UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 29, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 1-6140

DILLARD’S, INC.

(Exact name of registrant as specified in its charter)



DELAWARE		71-0388071
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1600 CANTRELL ROAD, LITTLE ROCK, ARKANSAS 72201

(Address of principal executive offices)

(Zip Code)

(501) 376-5200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	DDS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

CLASS A COMMON STOCK as of May 27, 2023 12,497,859

CLASS B COMMON STOCK as of May 27, 2023 3,986,233

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

DILLARD’S, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands)


	April 29,		January 28,		April 30,
	2023		2023		2022
Assets
Current assets:
Cash and cash equivalents	$	848,316	$	650,336	$	862,173
Restricted cash		8,418		9,995		—
Accounts receivable		59,050		56,952		30,920
Short-term investments		98,364		148,902		—
Merchandise inventories		1,410,017		1,120,208		1,364,975
Other current assets		79,030		85,453		96,193

Total current assets		2,503,195		2,071,846		2,354,261

Property and equipment (net of accumulated depreciation of $2,623,182, $2,584,708 and $2,554,485, respectively)		1,108,691		1,118,379		1,170,265
Operating lease assets		32,869		33,821		39,743
Deferred income taxes		41,801		42,278		29,115
Other assets		62,473		62,826		65,424

Total assets	$	3,749,029	$	3,329,150	$	3,658,808

Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable and accrued expenses	$	1,099,669	$	828,484	$	1,163,293
Current portion of long-term debt		—		—		44,800
Current portion of operating lease liabilities		9,086		9,702		11,344
Federal and state income taxes		82,032		20,775		99,288

Total current liabilities		1,190,787		858,961		1,318,725

Long-term debt		321,381		321,354		321,274
Operating lease liabilities		23,691		24,164		28,512
Other liabilities		330,036		326,033		277,964
Subordinated debentures		200,000		200,000		200,000
Commitments and contingencies
Stockholders’ equity:
Common stock		1,240		1,240		1,240
Additional paid-in capital		962,839		962,839		956,653
Accumulated other comprehensive loss		(64,378)		(65,722)		(22,617)
Retained earnings		5,846,802		5,648,700		5,275,371
Less treasury stock, at cost		(5,063,369)		(4,948,419)		(4,698,314)

Total stockholders’ equity		1,683,134		1,598,638		1,512,333

Total liabilities and stockholders’ equity	$	3,749,029	$	3,329,150	$	3,658,808

See notes to condensed consolidated financial statements.

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DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands, Except Per Share Data)


	Three Months Ended
	April 29,		April 30,
	2023		2022
Net sales	$	1,583,948	$	1,611,668
Service charges and other income		29,959		31,114

		1,613,907		1,642,782

Cost of sales		891,261		861,437
Selling, general and administrative expenses		406,375		400,773
Depreciation and amortization		45,747		46,209
Rentals		4,381		5,079
Interest and debt expense, net		123		10,562
Other expense		4,698		1,936
Gain on disposal of assets		(1,793)		(7,237)

Income before income taxes		263,115		324,023
Income taxes		61,620		72,930

Net income	$	201,495	$	251,093

Earnings per share:
Basic and diluted	$	11.85	$	13.68

See notes to condensed consolidated financial statements.

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DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In Thousands, Except Share and Per Share Data)


	Three Months Ended April 29, 2023
					Accumulated
			Additional		Other
	Common		Paid-in		Comprehensive		Retained		Treasury
	Stock		Capital		Loss		Earnings		Stock		Total
Balance, January 28, 2023	$	1,240	$	962,839	$	(65,722)	$	5,648,700	$	(4,948,419)	$	1,598,638
Net income		—		—		—		201,495		—		201,495
Other comprehensive income		—		—		1,344		—		—		1,344
Purchase of 357,154 shares of treasury stock (including excise tax)		—		—		—		—		(114,950)		(114,950)
Cash dividends declared:
Common stock, $0.20 per share		—		—		—		(3,393)		—		(3,393)
Balance, April 29, 2023	$	1,240	$	962,839	$	(64,378)	$	5,846,802	$	(5,063,369)	$	1,683,134


	Three Months Ended April 30, 2022
					Accumulated
			Additional		Other
	Common		Paid-in		Comprehensive		Retained		Treasury
	Stock		Capital		Loss		Earnings		Stock		Total
Balance, January 29, 2022	$	1,240	$	956,653	$	(22,798)	$	5,027,922	$	(4,511,799)	$	1,451,218
Net income		—		—		—		251,093		—		251,093
Other comprehensive income		—		—		181		—		—		181
Purchase of 735,117 shares of treasury stock		—		—		—		—		(186,515)		(186,515)
Cash dividends declared:
Common stock, $0.20 per share		—		—		—		(3,644)		—		(3,644)
Balance, April 30, 2022	$	1,240	$	956,653	$	(22,617)	$	5,275,371	$	(4,698,314)	$	1,512,333

See notes to condensed consolidated financial statements.

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DILLARD’S, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)


	Three Months Ended
	April 29,		April 30,
	2023		2022
Operating activities:
Net income	$	201,495	$	251,093
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and other deferred costs		46,155		46,606
Gain on disposal of assets		(1,793)		(7,237)
Accrued interest on short-term investments		(1,881)		—
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(2,098)		8,857
Increase in merchandise inventories		(289,809)		(284,797)
Decrease (increase) in other current assets		7,163		(18,468)
Increase in other assets		(380)		(447)
Increase in trade accounts payable and accrued expenses and other liabilities		261,600		293,551
Increase in income taxes payable		60,496		76,024

Net cash provided by operating activities		280,948		365,182

Investing activities:
Purchase of property and equipment and capitalized software		(32,348)		(27,312)
Proceeds from disposal of assets		1,887		8,090
Proceeds from insurance		—		4,438
Purchase of short-term investments		(97,543)		—
Proceeds from maturities of short-term investments		149,962		—

Net cash provided by (used in) investing activities		21,958		(14,784)

Financing activities:
Cash dividends paid		(3,425)		(3,879)
Purchase of treasury stock		(103,078)		(201,105)

Net cash used in financing activities		(106,503)		(204,984)

Increase in cash, cash equivalents and restricted cash		196,403		145,414
Cash, cash equivalents and restricted cash, beginning of period		660,331		716,759

Cash, cash equivalents and restricted cash, end of period	$	856,734	$	862,173

Non-cash transactions:
Accrued capital expenditures	$	8,608	$	6,667
Accrued purchases of treasury stock		11,872		1,643
Lease assets obtained in exchange for new operating lease liabilities		1,807		—

See notes to condensed consolidated financial statements.

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DILLARD’S, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of Dillard’s, Inc. (the “Company”) have been prepared in accordance with the rules of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended April 29, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending February 3, 2024 due to, among other factors, the seasonal nature of the business.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023 filed with the SEC on March 27, 2023.

Restricted Cash - Restricted cash consists of cash proceeds from the sale of property held in escrow for the acquisition of replacement property under like-kind exchange agreements. The escrow accounts are administered by an intermediary. Pursuant to the like-kind exchange agreements, the cash remains restricted for a maximum of 180 days from the date of the property sale pending the acquisition of replacement property.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows.


	April 29,		April 30,
(in thousands of dollars)	2023		2022
Cash and cash equivalents	$	848,316	$	862,173
Restricted cash		8,418		—
Total cash, cash equivalents and restricted cash	$	856,734	$	862,173

Note 2. Accounting Standards

Recently Adopted Accounting Pronouncements

There have been no recently adopted accounting pronouncements, except as noted below, that had a material impact on the Company’s condensed consolidated financial statements.

Disclosure of Supplier Finance Program Obligations

In September 2022, the Financial Accounting Standards Board issued accounting standards update ("ASU") No. 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. The ASU is intended to enhance the transparency of the use of supplier finance programs by requiring that the buyers in those programs provide additional disclosures about the program’s nature and potential magnitude, including a rollforward of the obligations and activity during the period. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The amendments in the update should be applied retrospectively, except for the amendment on rollforward information, which should be applied prospectively. This ASU was adopted for the fiscal period beginning January 29, 2023 and did not have a material impact on the Company’s condensed consolidated financial statements.

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Under the terms of the Company’s supplier finance program, participating suppliers have the option of payment in advance of an invoice due date, which is paid by certain administering banks, on the basis of invoices that the Company has confirmed as valid and approved. The Company agrees to pay the administering bank the stated amount of confirmed invoices from its designated suppliers on the original due dates of the invoices. The Company’s suppliers are not required to participate in the supplier finance program. The early payment transactions between the Company’s supplier and the administering bank are subject to an agreement between those parties, and the Company does not participate in any financial aspect of the agreement between the Company’s supplier and the administering bank. The Company has not pledged assets or any other security for the committed payment to the administering bank. The Company or the administering bank may terminate the agreement upon at least 30 days’ notice.

The amount of obligations confirmed under the program that remain unpaid by the Company were $1.4 million, $1.8 million and $0.9 million as of April 29, 2023, January 28, 2023 and April 30, 2022, respectively. These obligations are presented within trade accounts payable and accrued expenses in our condensed consolidated balance sheets.

Recently Issued Accounting Pronouncements

Management has considered all recent accounting pronouncements and believes there is no accounting guidance issued but not yet effective that would be material to the Company’s condensed consolidated financial statements.

Note 3. 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 segment, the Company determined its operating segments on a store by store basis. Each store’s operating performance has been aggregated into one reportable segment for financial reporting purposes because stores 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 retail operations segment would not provide meaningful additional information.

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


	Three Months Ended
	April 29,		April 30,
	2023		2022
Retail operations segment:
Cosmetics	15	%	14	%
Ladies’ apparel	23		23
Ladies’ accessories and lingerie	12		13
Juniors’ and children’s apparel	10		11
Men’s apparel and accessories	18		19
Shoes	15		15
Home and furniture	3		3
	96		98
Construction segment	4		2
Total	100	%	100	%

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


	Retail
(in thousands of dollars)	Operations		Construction		Consolidated
Three Months Ended April 29, 2023
Net sales from external customers	$	1,514,933	$	69,015	$	1,583,948
Gross margin		690,389		2,298		692,687
Depreciation and amortization		45,687		60		45,747
Interest and debt expense (income), net		228		(105)		123
Income before income taxes		262,823		292		263,115
Total assets		3,686,633		62,396		3,749,029

Three Months Ended April 30, 2022
Net sales from external customers	$	1,580,799	$	30,869	$	1,611,668
Gross margin		748,444		1,787		750,231
Depreciation and amortization		46,151		58		46,209
Interest and debt expense (income), net		10,569		(7)		10,562
Income (loss) before income taxes		324,142		(119)		324,023
Total assets		3,617,164		41,644		3,658,808

Intersegment construction revenues of $10.4 million and $10.0 million for the three months ended April 29, 2023 and April 30, 2022, 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 customer loyalty program associated with Dillard’s private label cards and through the issuances of gift cards. The customer loyalty program liability and a portion of the gift card liability are 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
	April 29,		January 28,		April 30,		January 29,
(in thousands of dollars)	2023		2023		2022		2022
Contract liabilities	$	76,011	$	83,909	$	71,779	$	80,421

During the three months ended April 29, 2023 and April 30, 2022, the Company recorded $24.3 million and $25.2 million, respectively, in revenue that was previously included in the retail operations contract liability balances of $83.9 million and $80.4 million at January 28, 2023 and January 29, 2022, respectively.

Construction contracts give rise to accounts receivable, contract assets and contract liabilities. We record accounts receivable based on amounts expected to be collected from 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,

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respectively, in the condensed consolidated balance sheets. The amounts included in the condensed consolidated balance sheets are as follows:


Construction
	April 29,		January 28,		April 30,		January 29,
(in thousands of dollars)	2023		2023		2022		2022
Accounts receivable	$	48,334	$	44,286	$	20,895	$	25,912
Costs and estimated earnings in excess of billings on uncompleted contracts		1,473		798		3,342		2,847
Billings in excess of costs and estimated earnings on uncompleted contracts		10,095		10,909		7,511		6,298

During the three months ended April 29, 2023 and April 30, 2022, the Company recorded $9.5 million and $5.8 million, respectively, in revenue that was previously included in billings in excess of costs and estimated earnings on uncompleted contracts of $10.9 million and $6.3 million at January 28, 2023 and January 29, 2022, respectively.

The remaining performance obligations related to executed construction contracts totaled $201.8 million, $189.1 million and $96.1 million at April 29, 2023, January 28, 2023 and April 30, 2022, respectively.

Note 4. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data).


	Three Months Ended
	April 29,		April 30,
	2023		2022
Net income	$	201,495	$	251,093

Weighted average shares of common stock outstanding		17,004		18,351

Basic and diluted earnings per share	$	11.85	$	13.68

The Company maintains a capital structure in which common stock is the only equity security issued and outstanding, and there were no shares of preferred stock, stock options, other dilutive securities or potentially dilutive securities issued or outstanding during the three months ended April 29, 2023 and April 30, 2022.

Note 5. Commitments and Contingencies

Various legal proceedings, in the form of lawsuits and claims, which occur in the normal course of business, are pending against the Company and its subsidiaries. In the opinion of management, disposition of these matters, individually or in the aggregate, is not expected to materially affect the Company’s financial position, cash flows or results of operations.

At April 29, 2023, letters of credit totaling $19.3 million were issued under the Company’s revolving credit facility. See Note 7, Revolving Credit Agreement, for additional information.

Note 6. Benefit Plans

The Company has an unfunded, nonqualified defined benefit plan (“Pension Plan”) for its officers. The Pension Plan is noncontributory and provides benefits based on years of service and compensation during employment. Pension expense is determined using an actuarial cost method to estimate the total benefits ultimately payable to officers and allocates this cost to service periods. The actuarial assumptions used to calculate pension costs are reviewed annually.

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The Company contributed $1.6 million to the Pension Plan during the three months ended April 29, 2023 and expects to make additional contributions to the Pension Plan of approximately $5.2 million during the remainder of fiscal 2023.

The components of net periodic benefit costs are as follows (in thousands):


	Three Months Ended
	April 29,		April 30,
(in thousands of dollars)	2023		2022
Components of net periodic benefit costs:
Service cost	$	1,262	$	1,019
Interest cost		3,237		1,697
Net actuarial loss		1,461		239
Net periodic benefit costs	$	5,960	$	2,955

The service cost component of net periodic benefit costs is included in selling, general and administrative expenses, and the interest costs and net actuarial loss components are included in other expense in the condensed consolidated statements of income.

Note 7. Revolving Credit Agreement

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. The credit agreement, which is secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries, 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"). Pursuant to the 2021 amendment, the Company pays a variable rate of interest on borrowings under the credit agreement and a commitment fee to the participating banks. The rate of interest on borrowings is LIBOR plus 1.75% if average quarterly availability is less than 50% of the total commitment, as defined in the 2021 amendment ("total commitment"), and the rate of interest on borrowings is LIBOR plus 1.50% if average quarterly availability is greater than or equal to 50% of the total commitment. The 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. As long as availability exceeds $80 million and certain events of default have not occurred and are not continuing, there are no financial covenant requirements under the credit agreement. The credit agreement, as amended by the 2021 amendment, matures on April 28, 2026.

At April 29, 2023, no borrowings were outstanding, and letters of credit totaling $19.3 million were issued under the credit agreement leaving unutilized availability under the facility of $780.7 million.

Note 8. Stock Repurchase Programs

In May 2021, 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 ("May 2021 Stock Plan"). 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 (“February 2022 Stock Plan”).

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The following is a summary of share repurchase activity for the periods indicated (in thousands, except per share data):


	Three Months Ended
	April 29,		April 30,
	2023		2022
Cost of shares repurchased	$	113,810	$	186,515
Number of shares repurchased		357		735
Average price per share	$	318.66	$	253.72

All repurchases of the Company’s Class A Common Stock above 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 April 29, 2023, the Company had completed the authorized purchases under the May 2021 Stock Plan, and $61.6 million of authorization remained under the February 2022 Stock Plan.

Subsequent to the end of the quarter ended April 29, 2023, the Company completed the remaining authorized purchases under the February 2022 Stock Plan, and in May 2023, 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 under an open-ended plan (“May 2023 Stock Plan”). The May 2023 Stock Plan permits the Company to repurchase its Class A Common Stock in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or through privately negotiated transactions.

Note 9. Income Taxes

During the three months ended April 29, 2023 and April 30, 2022, income tax expense differed from what would be computed using the statutory federal income tax rate primarily due to the effects of state and local income taxes.

Note 10. Gain on Disposal of Assets

During the three months ended April 29, 2023, the Company recorded proceeds of $1.9 million primarily from the sale of one store property, resulting in a gain of $1.8 million that was recorded in gain on disposal of assets.

During the three months ended April 30, 2022, the Company recorded proceeds of $8.1 million primarily from the sale of one store property, resulting in a gain of $7.2 million that was recorded in gain on disposal of assets.

Note 11. Fair Value Disclosures

The estimated fair values of financial instruments presented herein have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of amounts the Company could realize in a current market exchange.

The fair value of the Company’s long-term debt and subordinated debentures are based on market prices and are categorized as Level 1 in the fair value hierarchy.

The fair value of the Company’s cash and cash equivalents, restricted cash and trade accounts receivable approximates their carrying values at April 29, 2023 due to the short-term maturities of these instruments. The Company’s short-term investments are recorded at amortized cost, which is consistent with the Company’s held-to-maturity classification. The fair values of the Company’s long-term debt at April 29, 2023 were approximately $330 million. The carrying values of the Company’s long-term debt at April 29, 2023 were approximately $321 million. The fair values of the Company’s subordinated debentures at April 29, 2023 were approximately $206 million. The carrying values of the Company’s subordinated debentures at April 29, 2023 were $200 million.

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Key Performance Indicators

We use a number of key indicators of financial condition and operating performance to evaluate our business, including the following:


	Three Months Ended
	April 29,			April 30,
	2023			2022
Net sales (in millions)	$	1,583.9		$	1,611.7
Retail stores sales trend		(4)	%		22	%
Comparable retail stores sales trend		(4)	%		23	%
Gross margin (in millions)	$	692.7		$	750.2
Gross margin as a percentage of net sales		43.7	%		46.5	%
Retail gross margin as a percentage of retail net sales		45.6	%		47.3	%
Selling, general and administrative expenses as a percentage of net sales		25.7	%		24.9	%
Cash flow provided by operations (in millions)	$	280.9		$	365.2
Total retail store count at end of period		274			280
Retail sales per square foot	$	33		$	34
Retail store inventory trend		3	%		4	%
Annualized retail merchandise inventory turnover		2.5			2.7

General

Net sales. Net sales includes merchandise sales of comparable and non-comparable stores and revenue recognized on contracts of CDI Contractors, LLC (“CDI”), the Company’s general contracting construction company. Comparable store sales includes sales for those stores which were in operation for a full period in both the most recently completed quarter and the corresponding quarter for the prior fiscal year, including our internet store. Comparable store sales excludes changes in the allowance for sales returns. Non-comparable store sales includes: sales in the current fiscal year from stores opened during the previous fiscal year before they are considered comparable stores; sales from new stores opened during the current fiscal year; sales in the previous fiscal year for stores closed during the current or previous fiscal year that are no longer considered comparable stores; sales in clearance centers; and changes in the allowance for sales returns.

Sales occur as a result of interaction with customers across multiple points of contact, creating an interdependence between in-store and online sales. Online orders are fulfilled from both fulfillment centers and retail stores. Additionally, online customers have the ability to buy online and pick up in-store. Retail in-store customers have the ability to purchase items that may be ordered and fulfilled from either a fulfillment center or another retail store location. Online customers may return orders via mail, or customers may return orders placed online to retail store locations. Customers who earn reward points under the private label credit card program may earn and redeem rewards through in-store or online purchases.

Service charges and other income. Service charges and other income includes income generated through the long-term marketing and servicing alliance with Wells Fargo Bank, N.A. (“Wells Fargo Alliance”). Other income includes rental income, shipping and handling fees and gift card breakage.

Cost of sales. Cost of sales includes the cost of merchandise sold (net of purchase discounts, non-specific margin maintenance allowances and merchandise margin maintenance allowances), bankcard fees, freight to the distribution centers, employee and promotional discounts, shipping to customers and direct payroll for salon personnel. 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. Selling, general and administrative expenses include buying, occupancy, selling, distribution, warehousing, store and corporate expenses (including payroll and employee benefits),

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RESULTS OF OPERATIONS

The following table sets forth the results of operations as a percentage of net sales for the periods indicated (percentages may not foot due to rounding):


	Three Months Ended
	April 29,		April 30,
	2023		2022
Net sales	100.0	%	100.0	%
Service charges and other income	1.9		1.9

	101.9		101.9

Cost of sales	56.3		53.5
Selling, general and administrative expenses	25.7		24.9
Depreciation and amortization	2.9		2.9
Rentals	0.3		0.3
Interest and debt expense, net	0.0		0.7
Other expense	0.3		0.1
Gain on disposal of assets	(0.1)		(0.4)

Income before income taxes	16.6		20.1
Income taxes	3.9		4.5

Net income	12.7	%	15.6	%

Net Sales


	Three Months Ended
	April 29,		April 30,
(in thousands of dollars)	2023		2022		$ Change
Net sales:
Retail operations segment	$	1,514,933	$	1,580,799	$	(65,866)
Construction segment		69,015		30,869		38,146
Total net sales	$	1,583,948	$	1,611,668	$	(27,720)

The percent change by segment and product category in the Company’s sales for the three months ended April 29, 2023 compared to the three months ended April 30, 2022 as well as the sales percentage by segment and product category to total net sales for the three months ended April 29, 2023 are as follows:


	% Change		% of
	2023 - 2022		Net Sales
Retail operations segment
Cosmetics	5.7	%	15	%
Ladies’ apparel	(2.6)		23
Ladies’ accessories and lingerie	(10.2)		12
Juniors’ and children’s apparel	(9.7)		10
Men’s apparel and accessories	(7.3)		18
Shoes	(1.8)		15
Home and furniture	(5.3)		3
			96
Construction segment	123.6		4
Total			100	%

Net sales from the retail operations segment decreased $65.9 million, or approximately 4%, and sales in comparable stores decreased approximately 4% during the three months ended April 29, 2023 compared to the three months ended

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April 30, 2022. Sales in ladies’ accessories and lingerie, juniors’ and children’s apparel, men’s apparel and accessories and home and furniture decreased significantly, while sales in ladies’ apparel and shoes decreased moderately. Sales in cosmetics increased significantly.

The number of sales transactions decreased by 9% for the three months ended April 29, 2023 compared to the three months ended April 30, 2022, while the average dollars per sales transaction increased by 5%.

We recorded a return asset of $13.9 million and $14.7 million and an allowance for sales returns of $27.8 million and $30.3 million as of April 29, 2023 and April 30, 2022, respectively.

During the three months ended April 29, 2023, net sales from the construction segment increased $38.1 million, or approximately 124%, compared to the three months ended April 30, 2022, due to an increase in construction activity. The remaining performance obligations related to executed construction contracts totaled $201.8 million as of April 29, 2023, increasing approximately 7% from January 28, 2023 and increasing approximately 110% from April 30, 2022, respectively. We expect these remaining performance obligations to be earned over the next nine to eighteen months.

Service Charges and Other Income


					Three
	Three Months Ended				Months
	April 29,		April 30,		$ Change
(in thousands of dollars)	2023		2022		2023-2022
Service charges and other income:
Retail operations segment
Income from Wells Fargo Alliance	$	16,859	$	17,174	$	(315)
Shipping and handling income		9,971		10,222		(251)
Other		3,053		3,654		(601)
		29,883		31,050		(1,167)
Construction segment		76		64		12
Total service charges and other income	$	29,959	$	31,114	$	(1,155)

Gross Margin


	April 29,		April 30,
(in thousands of dollars)	2023		2022		$ Change		% Change
Gross margin:
Three months ended
Retail operations segment	$	690,389	$	748,444	$	(58,055)	(7.8)	%
Construction segment		2,298		1,787		511	28.6
Total gross margin	$	692,687	$	750,231	$	(57,544)	(7.7)	%


	Three Months Ended
	April 29,		April 30,
	2023		2022
Gross margin as a percentage of segment net sales:
Retail operations segment	45.6	%	47.3	%
Construction segment	3.3		5.8
Total gross margin as a percentage of net sales	43.7		46.5

Gross margin, as a percentage of sales, decreased to 43.7% from 46.5% during the three months ended April 29, 2023 compared to the three months ended April 30, 2022, respectively.

Gross margin from retail operations, as a percentage of sales, decreased to 45.6% from 47.3% during the three months ended April 29, 2023 compared to the three months ended April 30, 2022, respectively, as a result of increased markdowns and decreased markups. Gross margin decreased moderately in men’s apparel and accessories,

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juniors’ and children’s apparel, home and furniture and ladies’ accessories and lingerie, while decreasing slightly in shoes and ladies’ apparel. Gross margin increased slightly in cosmetics.

Total inventory increased 3% as of April 29, 2023 compared to April 30, 2022. A 1% change in the dollar amount of markdowns would have impacted net income by approximately $1 million for the three months ended April 29, 2023.

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. This issue negatively impacted our supply chain during fiscal 2022 and prior, resulting in shipping delays as well as increased shipping costs. Additionally, disruptions in the global transportation network, including slowdowns in our U.S. ports, caused delays in processing imported merchandise, thereby resulting in untimely deliveries of merchandise. These issues have improved and the negative impact on the Company’s operations and financial results has diminished. Management continues to monitor these issues closely.

Inflation and rising interest costs continue to be a concern for management. The extent to which our business will be affected by inflation and rising interest costs depends on our customers’ continuing ability and willingness to accept price increases.

Gross margin from construction decreased 250 basis points of segment net sales.

Selling, General and Administrative Expenses (“SG&A”)


	April 29,		April 30,
(in thousands of dollars)	2023		2022		$ Change		% Change
SG&A:
Three months ended
Retail operations segment	$	404,303	$	398,869	$	5,434	1.4	%
Construction segment		2,072		1,904		168	8.8
Total SG&A	$	406,375	$	400,773	$	5,602	1.4	%


	Three Months Ended
	April 29,		April 30,
	2023		2022
SG&A as a percentage of segment net sales:
Retail operations segment	26.7	%	25.2	%
Construction segment	3.0		6.2
Total SG&A as a percentage of net sales	25.7		24.9

SG&A increased to 25.7% of sales during the three months ended April 29, 2023 from 24.9% of sales during the three months ended April 30, 2022, an increase of $5.6 million. SG&A from retail operations increased to 26.7% of sales for the three months ended April 29, 2023 from 25.2% of sales for the three months ended April 30, 2022, an increase of $5.4 million attributable to several expense categories.

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Interest and Debt Expense, Net


	April 29,		April 30,
(in thousands of dollars)	2023		2022		$ Change		% Change
Interest and debt expense (income), net:
Three months ended
Retail operations segment	$	228	$	10,569	$	(10,341)	(97.8)	%
Construction segment		(105)		(7)		(98)	1,400.0
Total interest and debt expense, net	$	123	$	10,562	$	(10,439)	(98.8)	%

Net interest and debt expense decreased $10.4 million during the three months ended April 29, 2023 compared to the three months ended April 30, 2022, primarily due to an increase in interest income from increased rates on cash and cash equivalent balances and the purchases of short-term investments in the current year that did not occur in the prior period. Total weighted average debt outstanding decreased $44.8 million during the three months ended April 29, 2023 compared to the three months ended April 30, 2022 primarily due to a note maturity at the end of fiscal 2022.

Interest income was $10.0 million and $0.5 million for the three months ended April 29, 2023 and April 30, 2022, respectively.

Other Expense


	April 29,		April 30,
(in thousands of dollars)	2023		2022		$ Change		% Change
Other expense:
Three months ended
Retail operations segment	$	4,698	$	1,936	$	2,762	142.7	%
Construction segment		—		—		—	—
Total other expense	$	4,698	$	1,936	$	2,762	142.7	%

Other expense increased $2.8 million during the three months ended April 29, 2023 compared to the three months ended April 30, 2022 due to an increase in pension expense.

Gain on Disposal of Assets


	April 29,		April 30,
(in thousands of dollars)	2023		2022			$ Change
(Gain) loss on disposal of assets:
Three months ended
Retail operations segment	$	(1,793)	$	(7,240)	$	5,447
Construction segment		—		3		(3)
Total gain on disposal of assets	$	(1,793)	$	(7,237)	$	5,444

Income Taxes

The Company’s estimated federal and state effective income tax rate was approximately 23.4% and 22.5% for the three months ended April 29, 2023 and April 30, 2022, respectively. During the three months ended April 29, 2023 and April 30, 2022, income tax expense differed from what would be computed using the statutory federal income tax rate primarily due to the effects of state and local income taxes.

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The Company expects the fiscal 2023 federal and state effective income tax rate to approximate 23%. This rate may change if results of operations for fiscal 2023 differ from management’s current expectations. Changes in the Company’s assumptions and judgments can materially affect amounts recognized in the condensed consolidated financial statements.

FINANCIAL CONDITION

A summary of net cash flows for the three months ended April 29, 2023 and April 30, 2022 follows:


	Three Months Ended
	April 29,		April 30,
(in thousands of dollars)	2023		2022		$ Change
Operating Activities	$	280,948	$	365,182	$	(84,234)
Investing Activities		21,958		(14,784)		36,742
Financing Activities		(106,503)		(204,984)		98,481
Total Increase in Cash and Cash Equivalents and Restricted Cash	$	196,403	$	145,414	$	50,989

Net cash flows from operations decreased $84.2 million during the three months ended April 29, 2023 compared to the three months ended April 30, 2022. This reduction was primarily due a decrease in net income and changes in working capital items, notably changes in trade accounts payable and accrued expenses and other liabilities.

Wells Fargo owns and manages the Dillard’s private label cards under the Wells Fargo Alliance. The Company recognized income of $16.9 million and $17.2 million from the Wells Fargo Alliance during the three months ended April 29, 2023 and April 30, 2022, respectively.

Capital expenditures were $32.3 million and $27.3 million for the three months ended April 29, 2023 and April 30, 2022, respectively. The capital expenditures were primarily related to equipment purchases, the continued construction of new stores and the remodeling of existing stores. During the three months ended April 29, 2023, the Company opened a 100,000 square foot expansion at Gateway Mall in Lincoln, Nebraska. During the three months ended April 30, 2022, the Company opened a new store at University Place in Orem, Utah (160,000 square feet).

During the three months ended April 29, 2023, the Company received cash proceeds of $1.9 million and recorded a related gain of $1.8 million, primarily from the sale of an 85,000 square foot location at Sunland Park Mall in El Paso, Texas. The Company also closed (1) an owned location at Santa Rosa Mall in Mary Esther, Florida (115,000 square feet), (2) a leased location at Conestoga Mall in Grand Island, Nebraska (80,000 square feet) and (3) an owned clearance center at Metrocenter in Phoenix, Arizona (90,000 square feet). There were no material costs associated or expected with any of these store closures. We remain committed to closing under-performing stores where appropriate and may incur future closing costs related to such stores when they close.

During the three months ended April 30, 2022, the Company received cash proceeds of $8.1 million and recorded a related gain of $7.2 million, primarily from the sale of one store property.

During the three months ended April 30, 2022, the Company received life insurance proceeds of $4.4 million related to one policy.

During the three months ended April 29, 2023, the Company purchased certain treasury bills for $97.5 million that are classified as short-term investments and received proceeds of $150.0 million related to short-term investment maturities.

The Company had cash and cash equivalents and restricted cash of $856.7 million as of April 29, 2023. 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. 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

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FORWARD-LOOKING INFORMATION

This report contains certain forward-looking statements. 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 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 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 regarding the expected phase out of LIBOR, statements regarding the impacts of inflation and rising interest rates in fiscal 2023 and statements concerning estimated taxes. The Company cautions that forward-looking statements contained in this report are based on estimates, projections, beliefs and assumptions of management and information available to management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise. Forward-looking statements of the Company involve risks and uncertainties and are subject to change based on various important factors. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and assumptions. Representative examples of those factors include (without limitation) general retail industry conditions and macro-economic conditions including inflation, rising interest rates, bank failures, failure of the U.S. government to timely raise the debt ceiling, economic recession and changes in traffic at malls and shopping centers; economic and weather conditions for regions in which the Company’s stores are located and the effect of these factors on the buying patterns of the Company’s customers, including the effect of changes in prices and availability of oil and natural gas; the availability of and interest rates on consumer credit; the impact of competitive pressures in the department store industry and other retail channels including specialty, off-price, discount and Internet retailers; changes in the Company’s ability to meet labor needs amid nationwide labor shortages and an intense competition for talent; changes in consumer spending patterns, debt levels and their ability to meet credit obligations; high levels of unemployment; changes in tax legislation (including the Inflation Reduction Act of 2022); changes in legislation and governmental regulations affecting such matters as the cost of employee benefits or credit card income, such as the Consumer Financial Protection Bureau’s recent proposal to amend Regulation Z to limit the dollar amounts credit card companies can charge for late fees, adequate and stable availability and pricing of materials, production facilities and labor from which the Company sources its merchandise; changes in operating expenses, including employee wages, commission structures and related benefits; system failures or data security breaches; possible future acquisitions of store properties from other department store operators; the continued availability of financing in amounts and at the terms necessary to support the Company’s future business; fluctuations in LIBOR and other base borrowing rates; the elimination of LIBOR; potential disruption from terrorist activity and the effect on ongoing consumer confidence; COVID-19 and other epidemic, pandemic or public health issues and their effects on public health, our supply chain, the health and well-being of our employees and customers and the retail industry in general; potential disruption of international trade and supply chain efficiencies; global conflicts (including the 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 the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in the information set forth under caption “Item 7A-Quantitative and Qualitative Disclosures about Market Risk” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company is involved in litigation relating to claims arising out of the Company’s operations in the normal course of business. This may include litigation with customers, employment related lawsuits, class action lawsuits, purported class action lawsuits and actions brought by governmental authorities. As of June 2, 2023, the Company is not a party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows.

Item 1A. Risk Factors.

There have been no material changes in the information set forth under caption “Item 1A-Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(c)	Purchases of Equity Securities

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
January 29, 2023 through February 25, 2023	75,001	$	346.77	75,001	$	149,394,213
February 26, 2023 through April 1, 2023	106,486		331.82	106,486		114,059,786
April 2, 2023 through April 29, 2023	175,667		298.68	175,667		61,592,000
Total	357,154	$	318.66	357,154	$	61,592,000

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 (“February 2022 Stock Plan”). During the three months ended April 29, 2023, the Company repurchased 0.4 million shares totaling $113.8 million under its stock repurchase plan. As of April 29, 2023, $61.6 million of authorization remained under the February 2022 Stock Plan.

Reference is made to the discussion in Note 8, Stock Repurchase Programs, in the “Notes to Condensed Consolidated Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10-Q, which information is incorporated by reference herein.

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Item 6. Exhibits.

Number		Description

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Co-Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3		Certification of Co-Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

32.2		Certification of Co-Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

32.3		Certification of Co-Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

		DILLARD’S, INC.
		(Registrant)


Date:	June 2, 2023	/s/ Phillip R. Watts
		Phillip R. Watts
		Senior Vice President, Co-Principal Financial Officer and Principal Accounting Officer

		/s/ Chris B. Johnson
		Chris B. Johnson
		Senior Vice President and Co-Principal Financial Officer

		Page
		Number
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of April 29, 2023, January 28, 2023 and April 30, 2022	3

	Condensed Consolidated Statements of Income for the Three Months Ended April 29, 2023 and April 30, 2022	4

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended April 29, 2023 and April 30, 2022	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended April 29, 2023 and April 30, 2022	6

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 29, 2023 and April 30, 2022	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	25

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 6.	Exhibits	27

SIGNATURES		28