Dillard's(US:DDS)2025-03-28 20:05Company Overview - Dillard's operates 272 stores, including 28 clearance centers, and an e-commerce site, dillards.com, as of February 1, 2025[11]. - As of December 23, 2024, Dillard's employed approximately 28,800 associates, with 20,100 being full-time[26]. - As of February 1, 2025, the company operates 272 retail stores across 30 states, totaling approximately 46.3 million square feet, with 43.3 million square feet owned[106]. - The company operates several distribution centers, with a total owned square footage of 3,894,000, including a 700,000 square feet facility in Ft. Worth, Texas[109]. - The company operates a general contracting construction company, CDI, which is a separate reportable segment from its retail operations[128]. Financial Performance - Net income for fiscal 2024 was $593.5 million, a decrease from $738.8 million in fiscal 2023, resulting in earnings per share of $36.82 compared to $44.73[135]. - The company's net sales for fiscal 2024 were $6,482.6 million, a decrease of 4% compared to $6,752.1 million in fiscal 2023[179]. - Consolidated gross margin for fiscal 2024 was 39.5% of sales, down from 40.3% in fiscal 2023, with retail gross margin at 41.0% compared to 41.8%[133]. - Selling, general and administrative expenses increased to $1,731.2 million (26.7% of sales) in fiscal 2024 from $1,717.4 million (25.4% of sales) in fiscal 2023[134]. - Cash flow from operations was $714.1 million in fiscal 2024, down from $883.6 million in fiscal 2023[137]. - The company returned $534.8 million to shareholders through dividends and share repurchases during fiscal 2024[137]. - The estimated effective income tax rate for fiscal 2024 was 18.7%, down from 19.4% in fiscal 2023[199]. Sales and Market Trends - In Fiscal 2024, the retail operations segment accounted for 96% of net sales, with cosmetics at 16%, ladies' apparel at 20%, and men's apparel at 19%[12]. - Comparable store sales declined by 3% for the 52-week period ended February 1, 2025, while total retail sales decreased by 2% to $6.219 billion[132]. - The retail operations segment experienced a decrease in sales of $261.1 million, with comparable store sales down 3% for the 52-week period ended February 1, 2025[182]. - Exclusive brand merchandise sales penetration was 22.7% of total net sales in fiscal 2024, down from 23.5% in fiscal 2023[185]. - Retail sales per square foot decreased to $137 in fiscal 2024 from $143 in fiscal 2023[139]. - The company faced challenges from inflation and economic uncertainties, impacting pricing and customer purchasing behavior[147]. Competition and Market Risks - Dillard's faces intense competition from various retailers, including online and off-price competitors, which may impact revenues and market share[37]. - Changes in economic conditions affecting consumer confidence and spending could adversely affect the company's sales and results of operations[51]. - The company is exposed to risks associated with sourcing merchandise from foreign countries, including tariffs and trade restrictions, which could increase costs and affect profitability[63]. - Compliance with the Uyghur Forced Labor Prevention Act could lead to increased costs of goods and adversely affect profitability[66]. - Disruptions in the global supply chain could result in lost sales and increased costs, negatively impacting profits[67]. - The company's profitability may be adversely impacted by unexpected weather conditions affecting inventory compatibility with consumer needs[48]. Credit and Financial Agreements - The company has transitioned its private label credit card program from Wells Fargo to Citibank, with the new program launching on August 19, 2024[19]. - The Company entered into a 10-year agreement with Citibank to provide a new credit card program, replacing the previous Wells Fargo Alliance[70]. - Initial income from the Citibank Alliance is expected to be less than historical earnings from the Wells Fargo Alliance, with future cash flows difficult to predict[73]. - The income and cash flow from the Citibank Alliance will depend on factors such as sales levels, payment rates, and credit losses, similar to the previous alliance[75]. - Regulatory changes, such as limits on late fees, could materially affect income and cash flows from the private label credit card program[74]. - Income from the Citibank Alliance was $54.1 million in fiscal 2024, down from $67.2 million in fiscal 2023[210]. Cybersecurity and Compliance - The Company has developed a comprehensive information security program to manage cybersecurity risks, including annual risk assessments[94]. - Third-party security firms are engaged to monitor cybersecurity threats and ensure compliance with security standards[95]. - The Company utilizes multiple training methodologies to enhance associate awareness of cybersecurity risks and practices[97]. - The company faced numerous cybersecurity threats, which could potentially expose it to loss or misuse of confidential information[105]. - The company’s retail operations are impacted by a risk-based approach to cybersecurity, which may not fully eliminate risks[105]. - The Company faces risks related to customer payment methods, including potential fraud and compliance with various regulations[76]. Employee and Operational Insights - The company emphasizes talent development, with approximately 75% of salaried managers promoted from hourly store positions[30]. - Employee wage increases and healthcare costs could significantly impact the Company's financial results and cash flows[92]. - Payroll and payroll-related expenses rose by 1.2% to $1,231.4 million in fiscal 2024 compared to $1,217.3 million in fiscal 2023[192]. - Insurance accruals were recorded at $40.1 million as of February 1, 2025, with a 10% change in self-insurance reserve potentially affecting net income by approximately $3 million[171]. - The company's pension liability was reported at $298.9 million as of February 1, 2025, with expected pension expense of approximately $25.9 million for fiscal 2025[178]. Construction Segment Performance - The construction segment contributed 4% to total net sales in Fiscal 2024, up from 2% in Fiscal 2022[12]. - The construction segment's net sales decreased by $8.4 million or 3% during fiscal 2024 due to reduced construction activity[184]. - Remaining performance obligations related to executed construction contracts totaled $202.8 million, increasing approximately 24% from the previous year[184].