, statements of changes in beneficial ownership of securities on Form 4 and Form 5 and amendments to those reports filed or furnished with the SEC pursuant to Sections 13(a), 15(d) or 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as applicable, are available free of charge (as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC) on the Dillard's, Inc. investor relations website: investor.dillards.com.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, statements of changes in beneficial ownership of securities on Form 4 and Form 5 and amendments to those reports filed or furnished with the SEC pursuant to Sections 13(a), 15(d) or 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as applicable, are available free of charge (as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC) on the Dillard’s, Inc. investor relations website: investor.dillards.com.
The Company also operates a general contracting construction company, CDI Contractors, LLC ("CDI"), a portion of whose business includes constructing and remodeling stores for the Company.
The Company also operates a general contracting construction company, CDI Contractors, LLC (“CDI”), a portion of whose business includes constructing and remodeling stores for the Company.
Our private label merchandise program allows us to ensure the Company's high standards are achieved, while minimizing costs and differentiating our merchandise offerings from other retailers. We have made a significant investment in our trademark and license portfolio, in terms of design function, advertising, quality control and quick response to market trends in a quality manufacturing environment.
Our private label merchandise program allows us to ensure the Company’s high standards are achieved, while minimizing costs and differentiating our merchandise offerings from other retailers. 1 Table of Contents We have made a significant investment in our trademark and license portfolio, in terms of design function, advertising, quality control and quick response to market trends in a quality manufacturing environment.
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 2021, 2020 and 2019 ended on January 29, 2022, January 30, 2021 and February 1, 2020, 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. Fiscal 2022, 2021 and 2020 ended on January 28, 2023, January 29, 2022 and January 30, 2021, respectively, and contained 52 weeks each.
As of January 29, 2022, we operated 280 Dillard's stores, including 30 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 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.
Our corporate offices are located at 1600 Cantrell Road, Little Rock, Arkansas 72201, telephone: 501-376-5200. 3 Table of Conte nts C o ntents
Our corporate offices are located at 1600 Cantrell Road, Little Rock, Arkansas 72201, telephone: 501-376-5200. ​ ​ ​ 3 Table of Contents
ITEM 1. BUSINESS . Dillard's, Inc. ("Dillard's", the "Company", "we", "us", "our" or "Registrant") ranks among the nation's largest fashion apparel, cosmetics and home furnishing retailers. The Company, originally founded in 1938 by William T. Dillard, was incorporated in Delaware in 1964.
ITEM 1. BUSINESS. Dillard’s, Inc. (“Dillard’s”, the “Company”, “we”, “us”, “our” or “Registrant”) ranks among the nation’s largest fashion apparel, cosmetics and home furnishing retailers. The Company, originally founded in 1938 by William T. Dillard, was incorporated in Delaware in 1964.
Wells Fargo Bank, N.A. ("Wells Fargo") owns and manages Dillard's private label credit cards, including credit cards co-branded with American Express (collectively "private label cards") under a long-term marketing and servicing alliance ("Wells Fargo Alliance").
(“Wells Fargo”) owns and manages Dillard’s private label credit cards, including credit cards co-branded with American Express (collectively “private label cards”) under a long-term marketing and servicing alliance (“Wells Fargo Alliance”).
Human Capital As of December 25, 2021, the Company employed approximately 30,500 associates. Approximately 20,100 were full-time (greater than 35 hours per week) associates, 9,200 were part-time (20-35 hours per week) associates and 1,300 were limited status associates (less than 20 hours per week). 1 None of our associates are represented by a union.
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.
Dillard's trademark registrations are maintained for as long as Dillard's holds the exclusive right to use the trademarks on the listed products. 1 Table of Conte nts C o ntents Our merchandising, sales promotion and store operating support functions are conducted primarily at our corporate headquarters.
Dillard’s trademark registrations are maintained for as long as Dillard’s holds the exclusive right to use the trademarks on the listed products. Our merchandising, sales promotion and store operating support functions are conducted primarily at our corporate headquarters. Our back office sales support functions, such as accounting, product development, store planning and information technology, are also centralized.
Of the Company’s full-time associates, approximately 91% 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 .
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.
Available Information The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K (this "Annual Report") and should not be considered to be a part of this Annual Report.
In addition, in order to ensure that all qualified candidates are aware of store promotion opportunities, each store posts promotion opportunities for supervisory positions. Available Information The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K (this “Annual Report”) and should not be considered to be a part of this Annual Report.
The Company has a diverse customer base and seeks to achieve that same diversity in its workforce. As of December 25, 2021, approximately 75% of our store associates were women, and approximately 55% of our store associates were non-white.
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.
This knowledge is enhanced through regular store visits by senior management and merchandising personnel and through the use of online merchandise information and is supported by our regional merchandising offices. We will continue to use existing technology and research to edit merchandise assortments by store to meet the specific preference, taste and size requirements of each local operating area.
We will continue to use existing technology and research to edit merchandise assortments by store to meet the specific preference, taste and size requirements of each local operating area. Wells Fargo Bank, N.A.
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. In addition, in order to ensure that all qualified candidates are aware of store promotion opportunities, each store posts promotion opportunities for supervisory positions.
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 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.
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.
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Our back office sales support functions, such as accounting, product development, store planning and information technology, are also centralized. We have developed a knowledge of each of our trade areas and customer bases for our stores.
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We have developed a knowledge of each of our trade areas and customer bases for our stores. This knowledge is enhanced through regular store visits by senior management and merchandising personnel and through the use of online merchandise information and is supported by our regional merchandising offices.
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As of December 25, 2021, approximately 71% of the salaried managers at our stores were promoted from hourly store positions (increased from 63% as of the end of calendar 2020). 1 For purposes of this section, all figures are based on calendar year 2021. 2 Table of Conte nts C o ntents Diversity and inclusion .

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditionally, 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. 8 Table of Conte nts C o ntents 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.
Biggest changeAdditionally, 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.
Vendors and other suppliers of the Company may experience similar fluctuations, which may subject us to the effects of their price increases. For example, we have recently experienced significant inflation causing increases in fuel, materials and shipping costs. We may or may not be able to pass such costs along to our customers.
Vendors and other suppliers of the Company may experience similar fluctuations, which may subject us to the effects of their price increases. For example, we have experienced significant inflation causing increases in fuel, materials and shipping costs. We may or may not be able to pass such costs along to our customers.
We have approximately 74 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 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.
For example, beginning in Fiscal 2020, the United States Government took significant steps to address the forced labor concerns in the Xinjiang Uyghur Autonomous Region of China ("Xinjiang Region"), including withhold release orders (“WROs") issued by United States Customs and Border Protection (“CBP”).
For example, beginning in Fiscal 2020, the United States Government took significant steps to address the forced labor concerns in the Xinjiang Uyghur Autonomous Region of China (“Xinjiang Region”), including withhold release orders (“WROs”) issued by United States Customs and Border Protection (“CBP”).
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.
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 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 Conte nts C o ntents 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. 5 Table of Contents Our profitability may be adversely impacted by weather conditions.
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.
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.
As a result of the occurrence of, or threat of, a natural disaster, war, acts of violence or acts of terrorism, other armed conflicts, and public health issues (including the recent COVID-19 pandemic) in the United States, we may be required to suspend operations in some or all of our stores, which could have a material adverse impact on our business, financial condition and results of operations.
As a result of the occurrence of, or threat of, a natural disaster, climate change, war, acts of violence or acts of terrorism, other armed conflicts, and public health issues in the United States, we may be required to suspend operations in some or all of our stores, which could have a material adverse impact on our business, financial condition and results of operations.
For example, many disruptions in the global transportation network have occurred in Fiscal 2020 and 2021 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 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.
We rely on third-party service providers to provide hardware, software and services necessary to operate our 9 Table of Conte nts C o ntents information technology systems. Outages, failures, viruses, attacks, catastrophic events, acts of war or terrorism, and usage errors by third-party service providers (or their vendors) could also affect our information technology systems.
We rely on third-party service providers to provide hardware, software and services necessary to operate our information technology systems. Outages, failures, viruses, attacks, catastrophic events, acts of war or terrorism, and usage errors by third-party service providers (or their vendors) could also affect our information technology systems.
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. 10 Table of Conte nts C o ntents Legal and Compliance Risks Litigation with customers, employees and others could harm our reputation and impact operating results.
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.
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. 11 Table of Conte nts C o ntents
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
Because of the seasonality 4 Table of Conte nts C o ntents of our business, our operating results vary considerably from quarter to quarter, and results from any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.
Because of the seasonality of our business, our operating results vary considerably from quarter to quarter, and results from any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.
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.
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.
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.
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.
The occurrence of, or threat of, a natural disaster, war (including the recent 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) 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), 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.
As discussed in the immediately preceding risk factor, our brand and customer loyalty depend, in part, on our ability to predict or respond to changes in fashion trends and consumer preferences in a timely manner.
As discussed in the immediately preceding risk factor, our brand and customer loyalty depend, in part, on our ability to predict or respond to changes in fashion trends and consumer preferences in a timely manner. Failure to respond rapidly to changing trends could diminish brand and customer loyalty and impact our reputation with customers.
Wells Fargo 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.
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.
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.
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.
A reduction in the demand for or supply of our seasonal merchandise or reduced sales due to reduced customer traffic in our stores could have an adverse effect on our inventory levels, gross margins and results of operations. Natural disasters, war, acts of violence, acts of terrorism, other armed conflicts, and public health issues may adversely impact our business.
A reduction in the demand for or supply of our seasonal merchandise or reduced sales due to reduced customer traffic in our stores could have an adverse effect on our inventory levels, gross margins and results of operations.
The California ports of Los Angeles and Long Beach, which together handle a significant portion of United States merchandise imports including our own imports, have experienced and are expected to continue experiencing delays in processing imported merchandise, thereby resulting in untimely deliveries of merchandise and additional freight costs.
The California ports of Los Angeles and Long Beach, which together have handled a significant portion of United States merchandise imports, have experienced delays in processing imported merchandise, thereby resulting in untimely deliveries of merchandise and additional freight costs. Moreover, our third-party suppliers in foreign jurisdictions are subject to political and economic uncertainty.
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.
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.
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.
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.
Although we believe that our receiving and distribution process is efficient and that we have appropriate contingency plans, unforeseen disruptions in operations due to fire, severe weather conditions, natural disasters or other catastrophic events, labor disagreements or other shipping problems may result in the loss of inventory and/or delays in the delivery of merchandise to our stores and customers.
Although we believe that our receiving and distribution process is efficient and that we have appropriate contingency plans, unforeseen disruptions in operations due to fire, severe weather conditions, natural disasters or other catastrophic events, labor disagreements or other shipping problems may result in the loss of inventory and/or delays in the delivery of merchandise to our stores and customers. 4 Table of Contents Current store locations may become less desirable, and desirable new locations may not be available for a reasonable price, if at all, either of which could adversely affect our results of operations.
There can be no assurances that we would be able to arrange for alternate or replacement contractual or business relationships on terms as favorable as our existing ones, if at all.
There can be no assurances that we would be able to arrange for alternate or replacement contractual or business relationships on terms as favorable as our existing ones, if at all. Any inability on our part to do so could negatively affect our cash flows, financial condition and results of operations.
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. Risks Related to Retail Operations The retail merchandise business is highly competitive, and that competition could lower our revenues, margins and market share.
Any inability on our part to do so could negatively affect our cash flows, financial condition and results of operations. 7 Table of Conte nts C o ntents The Company and third-party suppliers on whom we rely source a significant portion of the merchandise we sell from foreign countries, which exposes us to certain risks that include political and economic conditions and supply chain disruptions.
The Company and third-party suppliers on whom we rely source a significant portion of the merchandise we sell from foreign countries, which exposes us to certain risks that include political and economic conditions and supply chain disruptions.
Our stores benefit from the abilities that our Company, other anchor tenants and other area attractions have to generate consumer traffic.
In order to generate customer traffic and for convenience of our customers, we attempt to locate our stores in desirable locations within shopping malls and open air centers. Our stores benefit from the abilities that our Company, other anchor tenants and other area attractions have to generate consumer traffic.
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Risks Related to the COVID-19 Pandemic The COVID-19 pandemic and its effects on public health, our supply chain, the health and well-being of our employees and customers, and the retail industry in general, has had, and could continue to have, a material adverse effect on our business, financial condition and results of operations.
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Natural disasters, climate change, war, acts of violence, acts of terrorism, other armed conflicts, and public health issues may adversely impact our business.
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In December 2019, a strain of coronavirus, now known as COVID-19, was reported to have surfaced in Wuhan, China. Since that time, the virus has rapidly spread to other countries around the world, including the United States.
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In addition, concern about climate change and greenhouse gases may result in new or additional legal, legislative and/or regulatory requirements to reduce or mitigate the effects of climate change on the environment. Any such new requirements could increase our operating costs for things like energy or packaging, as well as our product supply chain and distribution costs.
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In response to the pandemic, national and local governments, including those in the regions in which we operate, have taken various measures to attempt to slow the spread of the virus, including travel bans; prohibitions on group events and large gatherings; extended shutdowns of schools, government offices and certain businesses; curfews and recommendations to practice “social distancing.” Accordingly, the Company began closing its stores on March 19, 2020, and all store locations were temporarily closed by April 9, 2020.
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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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The Company reopened all stores as of June 2, 2020. The Company sources a significant portion of its private label and exclusive brand merchandise from countries that have experienced widespread transmission of the virus, including China. Additionally, many of the Company’s branded merchandise vendors may also source a significant portion of their merchandise from these same countries.
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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.
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Manufacturing capacity in those countries has been materially impacted by the pandemic, which has negatively impacted our supply chain. If this continues, we cannot guarantee that we will be able to locate alternative sources of supply for our merchandise on acceptable terms, or at all.
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If we are unable to adequately source our merchandise or purchase appropriate amounts of merchandise from branded vendors, our business and results of operations may be materially and adversely affected. Risks Related to Retail Operations The retail merchandise business is highly competitive, and that competition could lower our revenues, margins and market share.
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Current store locations may become less desirable, and desirable new locations may not be available for a reasonable price, if at all, either of which could adversely affect our results of operations. In order to generate customer traffic and for convenience of our customers, we attempt to locate our stores in desirable locations within shopping malls and open air centers.
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Failure to respond rapidly to changing trends could diminish brand and customer loyalty and impact our reputation with customers. 6 Table of Conte nts C o ntents Additionally, the value of our reputation is based, in part, on subjective perceptions of the quality of our merchandise selections.
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For instance, the United States is currently experiencing a shortage of truck drivers and trucks and truck parts, which may impact overall costs of transportation and the timely delivery of merchandise to our stores.
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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.
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Moreover, our third-party suppliers in foreign jurisdictions are subject to political and economic uncertainty.
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The Wells Fargo Alliance expires in November 2024.

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 29, 2022: Location Number of stores Owned Stores Leased Stores Owned Building on Leased Land Partially Owned and Partially Leased Alabama 9 9 — — — Arkansas 8 8 — — — Arizona 15 14 — 1 — California 3 3 — — — Colorado 8 8 — — — Florida 42 38 2 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 9 6 1 2 — 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 56 46 6 — 4 Utah 5 5 — — — Virginia 6 5 — 1 — Wyoming 1 1 — — — Total 280 245 22 9 4 12 Table of Conte nts C o ntents At January 29, 2022, we operated the following additional facilities: Facility Location Square Feet Owned / 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 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.
Worth, Texas 700,000 Owned Internet Fulfillment Center Maumelle, Arkansas 850,000 Owned Dillard's Executive Offices Little Rock, Arkansas 333,000 Owned CDI Contractors, LLC Executive Office Little Rock, Arkansas 25,000 Owned CDI Storage Facilities Maumelle, Arkansas 66,000 Owned Total 3,894,000 Additional property information is contained in Notes 1, 12, 13 and 14 in the "Notes to Consolidated Financial Statements," in Item 8 hereof.
Worth, Texas 700,000 Owned Internet Fulfillment Center Maumelle, Arkansas 850,000 Owned Dillard's Executive Offices Little Rock, Arkansas 333,000 Owned CDI Contractors, LLC Executive Office Little Rock, Arkansas 25,000 Owned CDI Storage Facilities Maumelle, Arkansas 66,000 Owned Total ​ ​ 3,894,000 ​ Additional property information is contained in Notes 1, 12, 13 and 14 in the “Notes to Consolidated Financial Statements,” in Item 8 hereof. ​
ITEM 2. PROPERTIES. All of our stores are owned by us or leased from third parties. At January 29, 2022, we operated 280 stores in 29 states totaling approximately 47.7 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 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 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of March 29, 2022, 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 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.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeName Age Position & Office Held Present Office Since Family Relationship to CEO William Dillard, II 77 Director; Chief Executive Officer 1998 Not applicable Alex Dillard 72 Director; President 1998 Brother of William Dillard, II Mike Dillard 70 Director; Executive Vice President 1984 Brother of William Dillard, II Drue Matheny 75 Director; Executive Vice President 1998 Sister of William Dillard, II William Dillard, III 51 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.
Biggest changeThere 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.
Stockman (4) 65 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.
Stockman (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.
Worley 56 Vice President; General Counsel 2012 None Brant Musgrave 49 Vice President 2014 None Mike Litchford 56 Vice President 2016 None Tom Bolin 59 Vice President 2016 None Annemarie Jazic (2) 38 Vice President 2017 Niece of William Dillard, II Alexandra Lucie (3) 38 Vice President 2017 Niece of William Dillard, II James D.
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.
Johnson 50 Senior Vice President; Co-Principal Financial Officer 2015 None Phillip R. Watts 59 Senior Vice President; Co-Principal Financial Officer and Principal Accounting Officer 2015 None Tony Bolte (1) 63 Senior Vice President 2021 None Dean L.
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.
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. 14 Table of Conte nts C o ntents PART II
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
Not applicable. 13 Table of Conte nts C o ntents 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. ​ 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.
Each is elected to serve a one-year term. There are no other persons chosen to become executive officers.
Each is elected to serve a one-year term.

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 Period (a) Total Number of Shares Purchased (1) (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 31, 2021 through November 27, 2021 — $ — — $ 262,859,316 November 28, 2021 through January 1, 2022 66,546 248.28 66,546 246,337,105 January 2, 2022 through January 29, 2022 548,602 244.83 548,602 112,022,064 Total 615,148 $ 245.20 615,148 $ 112,022,064 (1) The total number of shares purchased consists of shares purchased under the Board of Directors' authorized repurchase plan described below.
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”).
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market and Dividend Information for Common Stock The Company's Class A Common Stock trades on the New York Stock Exchange under the Ticker Symbol "DDS". No public market currently exists for the Company's Class B Common Stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market and Dividend Information for Common Stock The Company’s Class A Common Stock trades on the New York Stock Exchange under the Ticker Symbol “DDS”. No public market currently exists for the Company’s Class B Common Stock.
While the Company currently expects to continue paying quarterly cash dividends during fiscal 2022, 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 2023, all prospective dividends are subject to and conditional upon the review and approval of and declaration by the Board of Directors.
This repurchase plan permits the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act or through privately negotiated transactions. The repurchase plan has no expiration date.
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.
Stockholders As of February 26, 2022, there were 2,229 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 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.
Apparel Retailers Index for each of the last five fiscal years to the extent available. The cumulative total return assumes $100 invested in the Company's Class A Common Stock and each of the indices at market close on January 27, 2017 (the last trading day prior to the start of fiscal 2017) 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 2, 2018 (the last trading day prior to the start of fiscal 2018) and assumes reinvestment of dividends.
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.
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”.
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". 15 Table of Conte nts C o ntents Company Performance The graph below compares the cumulative total returns on the Company's Class A Common Stock, the Standard & Poor's 500 Index and the Dow Jones U.S.
Company Performance The graph below compares the cumulative total returns on the Company’s Class A Common Stock, the Standard & Poor’s 500 Index and the Dow Jones U.S. Apparel Retailers Index for each of the last five fiscal years.
Removed
In May 2021, the Company's Board of Directors authorized the repurchase of up to $500 million of the Company's Class A Common Stock under an open-ended stock repurchase plan ("May 2021 Stock Plan").
Added
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.
Removed
There was $112.0 million in remaining availability pursuant to the May 2021 Stock Plan as of January 29, 2022. On February 24, 2022, the Company announced that the Company's Board of Directors approved a new stock repurchase program authorizing the Company to repurchase up to $500 million of its Class A Common Stock. The repurchase plan has no expiration date.
Added
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
Removed
Apparel Retailers Index as of the last day of each of the Company's last five fiscal years. 2017 2018 2019 2020 2021 Dillard's, Inc. $ 117.22 $ 121.40 $ 113.19 $ 166.36 $ 498.61 S&P 500 122.83 122.76 149.23 174.97 211.71 DJ US Apparel Retailers 111.79 123.61 139.67 149.32 163.30 16 Table of Conte nts C o ntents

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe Company expects pension expense to be approximately $11.8 million in fiscal 2022. 23 Table of Conte nts C o ntents RESULTS OF OPERATIONS The following table sets forth the results of operations and percentage of net sales, for the periods indicated: For the years ended January 29, 2022 January 30, 2021 February 1, 2020 (in thousands of dollars) Amount % of Net Sales Amount % of Net Sales Amount % of Net Sales Net sales $ 6,492,993 100.0 % $ 4,300,895 100.0 % $ 6,203,520 100.0 % Service charges and other income 131,274 2.0 132,290 3.1 139,691 2.3 6,624,267 102.0 4,433,185 103.1 6,343,211 102.3 Cost of sales 3,747,665 57.7 3,069,063 71.4 4,235,978 68.3 Selling, general and administrative expenses 1,536,554 23.7 1,211,483 28.2 1,691,017 27.3 Depreciation and amortization 199,321 3.1 213,378 5.0 222,349 3.6 Rentals 22,594 0.3 22,174 0.5 26,375 0.4 Interest and debt expense, net 43,092 0.7 49,108 1.1 46,227 0.7 Other expense 11,366 0.2 8,417 0.2 7,667 0.1 (Gain) loss on disposal of assets (24,688) (0.4) 2,230 0.1 (20,293) (0.3) Asset impairment and store closing charges — — 10,736 0.2 — — Income (loss) before income taxes (benefit) 1,088,363 16.8 (153,404) (3.6) 133,891 2.2 Income taxes (benefit) 225,890 3.5 (81,750) (1.9) 22,810 0.4 Net income (loss) $ 862,473 13.3 % $ (71,654) (1.7) % $ 111,081 1.8 % Sales (in thousands of dollars) Fiscal 2021 Fiscal 2020 Fiscal 2019 Net sales: Retail operations segment $ 6,374,753 $ 4,160,232 $ 6,012,170 Construction segment 118,240 140,663 191,350 Total net sales $ 6,492,993 $ 4,300,895 $ 6,203,520 The percent change by segment and product category in the Company's sales for the past two years is as follows: Percent Change Fiscal 2021-2020 Fiscal 2020-2019 Retail operations segment Cosmetics 44.1 % (23.5) % Ladies' apparel 73.6 (43.5) Ladies' accessories and lingerie 41.9 (25.8) Juniors' and children's apparel 61.5 (30.5) Men's apparel and accessories 61.1 (29.9) Shoes 49.1 (29.9) Home and furniture 14.6 (13.6) Construction segment (15.9) (26.5) 2021 Compared to 2020 Net sales from the retail operations segment increased $2.2 billion during fiscal 2021 compared to fiscal 2020, an increase of 53% primarily due to the impact of the COVID-19 pandemic.
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%.
(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 any insurance proceeds in excess of the cost basis of the insured assets. Asset impairment and store closing charges.
(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 .
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 2021, 2020 and 2019.
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 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 2021, 2020, or 2019. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $8 million for fiscal 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.
As disclosed in that note, the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes.
As disclosed in that note, the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes.
The Company maintains a credit facility (“credit agreement”) for general corporate purposes including, among other uses, working capital financing, the issuance of letters of credit, capital expenditures and, subject to certain restrictions, the repayment of existing indebtedness and share repurchases.
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.
Asset Impairment and Store Closing Charges (in thousands of dollars) Fiscal 2021 Fiscal 2020 Fiscal 2019 Asset impairment and store closing charges: Retail operations segment $ — $ 10,736 $ — Construction segment — — — Total asset impairment and store closing charges $ — $ 10,736 $ — Fiscal 2020 During fiscal 2020, the Company recorded $10.7 million in asset impairment charges related to certain clearance locations.
Asset Impairment and Store Closing Charges ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2022 Fiscal 2021 Fiscal 2020 Asset impairment and store closing charges: ​ ​ ​ Retail operations segment ​ $ — ​ $ — ​ $ 10,736 Construction segment ​ — ​ — ​ — Total asset impairment and store closing charges ​ $ — ​ $ — ​ $ 10,736 ​ Fiscal 2020 During fiscal 2020, the Company recorded $10.7 million in asset impairment charges related to certain clearance locations.
The Company defers a portion of its net sales upon the sale of merchandise to its customer reward program members that is recognized in net sales when the reward is redeemed or expired at a future date. Revenues from CDI construction contracts are generally measured based on the ratio of costs incurred to total estimated contract costs (the "cost-to-cost method").
The Company defers a portion of its net sales upon the sale of merchandise to its customer reward program members that is recognized in net sales when the reward is redeemed or expired at a future date. Revenues from CDI construction contracts are generally measured based on the ratio of costs incurred to total estimated contract costs (the “cost-to-cost method”).
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; changes in legislation, affecting such matters as the cost of employee benefits or credit card income; adequate and stable availability and pricing of materials, production facilities and labor from which the Company sources its merchandise; changes in operating expenses, including employee wages, commission structures and related benefits; system failures or data security breaches; possible future acquisitions of store properties from other department store operators; the continued availability of financing in amounts and at the terms necessary to support the Company's future business; fluctuations in LIBOR and other base borrowing rates; the elimination of LIBOR; potential disruption from terrorist activity and the effect on ongoing consumer confidence; other epidemic, pandemic or public health issues; potential disruption of international trade and supply chain efficiencies; any government-ordered restrictions on the movement of the general public or the mandated or voluntary closing of retail stores in response to the COVID-19 pandemic; 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. 34 Table of Conte nts C o ntents
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.
During periods of deflation, inventory values on the first-in, first-out ("FIFO") retail inventory method may be lower than the LIFO retail inventory method. Additionally, inventory values at LIFO cost may be in excess of net realizable value.
During periods of deflation, inventory values on the first-in, first-out (“FIFO”) retail inventory method may be lower than the LIFO retail inventory method. Additionally, inventory values at LIFO cost may be in excess of net realizable value.
In March 2018, the Company's Board of Directors authorized the Company to repurchase up to $500 million of the Company's Class A Common Stock under an open-ended plan ("March 2018 Stock Plan").
Stock Repurchase . In March 2018, the Company’s Board of Directors authorized the Company to repurchase up to $500 million of the Company’s Class A Common Stock under an open-ended plan (“March 2018 Stock Plan”).
Depreciation and amortization expenses include depreciation and amortization on property and equipment. Rentals. Rentals includes expenses for store leases, including contingent rent, and data processing and other equipment rentals. 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 expense, net .
The extent to which our business will be affected by these factors depends on our customer’s ability and willingness to accept price increases. Accordingly, the related financial impact to fiscal 2022 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 2023 from these factors cannot be reasonably estimated at this time.
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.
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.
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 96.2%, 93.8% and 94.8% of total revenues in fiscal 2021, 2020 and 2019, 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 95.8%, 96.2% and 93.8% of total revenues in fiscal 2022, 2021 and 2020, respectively.
Cost of sales includes the cost of merchandise sold (net of purchase discounts, non-specific margin maintenance allowances and merchandise margin maintenance allowances), bankcard fees, freight to the distribution centers, employee and promotional discounts, shipping to customers and direct payroll for salon personnel.
Cost of sales 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.
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 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.
During fiscal 2021, the Company received cash proceeds of $29.3 million and recorded a related gain of $24.7 million, primarily related to the sale of three store properties: (1) a 120,000 square foot location at Cortana Mall in Baton Rouge, Louisiana, which was permanently closed and sold; (2) a 200,000 square foot location at Paradise Valley Mall in Phoenix, Arizona, which was permanently sold and closed and (3) a non-operating store property in Knoxville, Tennessee.
During fiscal 2021, the Company received cash proceeds of $29.3 million and recorded a related gain of $24.7 million, primarily related to the sale of three store properties: (1) a 120,000 square foot location at Cortana Mall in Baton Rouge, Louisiana; (2) a 200,000 square foot location at Paradise Valley Mall in Phoenix, Arizona and (3) a non-operating store property in Knoxville, Tennessee.
Our ability to attract and retain compelling vendors as well as in-house design talent, the adequacy and stable availability of materials and production facilities from which we source our merchandise 18 Table of Conte nts C o ntents and the speed at which we can respond to customer trends and preferences all have a significant impact on our merchandise mix and, thus, our ability to sell merchandise at profitable prices. • Store growth—Our ability to open new stores is dependent upon a number of factors, such as the identification of suitable markets and locations and the availability of shopping developments, especially in a weak economic environment.
Our ability to attract and retain compelling vendors as well as in-house design talent, the adequacy and stable availability of materials and production facilities from which we source our merchandise and the speed at which we can respond to customer trends and preferences all have a significant impact on our merchandise mix and, thus, our ability to sell merchandise at profitable prices. ● Store growth—Our ability to open new stores is dependent upon a number of factors, such as the identification of suitable markets and locations and the availability of shopping developments, especially in a weak economic environment.
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 $74.8 million, $78.6 million and $91.2 million from the alliance in fiscal 2021, 2020 and 2019, 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 $67.8 million, $74.8 million and $78.6 million from the alliance in fiscal 2022, 2021 and 2020, respectively.
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 2022, the Company expects to accrue interest expense of $15.0 million on its subordinated debentures. Dividends.
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 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 amended credit agreement ("total commitment"), and the rate of interest on borrowings is LIBOR plus 1.50% if average quarterly availability is greater than or equal to 50% of the total commitment.
The 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.
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 $74.8 million, $78.6 million and $91.2 million from the Wells Fargo Alliance during fiscal 2021, 2020 and 2019, respectively.
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.
At January 29, 2022 and January 30, 2021, 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 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.
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.
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.
During fiscal 2021 and 2020, the Company received proceeds from insurance of $2.9 million and $7.7 million, respectively, for claims filed for merchandise losses related to storm damage incurred at two stores.
During fiscal 2021, the Company received proceeds from insurance of $2.9 million for claims filed for merchandise losses related to storm damage incurred at two stores.
Other expense includes the interest cost and net actuarial loss components of net periodic benefit costs 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. (Gain) loss on disposal of assets.
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 .
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.
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 .
During fiscal 2021 and 2020, the Company received proceeds from insurance of $3.1 million and $6.1 million, respectively, for claims filed for building losses related to storm damage incurred at two stores. During fiscal 2021, the Company received proceeds from life insurance of $0.7 million related to one policy.
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.
We believe that these assumptions have been appropriate and that, based on these assumptions, the pension liability of $226.3 million is appropriately stated as of January 29, 2022; 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 $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.
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 Conte nts C o ntents COMMERCIAL COMMITMENTS AMOUNT OF COMMITMENT EXPIRATION PER PERIOD (in thousands of dollars) Other Commercial Commitments Total Amounts Committed Within 1 year 2 - 3 years 4 - 5 years After 5 years $800 million line of credit, none outstanding(1) $ — $ — $ — $ — $ — Standby letters of credit 20,083 20,083 — — — Import letters of credit — — — — — Total commercial commitments $ 20,083 $ 20,083 $ — $ — $ — ___________________________________ (1) At January 29, 2022, letters of credit totaling $20.1 million were issued under the credit agreement.
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.
Cost of sales also includes 19 Table of Conte nts C o ntents CDI contract costs, which comprise all direct material and labor costs, subcontract costs and those indirect costs related to contract performance, such as indirect labor, employee benefits and insurance program costs. Selling, general and administrative expenses.
Cost of sales also includes CDI contract costs, which comprise all direct material and labor costs, subcontract costs and those indirect costs related to contract performance, such as indirect labor, employee benefits and insurance program costs. Selling, general and administrative expenses .
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. Investment and Employee Stock Ownership Plan, including the special dividend of $15 per share paid on December 15, 2021.
Fiscal 2022 During fiscal 2022, income taxes included federal and state tax benefits of $19.3 million due to the deduction related to that portion of the Company’s dividends that were paid to the Dillard’s, Inc. Investment and Employee Stock Ownership Plan, including the special dividend of $15 per share paid on January 9, 2023.
The total amount of unrecognized tax benefits as of January 30, 2021 was $5.1 million, of which $3.3 million would, if recognized, affect the Company’s effective tax rate. The Company does not expect a significant change in unrecognized tax benefits in the next twelve months.
The 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.
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.
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.
In May 2021, the Company announced that its Board of Directors approved the Company to repurchase up to $500 million of the Company's Class A Common Stock under an open ended plan ("May 2021 Stock Plan").
In May 2021, the Company’s Board of Directors authorized the Company to repurchase up to $500 million of the Company’s Class A Common Stock under an open-ended plan (“May 2021 Stock Plan”).
A discussion regarding results of operations and analysis of financial condition for the year ended January 30, 2021, as compared to the year ended February 1, 2020 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 30, 2021.
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.
Income Taxes The Company's estimated federal and state effective income tax rate was 20.8% in fiscal 2021, 53.3% in fiscal 2020, and 17.0% in fiscal 2019. The Company expects the fiscal 2022 federal and state effective income tax rate to approximate 22%.
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%.
A further 50 basis point change in the discount rate would increase or decrease the pension liability by approximately $13 million. The Company expects to make a contribution to the pension plan of approximately $6.2 million in fiscal 2022.
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.
NEW ACCOUNTING PRONOUNCEMENTS For information with respect to new accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 1 in the "Notes to Consolidated Financial Statements" in Item 8 hereof. 33 Table of Conte nts C o ntents FORWARD-LOOKING INFORMATION This report contains certain forward-looking statements.
NEW ACCOUNTING PRONOUNCEMENTS For information with respect to new accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 1 in the “Notes to Consolidated Financial Statements” in Item 8 hereof. FORWARD-LOOKING INFORMATION This report contains certain forward-looking statements.
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 January 29, 2022 was $6.7 million, of which, $3.9 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. 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.
SG&A from retail operations decreased 497 basis points of segment net sales during fiscal 2021 compared to fiscal 2020. The increase in SG&A dollars was primarily due to increases in payroll expense and related payroll taxes. Payroll expense and related payroll taxes for fiscal 2021 were $1,042.7 million compared to $788.5 million for fiscal 2020, an increase of 32.2%.
SG&A from retail operations increased 90 basis points of segment net sales during fiscal 2022 compared to fiscal 2021. The increase in SG&A dollars was primarily due to increases in payroll expense and related payroll taxes. Payroll expense and related payroll taxes for fiscal 2022 were $1,138.8 million compared to $1,042.7 million for fiscal 2021, an increase of 9.2%.
Asset impairment and store closing charges consist of (a) write-downs to fair value of under-performing or held for sale properties and cost method investments and (b) exit costs associated with the closure of certain stores, if any.
Asset impairment and store closing charges consist of (a) write-downs to fair value of under-performing or held for sale properties and cost method investments and (b) exit costs associated with the closure of certain stores, if any. Exit costs include future rent, taxes and common area maintenance expenses from the time the stores are closed.
The asset and liability for sales returns are based on historical evidence of our return rate. We recorded an allowance for sales returns of $19.6 million and $11.7 million and return assets of $10.8 million and $7.5 million as of January 29, 2022 and January 30, 2021, 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 $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.
Depreciation and Amortization (in thousands of dollars) Fiscal 2021 Fiscal 2020 Fiscal 2019 Depreciation and amortization: Retail operations segment $ 199,061 $ 212,866 $ 221,643 Construction segment 260 512 706 Total depreciation and amortization $ 199,321 $ 213,378 $ 222,349 2021 Compared to 2020 Depreciation and amortization expense decreased $14.1 million during fiscal 2021 compared to fiscal 2020, primarily due to the timing and composition of capital expenditures.
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.
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 "2022 Guidance" and "Fiscal 2022 Outlook" included in this Management's Discussion and Analysis and other statements regarding management's expectations and forecasts for the remainder of fiscal 2022 and beyond, statements concerning the opening of new stores or the closing of existing stores, statements regarding our competitive position, statements concerning capital expenditures and sources of liquidity, statements regarding the expected impact of the COVID-19 pandemic and related government responses, including the CARES Act and other subsequently-enacted COVID-19 stimulus packages, statements concerning share repurchases, statements concerning pension contributions, statements concerning changes in loss trends, settlements and other costs related to our self-insurance programs, statements regarding the expected phase out of LIBOR, statements concerning expectations regarding the payment of dividends, statements regarding the impacts of inflation in fiscal 2022 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 “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.
As of January 29, 2022, the Company had completed the authorized purchases under the March 2018 Stock Plan, and $112.0 million of authorization remained under the May 2021 Stock Plan.
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.
The Company regularly records a provision for estimated shrinkage, thereby reducing the carrying value of merchandise inventory. Complete physical inventories of the Company's stores and warehouses are performed at least once during each fiscal year, with the recorded amount of merchandise inventory being adjusted to coincide with these physical counts.
The Company regularly records a provision for estimated shrinkage, thereby reducing the carrying value of merchandise inventory. Complete physical inventories of the Company’s stores and warehouses are generally performed no less frequently than annually, with the recorded amount of merchandise inventory being adjusted to coincide with these physical counts.
The progress towards completion is 21 Table of Conte nts C o ntents 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.
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.
This charge was recorded in other expense on the consolidated statement of operations. No borrowings were outstanding at January 29, 2022. Letters of credit totaling $20.1 million were issued under the credit agreement leaving unutilized availability under the facility of $700.6 million at January 29, 2022.
This charge was recorded in other expense on the consolidated statement of operations. No borrowings were outstanding at January 28, 2023. Letters of credit totaling $19.3 million were issued under the credit agreement leaving unutilized availability under the facility of $729.4 million at January 28, 2023.
During fiscal 2021, the Company repurchased 3.2 million shares of Class A Common Stock for $561.1 million (including the accrual of $16.2 million of share repurchases that had not settled as of January 29, 2022) at an average price of $175.06 per share.
During fiscal 2021, the Company repurchased 3.2 million shares of Class A Common Stock for $561.1 million (including the unsettled share repurchases accrued at January 29, 2022) at an average price of $175.06 per share. The ultimate disposition of the repurchased stock has not been determined.
We assess the impairment of long-lived assets, primarily fixed assets and operating lease assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
The Company’s judgment regarding the existence of impairment indicators is based on market and operational performance. We assess the impairment of long-lived assets, primarily fixed assets and operating lease assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Cash flows for the Company's most recent three fiscal years were as follows: Percent Change (in thousands of dollars) Fiscal 2021 Fiscal 2020 Fiscal 2019 2021 - 2020 2020 - 2019 Operating Activities $ 1,280,020 $ 252,946 $ 365,074 406.0 % (30.7) % Investing Activities (69,788) (48,380) (68,092) (44.2) 28.9 Financing Activities (853,812) (121,304) (143,414) (603.9) 15.4 Total Cash Provided $ 356,420 $ 83,262 $ 153,568 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 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.
Gross Margin (in thousands of dollars) Fiscal 2021 Fiscal 2020 Fiscal 2019 Gross margin: Retail operations segment $ 2,736,762 $ 1,223,614 $ 1,960,255 Construction segment 8,566 8,218 7,287 Total gross margin $ 2,745,328 $ 1,231,832 $ 1,967,542 Gross margin as a percentage of segment net sales: Retail operations segment 42.9 % 29.4 % 32.6 % Construction segment 7.2 5.8 3.8 Total gross margin as a percentage of net sales 42.3 28.6 31.7 2021 Compared to 2020 Gross margin as a percentage of net sales increased 1,364 basis points of sales during fiscal 2021 compared to fiscal 2020.
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.
Interest and debt expense includes interest, net of interest income and capitalized interest, relating to the Company’s unsecured notes, subordinated debentures and borrowings under the Company’s credit facility. Interest and debt expense also includes gains and losses on note repurchases, if any, amortization of financing costs and interest on finance lease obligations. Other expense.
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 .
Selling, General and Administrative Expenses ("SG&A") (in thousands of dollars) Fiscal 2021 Fiscal 2020 Fiscal 2019 SG&A: Retail operations segment $ 1,529,787 $ 1,205,394 $ 1,684,258 Construction segment 6,767 6,089 6,759 Total SG&A $ 1,536,554 $ 1,211,483 $ 1,691,017 SG&A as a percentage of segment net sales: Retail operations segment 24.0 % 29.0 % 28.0 % Construction segment 5.7 4.3 3.5 Total SG&A as a percentage of net sales 23.7 28.2 27.3 2021 Compared to 2020 SG&A increased $325.1 million, or 26.8%, during fiscal 2021 compared to fiscal 2020 while decreasing 451 basis points of sales.
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.
Service Charges and Other Income (in thousands of dollars) Fiscal 2021 Fiscal 2020 Fiscal 2019 Service charges and other income: Retail operations segment Income from Wells Fargo Alliance $ 74,780 $ 78,600 $ 91,225 Leased department income 6 1,078 4,576 Shipping and handling income 41,850 39,749 28,275 Other 13,917 11,648 14,929 130,553 131,075 139,005 Construction segment 721 1,215 686 Total $ 131,274 $ 132,290 $ 139,691 2021 Compared to 2020 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 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.
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 increased to $853.8 million in fiscal 2021 from $121.3 million in fiscal 2020.
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.
Key Performance Indicators We use a number of key indicators of financial condition and operating performance to evaluate our business, including the following: Fiscal 2021 Fiscal 2020 Fiscal 2019 Net sales (in millions) $ 6,493.0 $ 4,300.9 $ 6,203.5 Gross margin (in millions) $ 2,745.3 $ 1,231.8 $ 1,967.5 Gross margin as a percentage of net sales 42.3 % 28.6 % 31.7 % Retail gross margin as a percentage of retail net sales 42.9 % 29.4 % 32.6 % Selling, general and administrative expenses as a percentage of net sales 23.7 % 28.2 % 27.3 % Cash flow from operations (in millions) $ 1,280.0 $ 252.9 $ 365.1 Total retail store count at end of period 280 282 285 Retail sales per square foot $ 138 $ 90 $ 127 Retail stores sales trend 53 % (31) % (2) % * Comparable retail store sales trend ** ** (1) % * Retail store inventory trend (1) % (26) % (4) % Retail merchandise inventory turnover 2.9 2.0 2.4 * Based upon the 52 weeks ended February 1, 2020 and the 52 weeks ended February 2, 2019. ** 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 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 January 29, 2022, the Company had purchase obligations of $1,550.5 million outstanding for merchandise and store construction commitments, all of which are expected to be paid during fiscal 2022. Investing Activities Cash inflows from investing activities generally include proceeds from sales of property and equipment. Investment cash outflows generally include payments for capital expenditures such as property and equipment.
At January 28, 2023, the Company had purchase obligations of $1,330.3 million outstanding for merchandise and store construction commitments, all of which are expected to be paid during fiscal 2023. 29 Table of Contents Investing Activities Cash inflows from investing activities generally include proceeds from sales of property and equipment and maturities of short-term investments.
The Company had no borrowings during fiscal 2021, and the Company had weighted-average borrowings of $148.6 million and $76.9 million during fiscal 2020 and 2019, respectively. Long-term Debt. At January 29, 2022, the Company had $366.0 million of long-term debt, including the current portion, comprised of unsecured notes.
The Company had no borrowings during fiscal 2022 and 2021, and the Company had weighted-average borrowings of $148.6 million during fiscal 2020. Long-term Debt . At January 28, 2023, the Company had $321.4 million of long-term debt, comprised of unsecured notes.
We do not believe that inflation has had a material effect on our results during the periods presented; however, our business will likely be affected by inflation in fiscal 2022, the extent of which depends on the customer's ability and willingness to accept price increases. 2022 Guidance A summary of management's estimates of certain financial measures for fiscal 2022 is shown below: (in millions of dollars) Fiscal 2022 Estimated Fiscal 2021 Actual Depreciation and amortization $ 190 $ 199 Rentals 23 23 Interest and debt expense, net 42 43 Capital expenditures 150 104 General Net sales.
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 .
The discount rate increased to 3.0% as of January 29, 2022 from 2.5% as of January 30, 2021.
The discount rate increased to 4.8% as of January 28, 2023 from 3.0% as of January 29, 2022.
Fiscal 2020 During fiscal 2020, the Company received proceeds of $1.5 million primarily from the sale of one property, resulting in a loss of $2.2 million that was recorded in (gain) loss on disposal of assets.
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.
Interest and Debt Expense, Net (in thousands of dollars) Fiscal 2021 Fiscal 2020 Fiscal 2019 Interest and debt expense (income), net: Retail operations segment $ 43,131 $ 49,154 $ 46,337 Construction segment (39) (46) (110) Total interest and debt expense, net $ 43,092 $ 49,108 $ 46,227 2021 Compared to 2020 Net interest and debt expense decreased $6.0 million in fiscal 2021 compared to fiscal 2020 primarily due to a decrease of short term borrowings under the credit facility.
Interest and Debt Expense, Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2022 Fiscal 2021 Fiscal 2020 Interest and debt expense (income), net: ​ ​ ​ ​ ​ ​ Retail operations segment ​ $ 30,614 ​ $ 43,131 ​ $ 49,154 Construction segment ​ (87) ​ (39) ​ (46) Total interest and debt expense, net ​ $ 30,527 ​ $ 43,092 ​ $ 49,108 ​ 2022 Compared to 2021 Net interest and debt expense decreased $12.6 million in fiscal 2022 compared to fiscal 2021 primarily due to an increase in interest income.
During fiscal 2021, 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. 31 Table of Conte nts C o ntents Fiscal 2022 Outlook The Company expects to finance its operations during fiscal 2022 from cash on hand, cash flows generated from operations and, if necessary, utilization of our revolving credit facility.
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.
Included in net income for 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 and a net tax benefit of $18.0 million ($0.88 per share) due to the deduction related to that portion of a special dividend of $15 per share that was paid to the Dillard's, Inc.
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.
Shipping and handling income increased during fiscal 2021 primarily due to an increase in online shopping. 2021 Compared to 2019 Income from the Wells Fargo Alliance decreased $16.4 million in fiscal 2021 compared to fiscal 2019 primarily due to decreases in finance charges partially offset by decreases in credit losses.
Income from the alliance decreased $7.0 million in fiscal 2022 compared to fiscal 2021 primarily due to increased funding costs. Shipping and handling income increased during fiscal 2022 primarily due to an increase in online shopping.
During fiscal 2022, the Company expects to accrue interest expense of $27.0 million on its long-term debt. Subordinated Debentures. As of January 29, 2022, the Company had $200 million outstanding of its 7.5% subordinated debentures due August 1, 2038. All of these subordinated debentures were held by Dillard's Capital Trust I, a 100% owned, unconsolidated finance subsidiary of the Company.
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.
Net cash flows from operations increased $914.9 million during fiscal 2021 compared to fiscal 2019. Operating cash inflows also include the Company's income and reimbursements from the Wells Fargo Alliance and cash distributions from joint ventures (excluding returns of investments), if any.
Operating cash inflows also include the Company’s income and reimbursements from the Wells Fargo Alliance and cash distributions from joint ventures (excluding returns of investments), if any. Operating cash outflows include payments to vendors for inventory, services and supplies, payments to employees and payments of interest and taxes.
(Gain) Loss on Disposal of Assets (in thousands of dollars) Fiscal 2021 Fiscal 2020 Fiscal 2019 (Gain) loss on disposal of assets: Retail operations segment $ (24,682) $ 2,256 $ (20,294) Construction segment (6) (26) 1 Total (gain) loss on disposal of assets $ (24,688) $ 2,230 $ (20,293) 27 Table of Conte nts C o ntents 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.
Other Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2022 Fiscal 2021 Fiscal 2020 Other expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ Retail operations segment ​ $ 7,744 ​ $ 11,366 ​ $ 8,417 Construction segment ​ — ​ — ​ — Total other expense ​ $ 7,744 ​ $ 11,366 ​ $ 8,417 ​ 2022 Compared to 2021 Other expense decreased $3.6 million in fiscal 2022 compared to fiscal 2021 primarily due to the write-off in fiscal 2021 of certain deferred financing fees in connection with the amendment and extension of the Company’s secured revolving credit facility. 27 Table of Contents (Gain) Loss on Disposal of Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of dollars) Fiscal 2022 Fiscal 2021 Fiscal 2020 (Gain) loss on disposal of assets: ​ ​ ​ Retail operations segment ​ $ (21,046) ​ $ (24,682) ​ $ 2,256 Construction segment ​ (1) ​ (6) ​ (26) Total (gain) loss on disposal of assets ​ $ (21,047) ​ $ (24,688) ​ $ 2,230 ​ 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) loss on disposal of assets.
During fiscal 2020, the Company received life insurance proceeds of $4.3 million related to four policies. 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 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.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Dillard's, Inc. operates 280 retail department stores spanning 29 states and an Internet store. 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.
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.
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. 22 Table of Conte nts C o ntents As such, these estimates may require adjustment in the future as additional facts become known or as circumstances change.
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.
During fiscal 2021, gross margin increased significantly in all product categories, except for cosmetics, which increased moderately. Retail store inventory decreased 1% at January 29, 2022 compared to January 30, 2021. We source a significant portion of our private label and exclusive brand merchandise from countries that have experienced widespread transmission of the COVID-19 virus.
Retail store inventory increased 4% at January 28, 2023 compared to January 29, 2022. We source a significant portion of our private label and exclusive brand merchandise from countries that have been impacted by the COVID-19 virus. Additionally, many of our branded merchandise vendors also source a significant portion of their merchandise from these same countries.
The credit agreement provides a borrowing capacity of $800 million, subject to certain limitations as outlined in the credit agreement, with a $200 million expansion option ("credit agreement"). As part of the Company's liquidity strategy during the COVID-19 pandemic, in March 2020, the company borrowed $779 million under the credit agreement.
The credit agreement 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").
Exclusive Brand Merchandise Sales penetration of exclusive brand merchandise for fiscal 2021, 2020 and 2019 was 22.7%, 20.4% and 21.1% of total net sales, respectively.
The remaining performance obligations related to executed construction contracts totaled $189.1 million, increasing approximately 101% from January 29, 2022. Exclusive Brand Merchandise Sales penetration of exclusive brand merchandise for fiscal 2022, 2021 and 2020 was 23.8%, 22.7% and 20.4% of total net sales, respectively.
At present, a number of economic and geopolitical factors are affecting the U.S. and world economies, including rising gas prices (in part due to the war in Ukraine and the resulting sanctions imposed on Russia by the U.S. and other countries), increased shipping costs with reduced shipping capacity, U.S. port slowdowns, increasing U.S. wages in a tight labor market as well as some continuing effects from the COVID-19 pandemic, including countries from which we source some of our merchandise.
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.
During fiscal 2021, the Company also closed its leased clearance center at Valle Vista Mall in Harlingen, Texas (100,000 square feet). The Company has announced the upcoming closure of its leased clearance center at University Square Mall in Tampa, Florida (80,000 square feet). There were no material costs associated or expected with any of these store closures.
During early 2023, the Company has closed an owned location at Santa Rosa Mall in Fort Walton Beach, Florida (115,000 square feet) and a leased location at Conestoga Mall in Grand Island, Nebraska (80,000 square feet). There were no material costs associated or expected with any of these store closures.
Total weighted average debt outstanding during fiscal 2021 decreased approximately $148.6 million compared to fiscal 2020 primarily due to a decrease of short term borrowings under the credit facility.
Total weighted average debt outstanding during fiscal 2022 decreased $3.4 million compared to fiscal 2021 primarily due to a note maturity.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeExpected Maturity Date (fiscal year) (in thousands of dollars) 2022 2023 2024 2025 2026 Thereafter Total Fair Value Long-term debt $ 44,800 $ — $ — $ — $ 96,000 $ 225,247 $ 366,047 $ 419,418 Average fixed interest rate 7.9 % — % — % — % 7.8 % 7.3 % 7.5 % Subordinated debentures $ — $ — $ — $ — $ — $ 200,000 $ 200,000 $ 209,360 Average interest rate — — — — — 7.5 % 7.5 % The Company is exposed to market risk from changes in the interest rates under its $800 million credit agreement, which is secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries.
Biggest changeThe 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 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 2021.
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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The table below provides information about the Company's obligations that are sensitive to changes in interest rates. 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The table below provides information about the Company’s obligations that are sensitive to changes in interest rates.

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