Dillard's(DDS) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This part presents Dillard's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section provides Dillard's unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income, stockholders' equity, and cash flow statements, along with detailed explanatory notes Condensed Consolidated Balance Sheets | Metric (in Thousands) | July 30, 2022 | January 29, 2022 | July 31, 2021 | | :-------------------- | :------------ | :--------------- | :------------ | | Cash and cash equivalents | $492,856 | $716,759 | $669,474 | | Merchandise inventories | $1,193,443 | $1,080,178 | $1,112,815 | | Total assets | $3,221,603 | $3,245,557 | $3,383,509 | | Total current liabilities | $946,006 | $966,186 | $894,012 | | Long-term debt | $321,300 | $321,247 | $365,918 | | Total stockholders' equity | $1,449,001 | $1,451,218 | $1,609,579 | Condensed Consolidated Statements of Income | Metric (in Thousands, Except Per Share Data) | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $1,588,620 | $1,570,378 | $3,200,288 | $2,898,921 | | Service charges and other income | $29,267 | $31,054 | $60,381 | $60,046 | | Cost of sales | $941,217 | $927,210 | $1,802,654 | $1,701,299 | | Selling, general and administrative expenses | $401,332 | $365,868 | $802,105 | $702,482 | | Income before income taxes | $210,579 | $240,316 | $534,602 | $443,803 | | Net income | $163,449 | $185,656 | $414,542 | $343,903 | | Earnings per share (Basic and diluted) | $9.30 | $8.81 | $23.07 | $16.03 | Condensed Consolidated Statements of Comprehensive Income | Metric (in Thousands) | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $163,449 | $185,656 | $414,542 | $343,903 | | Other comprehensive income | $182 | $528 | $363 | $1,057 | | Comprehensive income | $163,631 | $186,184 | $414,905 | $344,960 | Condensed Consolidated Statements of Stockholders' Equity | Metric (in Thousands) | Balance, April 30, 2022 | Balance, July 30, 2022 | | :-------------------- | :---------------------- | :--------------------- | | Common Stock | $1,240 | $1,240 | | Additional Paid-in Capital | $956,653 | $958,974 | | Accumulated Other Comprehensive Loss | $(22,617) | $(22,435) | | Retained Earnings | $5,275,371 | $5,435,331 | | Treasury Stock | $(4,698,314) | $(4,924,109) | | Total | $1,512,333 | $1,449,001 | - During the three months ended July 30, 2022, the company reported net income of $163.4 million and purchased 874,818 shares of treasury stock for $225.8 million[20] Condensed Consolidated Statements of Cash Flows | Metric (in Thousands) | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $279,050 | $492,301 | | Net cash used in investing activities | $(72,886) | $(9,101) | | Net cash used in financing activities | $(430,067) | $(174,065) | | Cash and cash equivalents, end of period | $492,856 | $669,474 | Notes to Condensed Consolidated Financial Statements Note 1. Basis of Presentation Unaudited interim financial statements adhere to SEC rules and GAAP, reflecting the seasonal nature of the business and amortized cost classification for short-term investments - The company's short-term investments are comprised of U.S. Treasury Bills, classified as held-to-maturity and stated at amortized cost[29] - Operating results for the three and six months ended July 30, 2022, are not necessarily indicative of the full fiscal year due to the seasonal nature of the business[27] Note 2. Accounting Standards Management confirms no new accounting guidance issued but not yet effective is relevant to the Company's current financial statements - No new accounting guidance issued but not yet effective is considered relevant to the company's current financial statements[30] Note 3. Business Segments The Company operates in retail and construction segments, with retail operations aggregated due to similar characteristics, and this note details segment-level financial data and contract liabilities - The Company operates in two reportable segments: retail department stores ('retail operations') and a general contracting construction company ('construction')[31] | Product Line | Three Months July 30, 2022 (% of Net Sales) | Three Months July 31, 2021 (% of Net Sales) | Six Months July 30, 2022 (% of Net Sales) | Six Months July 31, 2021 (% of Net Sales) | | :------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Cosmetics | 14 % | 13 % | 13 % | 14 % | | Ladies' apparel | 23 % | 24 % | 23 % | 23 % | | Ladies' accessories and lingerie | 15 % | 15 % | 14 % | 15 % | | Juniors' and children's apparel | 8 % | 9 % | 10 % | 10 % | | Men's apparel and accessories | 21 % | 20 % | 20 % | 19 % | | Shoes | 14 % | 14 % | 15 % | 14 % | | Home and furniture | 3 % | 3 % | 3 % | 3 % | | Construction segment | 2 % | 2 % | 2 % | 2 % | | Metric (in Thousands) | Retail Operations (3M July 30, 2022) | Construction (3M July 30, 2022) | Consolidated (3M July 30, 2022) | | :-------------------- | :----------------------------------- | :------------------------------ | :------------------------------ | | Net sales from external customers | $1,552,658 | $35,962 | $1,588,620 | | Gross margin | $644,921 | $2,482 | $647,403 | | Income before income taxes | $209,960 | $619 | $210,579 | | Total assets | $3,174,436 | $47,167 | $3,221,603 | - Remaining performance obligations for construction contracts totaled $215.9 million at July 30, 2022, a significant increase from $93.9 million at January 29, 2022, and $51.8 million at July 31, 2021, expected to be earned over the next 9 to 18 months[40] Note 4. Earnings Per Share Data This note details the computation of basic and diluted earnings per share, confirming the Company's capital structure consists solely of common stock with no dilutive securities | Metric (in Thousands, Except Per Share Data) | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $163,449 | $185,656 | $414,542 | $343,903 | | Weighted average shares outstanding | 17,583 | 21,079 | 17,967 | 21,458 | | Basic and diluted earnings per share | $9.30 | $8.81 | $23.07 | $16.03 | - The Company has no preferred stock, stock options, or other dilutive securities outstanding[43] Note 5. Commitments and Contingencies The Company is involved in routine legal proceedings not expected to materially affect its financial position, with $19.5 million in letters of credit issued under its revolving credit facility - Legal proceedings are not expected to have a material adverse effect on the Company's financial position, cash flows, or results of operations[44] - Letters of credit totaling $19.5 million were issued under the Company's revolving credit facility as of July 30, 2022[45] Note 6. Benefit Plans The Company maintains an unfunded, nonqualified defined benefit pension plan for officers, with net periodic benefit costs of $2.955 million and $5.910 million for the three and six months ended July 30, 2022, respectively - The Company has an unfunded, nonqualified defined benefit plan for its officers, with contributions of $1.5 million and $3.1 million during the three and six months ended July 30, 2022, respectively[46] | Components of Net Periodic Benefit Costs (in Thousands) | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service cost | $1,019 | $1,067 | $2,038 | $2,134 | | Interest cost | $1,696 | $1,438 | $3,393 | $2,875 | | Net actuarial loss | $240 | $697 | $479 | $1,394 | | Net periodic benefit costs | $2,955 | $3,202 | $5,910 | $6,403 | Note 7. Revolving Credit Agreement The Company maintains an $800 million revolving credit facility for general corporate purposes, with no outstanding borrowings and $780.5 million available as of July 30, 2022 - The credit agreement provides a borrowing capacity of $800 million, with a $200 million expansion option, maturing on April 28, 2026[49][50] - As of July 30, 2022, no borrowings were outstanding, and $780.5 million of unutilized availability remained under the facility[51] Note 8. Stock Repurchase Programs The Company's February 2022 Stock Plan authorized up to $500 million in repurchases, with $199.7 million remaining after repurchasing 875 thousand shares for $225.8 million during the three months ended July 30, 2022 - The February 2022 Stock Plan authorized the repurchase of up to $500 million of Class A Common Stock, with $199.7 million remaining as of July 30, 2022[52][53] | Metric (in Thousands, Except Per Share Data) | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of shares repurchased | $225,795 | $112,207 | $412,310 | $171,021 | | Number of shares repurchased | 875 | 734 | 1,610 | 1,359 | | Average price per share | $258.11 | $152.77 | $256.10 | $125.81 | Note 9. Income Taxes Income tax expense for the three and six months ended July 30, 2022, primarily differed from the statutory federal income tax rate due to state and local income taxes - Income tax expense differed from the statutory federal income tax rate primarily due to state and local income taxes[54] Note 10. Gain on Disposal of Assets The Company recorded a $7.2 million gain from selling one store property during the six months ended July 30, 2022, compared to a $24.7 million gain from three properties in the prior year - Six months ended July 30, 2022: $8.1 million proceeds from sale of one store property, resulting in a $7.2 million gain[57] - Six months ended July 31, 2021: $29.3 million proceeds from sale of three store properties, resulting in a $24.7 million gain[57] Note 11. Fair Value Disclosures Fair values of cash, cash equivalents, accounts receivable, and short-term investments approximate carrying values, while long-term debt and subordinated debentures are valued based on market prices - Fair value of cash, cash equivalents, and accounts receivable approximates carrying values due to short-term maturities[59] | Metric (in Millions) | Carrying Value (July 30, 2022) | Fair Value (July 30, 2022) | | :------------------- | :----------------------------- | :------------------------- | | Long-term debt | $366.1 | ~$383 | | Subordinated debentures | $200 | ~$216 | - Fair values of long-term debt and subordinated debentures are based on market prices and categorized as Level 1 in the fair value hierarchy[60] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial performance and condition, highlighting key results, operational trends, and influencing factors for the reported periods EXECUTIVE OVERVIEW Q2 2022 results were strong but slightly below prior year records, with flat comparable retail sales, a slight decline in retail gross margin, increased SG&A due to payroll, and positive operating cash flow despite decreased net income - Comparable retail store sales were flat for the three months ended July 30, 2022, compared to the prior year second quarter[64] - Retail gross margin declined 20 basis points to 41.5% for the three months ended July 30, 2022[64] - Selling, general and administrative (SG&A) expenses increased to $401.3 million (25.3% of sales) for the three months ended July 30, 2022, primarily due to increased payroll and payroll-related expenses[65] | Metric (in Millions, Except Per Share Data) | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net income | $163.4 | $185.7 | | EPS | $9.30 | $8.81 | - Cash flows provided by operating activities were $279.1 million for the six months ended July 30, 2022[67] - The Company repurchased approximately 875,000 shares of Class A Common Stock for $225.8 million during the three months ended July 30, 2022, with $199.7 million remaining under the open stock repurchase plan[67] - As of July 30, 2022, the Company had working capital of $984.1 million, including $492.9 million in cash and cash equivalents and $74.0 million in short-term investments[68] - The Company maintained 279 Dillard's stores (including 29 clearance centers) and an internet store as of July 30, 2022[68] - Economic and geopolitical factors, including fluctuating gas prices, inflation, interest rate increases, increased shipping costs, U.S. port slowdowns, and increasing U.S. wages, are affecting the business, with the financial impact for fiscal 2022 not yet reasonably estimable[69] Key Performance Indicators This section outlines the key financial and operational metrics used to evaluate the Company's business performance, including sales, margins, expenses, cash flow, store count, and inventory trends | Indicator (in Millions, Except Percentages and Counts) | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | | :----------------------------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $1,588.6 | $1,570.4 | | Comparable retail stores sales trend | 0 % | * | | Gross margin | $647.4 | $643.2 | | Gross margin as a percentage of net sales | 40.8 % | 41.0 % | | Retail gross margin as a percentage of retail net sales | 41.5 % | 41.7 % | | Selling, general and administrative expenses as a percentage of net sales | 25.3 % | 23.3 % | | Cash flow provided by operations** | $279.1 | $492.3 | | Total retail store count at end of period | 279 | 280 | | Retail sales per square foot | $34 | $33 | | Retail store inventory trend | 7 % | (13)% | | Annualized retail merchandise inventory turnover | 2.8 | 2.9 | - *Comparable store sales data for Q2 2021 was not reported due to COVID-19 related store closures in Q2 2020 and the interdependence of in-store and online sales[71] - **Cash flow from operations data is for the six months ended July 30, 2022, and July 31, 2021[71] General This section defines key financial statement line items and operational concepts, addresses the LIBOR transition, and highlights the seasonal nature of the Company's business - Net sales include merchandise sales from comparable and non-comparable stores and revenue from CDI Contractors, LLC, with an interdependence between in-store and online sales[72][73] - Service charges and other income include earnings from the Wells Fargo Alliance, rental income, shipping/handling fees, and gift card breakage[74] - Cost of sales encompasses merchandise costs, bankcard fees, freight, discounts, shipping to customers, salon payroll, and CDI contract costs[75][76] - Selling, general and administrative expenses cover a broad range of operational costs, including payroll, benefits, occupancy, advertising, and corporate expenses[77] - The Company is monitoring the phase-out of LIBOR and planning for a transition to a SOFR-based rate for its credit agreement and other applicable agreements[82] - The business is subject to seasonal influences, with a significant portion of sales and income typically realized during the last quarter of the fiscal year due to the holiday season[83] RESULTS OF OPERATIONS This section provides a detailed analysis of the Company's operating results, including net sales, service charges, gross margin, SG&A, other expense, asset disposal gains, and income taxes for the reported periods Net Sales Total net sales increased by 1.2% for the three months and 10.4% for the six months ended July 30, 2022, driven by retail and construction segment growth, with flat comparable store sales in the quarter but a 10% increase for six months | Segment | % Change 2022 - 2021 (3 Months) | % of Net Sales (3 Months) | | :------------------------------------------ | :------------------------------ | :------------------------ | | Retail operations segment | | | | Cosmetics | 4.0 % | 14 % | | Ladies' apparel | (4.4)% | 23 % | | Ladies' accessories and lingerie | (2.5)% | 15 % | | Juniors' and children's apparel | (3.2)% | 8 % | | Men's apparel and accessories | 9.7 % | 21 % | | Shoes | 1.7 % | 14 % | | Home and furniture | (2.9)% | 3 % | | Construction segment | 16.1 % | 2 % | - For the three months ended July 30, 2022, net sales from retail operations increased $13.3 million (approximately 1%), with comparable store sales remaining flat[86] - Sales transactions decreased by 8%, while average dollars per transaction increased by 8%[87] - Construction segment net sales increased $5.0 million (approximately 16%) for the three months ended July 30, 2022, due to increased activity, with remaining performance obligations significantly increasing by 130% from January 29, 2022, and 317% from July 31, 2021[89] | Segment | % Change 2022 - 2021 (6 Months) | % of Net Sales (6 Months) | | :------------------------------------------ | :------------------------------ | :------------------------ | | Retail operations segment | | | | Cosmetics | 9.2 % | 13 % | | Ladies' apparel | 9.0 % | 23 % | | Ladies' accessories and lingerie | 2.0 % | 14 % | | Juniors' and children's apparel | 12.4 % | 10 % | | Men's apparel and accessories | 19.6 % | 20 % | | Shoes | 11.5 % | 15 % | | Home and furniture | 3.7 % | 3 % | | Construction segment | 6.4 % | 2 % | - For the six months ended July 30, 2022, net sales from retail operations increased $297.3 million (approximately 10%), with comparable store sales also increasing approximately 10%[90] - Sales transactions increased by 1%, and average dollars per transaction increased by 10%[91] Service Charges and Other Income Total service charges and other income decreased by $1.8 million (5.8%) for the three months but increased by $0.3 million (0.6%) for the six months ended July 30, 2022, primarily due to changes in Wells Fargo Alliance income and shipping fees | Metric (in Thousands) | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income from Wells Fargo Alliance | $16,375 | $17,735 | $33,549 | $35,443 | | Shipping and handling income | $9,848 | $10,223 | $20,070 | $18,704 | | Total service charges and other income | $29,267 | $31,054 | $60,381 | $60,046 | - Income from the Wells Fargo Alliance decreased by $1.36 million for the three months and $1.894 million for the six months ended July 30, 2022[94] Gross Margin Gross margin as a percentage of sales slightly decreased to 40.8% for the three months but increased to 43.7% for the six months ended July 30, 2022, reflecting positive customer response, effective inventory management, and ongoing supply chain challenges | Metric | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total gross margin as a percentage of net sales | 40.8 % | 41.0 % | 43.7 % | 41.3 % | | Retail operations segment gross margin as a percentage of sales | 41.5 % | 41.7 % | 44.5 % | 42.1 % | - Retail operations gross margin as a percentage of sales decreased to 41.5% for the three months ended July 30, 2022, but increased to 44.5% for the six months, attributed to positive customer response and decreased markdowns[96][99] - Inventory increased 7% as of July 30, 2022, compared to July 31, 2021[100] - The Company continues to face supply chain disruptions, including manufacturing capacity impacts from COVID-19, global transportation network issues, U.S. port slowdowns, and a shortage of truck drivers, which may affect costs and timely deliveries[101][102][103] Selling, General and Administrative Expenses ("SG&A") SG&A expenses increased to 25.3% of sales for the three months and 25.1% for the six months ended July 30, 2022, primarily driven by higher payroll and related expenses in a competitive wage environment | Metric (in Thousands) | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total SG&A | $401,332 | $365,868 | $802,105 | $702,482 | | Total SG&A as a percentage of net sales | 25.3 % | 23.3 % | 25.1 % | 24.2 % | | Retail operations segment SG&A as a percentage of sales | 25.7 % | 23.7 % | 25.5 % | 24.7 % | - The dollar increase in SG&A is primarily due to increased payroll and payroll-related expenses in the current highly competitive wage environment, with payroll expense and related taxes increasing by $26.0 million for the three months and $72.9 million for the six months ended July 30, 2022[108] Other Expense Other expense decreased by $3.2 million (45.4%) for the six months ended July 30, 2022, mainly due to the write-off of deferred financing fees in fiscal 2021 | Metric (in Thousands) | Three Months Ended July 30, 2022 | Three Months Ended July 31, 2021 | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total other expense | $1,936 | $2,134 | $3,872 | $7,098 | - The decrease in other expense is primarily due to the write-off of deferred financing fees in fiscal 2021[109] Gain on Disposal of Assets The Company recorded a $7.2 million gain from selling one store property during the six months ended July 30, 2022, compared to a $24.7 million gain from three properties in the prior year, alongside several store closures | Metric (in Thousands) | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Total gain on disposal of assets | $(7,238) | $(24,682) | - During the six months ended July 30, 2022, the Company recorded proceeds of $8.1 million from the sale of one store property, resulting in a $7.2 million gain[110] - During the six months ended July 31, 2021, the Company recorded proceeds of $29.3 million from the sale of three store properties, resulting in a $24.7 million gain[113] - The Company closed several under-performing stores during fiscal 2022, including locations in Provo, Tampa, St. Joseph, and Wichita Falls[121][124] Income Taxes The Company's estimated federal and state effective income tax rate was approximately 22.4% for the three months and 22.5% for the six months ended July 30, 2022, consistent with the prior year, with a 22% rate expected for fiscal 2022 - Estimated federal and state effective income tax rate was approximately 22.4% for the three months ended July 30, 2022 (22.8% in prior year)[114] - Estimated federal and state effective income tax rate was approximately 22.5% for the six months ended July 30, 2022 (22.5% in prior year)[115] - The Company expects the fiscal 2022 federal and state effective income tax rate to approximate 22%[116] FINANCIAL CONDITION Net cash flows from operations decreased due to working capital changes, while the Company invested in capital expenditures, short-term investments, and stock repurchases, maintaining strong liquidity with no outstanding credit facility borrowings | Cash Flow Activity (in Millions) | Six Months Ended July 30, 2022 | Six Months Ended July 31, 2021 | $ Change | | :------------------------------- | :----------------------------- | :----------------------------- | :------- | | Operating Activities | $279.1 | $492.3 | $(213.3) | | Investing Activities | $(72.9) | $(9.1) | $(63.8) | | Financing Activities | $(430.1) | $(174.1) | $(256.0) | | Total (Decrease) Increase in Cash and Cash Equivalents | $(223.9) | $309.1 | $(533.0) | - Net cash flows from operations decreased by $213.3 million during the six months ended July 30, 2022, primarily due to changes in trade accounts payable, accrued expenses, and merchandise inventories[118] - Capital expenditures were $61.1 million for the six months ended July 30, 2022, primarily for equipment, new store construction, and remodels, with new store openings planned in Amarillo, Texas, and Sioux Falls, South Dakota, following a new store in Orem, Utah[120] - The Company purchased $74.0 million in short-term investments (treasury bills) during the six months ended July 30, 2022[127] - As of July 30, 2022, the Company had $492.9 million in cash on hand and $780.5 million in unutilized availability under its $800 million credit facility[128][130] - The Company repurchased 1.6 million shares of Class A Common Stock for $412.3 million during the six months ended July 30, 2022, with the Inflation Reduction Act of 2022's 1% excise tax on share repurchases not expected to have a material impact[131][132] OFF-BALANCE-SHEET ARRANGEMENTS The Company has not entered into any special-purpose entities or off-balance-sheet arrangements likely to materially affect its financial condition or results of operations - The Company is not party to any special-purpose entities or off-balance-sheet arrangements for capital raising, debt, or business operations that would materially affect its financial condition[136] NEW ACCOUNTING STANDARDS This section refers to Note 2 for information regarding new accounting pronouncements and their potential impact on the consolidated financial statements - Refer to Note 2, Accounting Standards, for information on new accounting pronouncements[137] FORWARD-LOOKING INFORMATION This section contains a cautionary statement regarding forward-looking statements, highlighting risks from macroeconomic conditions, competitive pressures, supply chain issues, and the ongoing pandemic - Forward-looking statements are subject to risks and uncertainties, including the COVID-19 pandemic, general retail industry conditions, macroeconomic factors (inflation, interest rates), competitive pressures, labor shortages, consumer spending patterns, changes in tax legislation (including the Inflation Reduction Act of 2022), supply chain efficiencies, LIBOR fluctuations, and global conflicts[138][140] - The Company disclaims any obligation to update or revise forward-looking statements[138] Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes in the Company's quantitative and qualitative disclosures about market risk since its Annual Report on Form 10-K for the fiscal year ended January 29, 2022 - No material changes in market risk disclosures since the Annual Report on Form 10-K for the fiscal year ended January 29, 2022[141] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of July 30, 2022, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of July 30, 2022[142] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended July 30, 2022[143] PART II. OTHER INFORMATION This part addresses legal proceedings, risk factors, unregistered sales of equity securities, and a list of exhibits filed with the Form 10-Q Item 1. Legal Proceedings As of September 1, 2022, no routine litigation is expected to have a material adverse effect on the Company's business or financial condition - As of September 1, 2022, no legal proceedings are expected to have a material adverse effect on the Company's business or financial condition[146] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2022 - No material changes in risk factors since the Annual Report on Form 10-K for the fiscal year ended January 29, 2022[147] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the Company's Class A Common Stock repurchases, with 0.9 million shares bought for $225.8 million during the three months ended July 30, 2022, leaving $199.7 million authorized | Period | Total Number of Shares Purchased | Average Price Per Share | Purchased as Part of Publicly Announced Plans or Programs | Shares that May Yet Be Purchased Under the Plans or Programs (in Millions) | | :-------------------------------- | :------------------------------- | :---------------------- | :-------------------------------------------------------- | :----------------------------------------------------------- | | May 1, 2022 through May 28, 2022 | 575,451 | $268.70 | 575,451 | $270.9 | | May 29, 2022 through July 2, 2022 | 92,407 | $287.94 | 92,407 | $244.3 | | July 3, 2022 through July 30, 2022 | 206,960 | $215.34 | 206,960 | $199.7 | | Total | 874,818 | $258.11 | 874,818 | $199.7 | - During the three months ended July 30, 2022, the Company repurchased 0.9 million shares totaling $225.8 million under its stock repurchase plan, with $199.7 million of authorization remaining under the February 2022 Stock Plan[150] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Co-Principal Financial Officers and XBRL-related documents - Exhibits include certifications (31.1, 31.2, 31.3, 32.1, 32.2, 32.3) and XBRL instance and taxonomy documents[153]