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
	May 4, 2019		May 5, 2018
Retail operations segment
Cosmetics	14	%	14	%
Ladies’ apparel	24		24
Ladies’ accessories and lingerie	14		14
Juniors’ and children’s apparel	11		10
Men’s apparel and accessories	16		16
Shoes	15		16
Home and furniture	3		3
	97		97
Construction segment	3		3
Total	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 May 4, 2019:
Net sales from external customers	$	1,420,522	$	44,919		$	1,465,441
Gross profit	536,371		1,303			537,674
Depreciation and amortization	52,194		170			52,364
Interest and debt expense (income), net	11,264		(27		)	11,237
Income before income taxes	100,728		44			100,772
Total assets	3,731,040		47,948			3,778,988

Three Months Ended May 5, 2018:
Net sales from external customers	$	1,411,344	$	46,918		$	1,458,262
Gross profit	552,865		1,656			554,521
Depreciation and amortization	55,844		159			56,003
Interest and debt expense (income), net	14,030		(8		)	14,022
Income before income taxes	103,404		(166		)	103,238
Total assets	3,742,719		38,744			3,781,463

Intersegment construction revenues of $8.4 million and $5.4 million for the three months ended May 4, 2019 and May 5, 2018, respectively, were eliminated during consolidation and have been excluded from net sales for the respective periods.

The retail operations segment gives rise to contract liabilities through the loyalty program and through the issuances of gift cards. The loyalty program liability and a portion of the gift card liability is included in trade accounts payable and accrued expenses, and a portion of the gift card liability is included in other liabilities on the condensed consolidated balance sheets. Our retail operations segment contract liabilities are as follows:



Retail
(in thousands of dollars)	May 4, 2019		February 2, 2019		May 5, 2018		February 3, 2018
Contract liabilities	$	64,934	$	72,852	$	61,356	$	73,059

During the three months ended May 4, 2019 and May 5, 2018, the Company recorded $24.8 million and $26.6 million, respectively, in revenue that was previously included in the retail operations contract liability balances of $72.9 million and $73.1 million, at February 2, 2019 and February 3, 2018, respectively.

Construction contracts give rise to accounts receivable, contract assets and contract liabilities. 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 in the condensed consolidated balance sheets, respectively. The amounts included in the condensed consolidated balance sheets are as follows:



Construction
(in thousands of dollars)	May 4, 2019		February 2, 2019		May 5, 2018		February 3, 2018
Accounts receivable	$	32,320	$	31,867	$	26,782	$	20,136
Costs and estimated earnings in excess of billings on uncompleted contracts	829		1,165		861		1,213
Billings in excess of costs and estimated earnings on uncompleted contracts	6,768		7,414		4,665		5,503

During the three months ended May 4, 2019 and May 5, 2018, the Company recorded $6.6 million and $4.0 million, respectively, in revenue that was previously included in billings in excess of costs and estimated earnings on uncompleted contracts of $7.4 million and $5.5 million at February 2, 2019 and February 3, 2018, respectively.

The remaining performance obligations related to executed construction contracts totaled $123.4 million, $143.9 million and $230.2 million at May 4, 2019, February 2, 2019 and May 5, 2018, respectively.