Business Segments

The Company operates in two reportable segments: the operation of retail department stores (“retail operations”) and a general contracting construction company (“construction”).

For the Company’s retail operations, the Company determined its operating segments on a store by store basis. Each store’s operating performance has been aggregated into one reportable segment. The Company’s operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas: economic characteristics, class of consumer, nature of products and distribution methods. Revenues from external customers are derived from merchandise sales, and the Company does not rely on any major customers as a source of revenue. Across all stores, the Company operates one store format under the Dillard’s name where each store offers the same general mix of merchandise with similar categories and similar customers. The Company believes that disaggregating its operating segments would not provide meaningful additional information.

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



	Three Months Ended				Six Months Ended
	August 4, 2018		July 29, 2017		August 4, 2018		July 29, 2017
Retail operations segment
Cosmetics	13	%	13	%	13	%	13	%
Ladies’ apparel	24		25		24		25
Ladies’ accessories and lingerie	16		16		15		15
Juniors’ and children’s apparel	8		8		9		9
Men’s apparel and accessories	18		17		17		16
Shoes	14		15		15		16
Home and furniture	3		3		3		3
	96		97		96		97
Construction segment	4		3		4		3
Total	100	%	100	%	100	%	100	%

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



(in thousands of dollars)	Retail Operations			Construction			Consolidated
Three Months Ended August 4, 2018:
Net sales from external customers	$	1,408,803		$	59,220		$	1,468,023
Gross profit	448,910			1,936			450,846
Depreciation and amortization	56,064			157			56,221
Interest and debt expense (income), net	14,333			(12		)	14,321
(Loss) income before income taxes and income on and equity in earnings of joint ventures	(4,482		)	654			(3,828		)
Total assets	3,531,148			51,482			3,582,630

Three Months Ended July 29, 2017:
Net sales from external customers	$	1,384,623		$	42,657		$	1,427,280
Gross profit	418,561			1,665			420,226
Depreciation and amortization	59,701			167			59,868
Interest and debt expense (income), net	15,817			(19		)	15,798
(Loss) income before income taxes and income on and equity in earnings of joint ventures	(27,683		)	642			(27,041		)
Income on and equity in earnings of joint ventures	11			—			11
Total assets	3,721,281			41,436			3,762,717

Six Months Ended August 4, 2018:
Net sales from external customers	$	2,820,147		$	106,138		$	2,926,285
Gross profit	1,001,775			3,592			1,005,367
Depreciation and amortization	111,908			316			112,224
Interest and debt expense (income), net	28,363			(20		)	28,343
Income before income taxes and income on and equity in earnings of joint ventures	98,922			488			99,410
Total assets	3,531,148			51,482			3,582,630

Six Months Ended July 29, 2017:
Net sales from external customers	$	2,770,492		$	75,248		$	2,845,740
Gross profit	965,410			3,191			968,601
Depreciation and amortization	119,544			335			119,879
Interest and debt expense (income), net	31,520			(40		)	31,480
Income before income taxes and income on and equity in earnings of joint ventures	74,677			743			75,420
Income on and equity in earnings of joint ventures	22			—			22
Total assets	3,721,281			41,436			3,762,717

Intersegment construction revenues of $6.7 million and $12.6 million for the three months ended August 4, 2018 and July 29, 2017, respectively, and $12.1 million and $21.6 million for the six months ended August 4, 2018 and July 29, 2017, respectively, were eliminated during consolidation and have been excluded from net sales for the respective periods.