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Dillard's(DDS) - 2025 Q3 - Quarterly Report
Dillard'sDillard's(US:DDS)2024-12-06 21:19

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Dillard's, Inc. for the period ended November 2, 2024, including Balance Sheets, Statements of Income, Comprehensive Income, Stockholders' Equity, and Cash Flows, with accompanying notes Condensed Consolidated Balance Sheets Total assets increased to $4.13 billion, driven by higher merchandise inventories and cash, with stockholders' equity rising to $1.96 billion Key Balance Sheet Items (In Thousands) | Account | Nov 2, 2024 | Feb 3, 2024 | Oct 28, 2023 | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $980,392 | $808,287 | $842,001 | | Merchandise inventories | $1,682,217 | $1,093,999 | $1,629,245 | | Total current assets | $2,942,301 | $2,208,210 | $2,665,561 | | Total assets | $4,133,062 | $3,448,906 | $3,897,934 | | Liabilities & Equity | | | | | Trade accounts payable and accrued expenses | $1,214,982 | $782,545 | $1,181,198 | | Total current liabilities | $1,236,733 | $827,756 | $1,202,159 | | Total stockholders' equity | $1,963,395 | $1,697,068 | $1,813,638 | Condensed Consolidated Statements of Income Q3 net income decreased to $124.6 million ($7.73 per share) due to lower net sales, with nine-month net income also declining to $379.1 million Quarterly Performance Summary (In Thousands, Except Per Share Data) | Metric | Q3 2024 (ended Nov 2) | Q3 2023 (ended Oct 28) | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,427,009 | $1,476,362 | -3.3% | | Income Before Income Taxes | $162,506 | $199,379 | -18.5% | | Net Income | $124,596 | $155,339 | -19.8% | | Basic and Diluted EPS | $7.73 | $9.49 | -18.5% | Nine-Month Performance Summary (In Thousands, Except Per Share Data) | Metric | Nine Months 2024 (ended Nov 2) | Nine Months 2023 (ended Oct 28) | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | $4,465,998 | $4,627,687 | -3.5% | | Income Before Income Taxes | $494,427 | $634,085 | -22.0% | | Net Income | $379,117 | $488,345 | -22.4% | | Basic and Diluted EPS | $23.42 | $29.38 | -20.3% | Condensed Consolidated Statements of Cash Flows Operating cash flow decreased to $349.4 million, while financing cash outflow significantly reduced, leading to an increased cash position of $980.4 million Cash Flow Summary for Nine Months Ended (In Thousands) | Activity | Nov 2, 2024 | Oct 28, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $349,434 | $447,107 | | Net cash (used in) provided by investing activities | ($60,162) | $7,916 | | Net cash used in financing activities | ($117,167) | ($273,353) | | Increase in cash and cash equivalents | $172,105 | $181,670 | - The decrease in cash from operations was primarily driven by lower net income and a larger increase in merchandise inventories compared to the prior year30 - Financing activities included $105.0 million in treasury stock purchases and $12.2 million in dividend payments for the nine months ended Nov 2, 2024, compared to $263.2 million and $10.1 million, respectively, in the prior year period30 Notes to Condensed Consolidated Financial Statements Notes detail business segments, share repurchases, credit facilities, and a significant subsequent event: a special dividend of $25.00 per share - The company operates in two reportable segments: retail department stores (retail operations) and a general contracting construction company (construction)40 Percentage of Net Sales by Segment and Product Line (Q3 2024) | Category | % of Net Sales | | :--- | :--- | | Retail Operations Segment | 95% | | Cosmetics | 15% | | Ladies' apparel | 21% | | Ladies' accessories and lingerie | 13% | | Juniors' and children's apparel | 9% | | Men's apparel and accessories | 19% | | Shoes | 15% | | Home and furniture | 3% | | Construction Segment | 5% | | Total | 100% | - As of November 2, 2024, the company had $287.0 million of authorization remaining under its May 2023 stock repurchase plan63 - Subsequent Event: On November 21, 2024, the Board of Directors declared a special dividend of $25.00 per share, payable on January 6, 20256970 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q3 performance, noting a 4% retail sales decline, focus on gross margin and expense control, and challenges with inventory and a new credit card alliance Executive Overview Q3 saw a 4% retail sales decline, with management focusing on gross margin maintenance and SG&A control, ending with a strong cash position Q3 Key Performance Indicators (vs. Prior Year Q3) | Indicator | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net sales (in millions) | $1,427.0 | $1,476.4 | | Comparable retail stores sales trend | (4)% | (6)% | | Retail gross margin % of retail net sales | 44.5% | 45.3% | | SG&A % of net sales | 29.4% | 28.6% | | Retail store inventory trend | 3% | (1)% | - The company reported net income of $124.6 million ($7.73 per share) for Q3 2024, compared to $155.3 million ($9.49 per share) for Q3 202375 Results of Operations Q3 net sales decreased by 3.3% to $1.43 billion due to retail segment decline, with gross margin contracting and SG&A expenses increasing as a percentage of sales - In Q3 2024, retail operations sales decreased by approximately 4%, with the largest declines in juniors' and children's apparel (-7.8%) and men's apparel and accessories (-6.4%), while cosmetics saw growth (+1.6%)93 - Gross margin from retail operations decreased to 44.5% from 45.3% in the prior-year quarter, primarily due to increased markdowns109 - Income from the company's credit card alliances decreased by $3.5 million in Q3 year-over-year, primarily due to higher credit losses and lower finance charge income102 - SG&A expenses decreased by $2.9 million year-over-year in Q3, but increased as a percentage of sales from 28.6% to 29.4%115 Financial Condition and Liquidity The company maintains a strong financial position with $980.4 million in cash and significant credit availability, having repurchased $107.0 million in stock and launched a new credit card program - The company entered into a new 10-year agreement with Citibank for its credit card program, launched in August 2024, with management expecting initially lower cash flows compared to the prior Wells Fargo Alliance128130133 - Capital expenditures were $89.1 million for the first nine months of fiscal 2024, down from $104.7 million in the prior year134 - During the first nine months of fiscal 2024, the company repurchased 0.3 million shares for $107.0 million141 - A special dividend of $25.00 per share was declared on November 21, 2024, to be paid in January 2025, funded from cash flows from operations143 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes have occurred in the company's market risk disclosures since the last Annual Report on Form 10-K - There have been no material changes in the information regarding quantitative and qualitative disclosures about market risk since the last Annual Report on Form 10-K152 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The company's management concluded that disclosure controls and procedures were effective as of the end of the fiscal quarter153 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls154 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not party to any legal proceedings expected to have a material adverse effect on its business or financial results - As of December 6, 2024, the company is not party to any legal proceedings expected to have a material adverse effect on its business157 Item 1A. Risk Factors No material changes have occurred in the company's risk factors since the last Annual Report on Form 10-K - There have been no material changes in risk factors from the company's Annual Report on Form 10-K158 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 293,583 shares for $107.0 million under the May 2023 Stock Plan, with $287.0 million remaining authorized Issuer Purchases of Equity Securities (Q3 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans | Approx. Dollar Value of Shares that May Yet Be Purchased | | :--- | :--- | :--- | :--- | :--- | | Aug 4 - Aug 31, 2024 | 54,775 | $346.84 | 54,775 | $374,998,500 | | Sep 1 - Oct 5, 2024 | 132,646 | $361.83 | 132,646 | $327,002,805 | | Oct 6 - Nov 2, 2024 | 106,162 | $376.75 | 106,162 | $287,005,827 | | Total | 293,583 | $364.43 | 293,583 | $287,005,827 | - During the three months ended November 2, 2024, the company repurchased 0.3 million shares for $107.0 million, with $287.0 million of authorization remaining under the May 2023 Stock Plan160 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including required certifications from the CEO and Co-Principal Financial Officers and XBRL data files - The report includes required certifications from the Chief Executive Officer and Co-Principal Financial Officers pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002164