Business Segments

6 Months Ended

Jul. 29, 2023

Segment Reporting [Abstract]

Business Segments

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				Six Months Ended
	July 29,		July 30,		July 29,		July 30,
	2023		2022		2023		2022
Retail operations segment:
Cosmetics	14	%	14	%	14	%	13	%
Ladies’ apparel	22		23		23		23
Ladies’ accessories and lingerie	14		15		13		14
Juniors’ and children’s apparel	8		8		9		10
Men’s apparel and accessories	21		21		19		20
Shoes	14		14		15		15
Home and furniture	3		3		3		3
	96		98		96		98
Construction segment	4		2		4		2
Total	100	%	100	%	100	%	100	%

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 July 29, 2023
Net sales from external customers	$	1,498,532	$	68,845	$	1,567,377
Gross margin		605,623		2,919		608,542
Depreciation and amortization		44,751		67		44,818
Interest and debt expense (income), net		275		(143)		132
Income before income taxes		170,618		973		171,591
Total assets		3,443,882		68,480		3,512,362
Three Months Ended July 30, 2022
Net sales from external customers	$	1,552,658	$	35,962	$	1,588,620
Gross margin		644,921		2,482		647,403
Depreciation and amortization		47,863		56		47,919
Interest and debt expense (income), net		9,601		(12)		9,589
Income before income taxes		209,960		619		210,579
Total assets		3,174,436		47,167		3,221,603
Six Months Ended July 29, 2023
Net sales from external customers	$	3,013,465	$	137,860	$	3,151,325
Gross margin		1,296,012		5,217		1,301,229
Depreciation and amortization		90,438		127		90,565
Interest and debt expense (income), net		503		(248)		255
Income before income taxes		433,441		1,265		434,706
Total assets		3,443,882		68,480		3,512,362
Six Months Ended July 30, 2022
Net sales from external customers	$	3,133,457	$	66,831	$	3,200,288
Gross margin		1,393,365		4,269		1,397,634
Depreciation and amortization		94,014		114		94,128
Interest and debt expense (income), net		20,170		(19)		20,151
Income before income taxes		534,102		500		534,602
Total assets		3,174,436		47,167		3,221,603

Intersegment construction revenues of $10.1 million and $11.6 million for the three months ended July 29, 2023 and July 30, 2022, respectively, and $20.5 million and $21.6 million for the six months ended July 29, 2023 and July 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
	July 29,		January 28,		July 30,		January 29,
(in thousands of dollars)	2023		2023		2022		2022
Contract liabilities	$	73,399	$	83,909	$	68,543	$	80,421

During the six months ended July 29, 2023 and July 30, 2022, the Company recorded $36.7 million and $37.4 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, respectively, in the condensed consolidated balance sheets. The amounts included in the condensed consolidated balance sheets are as follows:

Construction
	July 29,		January 28,		July 30,		January 29,
(in thousands of dollars)	2023		2023		2022		2022
Accounts receivable	$	48,429	$	44,286	$	26,229	$	25,912
Costs and estimated earnings in excess of billings on uncompleted contracts		4,189		798		4,036		2,847
Billings in excess of costs and estimated earnings on uncompleted contracts		10,001		10,909		7,850		6,298

During the six months ended July 29, 2023 and July 30, 2022, the Company recorded $10.1 million and $5.7 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 $210.5 million, $189.1 million and $215.9 million at July 29, 2023, January 28, 2023 and July 30, 2022, respectively.