DILLARD'S, INC. The following discussion should be read in conjunction with the condensed consolidated financial statements and the footnotes thereto included elsewhere in this report, as well as the financial and other information included in our Annual Report on Form 10-K for the year endedFebruary 1, 2020 .
EXECUTIVE OVERVIEW
InMarch 2020 , theWorld Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughoutthe United States and the world. The effects of the COVID-19 pandemic has had and continues to have a significant impact on the Company's business, results of operations and financial position. The Company began closing stores onMarch 19, 2020 as mandated by state and local governments, and byApril 9, 2020 , all 285 store locations were temporarily closed. During the three months endedMay 2, 2020 , total retail sales decreased 47%. Due to the temporary closure of the Company's brick-and-mortar stores as well as the interdependence between in-store and online sales, the Company reported no comparable store sales data for the three months endedMay 2, 2020 . Retail gross margins decreased significantly to 12.8% during the three months endedMay 2, 2020 compared to 37.8% during the three months endedMay 4, 2019 , primarily due to markdowns. The Company was able to reduce inventory by 14% compared to the prior year first quarter by reducing purchases 33% through the cancellation, delay and suspension of merchandise orders and by taking aggressive markdowns. Selling, general and administrative expenses decreased to$290.4 million compared to$405.2 million from the prior year first quarter primarily due to decreases in payroll expense associated with the furlough of store associates, support facility functions and corporate employees. At the peak of store closures, approximately 90% of Dillard's 38,000 associates were furloughed. Payroll expense for the 13 weeks endedMay 2, 2020 was$168.5 million compared to$257.5 million for the 13 weeks endedMay 4, 2019 , a decline of 35%. The Company reported a consolidated net loss of$162.0 million ($6.94 per share) compared to net income of$78.6 million ($2.99 per share) for the prior year first quarter. The Company expects to be in a net operating loss position for fiscal year 2020. The Coronavirus Aid, Relief and Economic Security ("CARES") Act, signed into law onMarch 27, 2020 , allows for net operating loss carryback to years in which the tax rate was 35%. Included in net loss for the quarter endedMay 2, 2020 is a net tax benefit of$14.8 million ($0.63 per share) related to this provision. Included in net income for the quarter endedMay 4, 2019 was a pretax gain of$7.4 million ($5.8 million after tax or$0.22 per share) related to the sale of two stores. During the three months endedMay 2, 2020 , the Company purchased$61.8 million of its outstanding Class A Common Stock under its stock repurchase plan authorized by the Company's Board of Directors inMarch 2018 (the "March 2018 Plan"). As ofMay 2, 2020 , authorization of$206.9 million remained under theMarch 2018 Plan. As ofMay 2, 2020 , the Company had working capital of$707.8 million (including cash and cash equivalents of$70.0 million ) and$565.7 million of total debt outstanding, excluding finance lease liabilities and operating lease liabilities. Cash flows used in operating activities were$111.1 million for the three months endedMay 2, 2020 .
The Company maintained 285 Dillard's stores, including 30 clearance centers, and
one internet store at
OnFebruary 25, 2020 , the Company provided estimates for certain financial statement items, including depreciation and amortization, rentals, interest and debt expense, net and capital expenditures, for the fiscal year endingJanuary 30, 2021 based upon current conditions at that time, which did not include the impact of COVID-19. Due to heightened uncertainty relating to the impacts of COVID-19 on the Company's business operations, including the duration and impact on overall customer demand, the Company previously withdrew its 2020 guidance. During the four weeks endedMay 30, 2020 (fiscal May), we re-opened most of our full-line stores: 45 stores onMay 5th , 80 stores onMay 12th , 115 stores onMay 19th and 20th and 8 stores onMay 26th . All of these stores have been operating at reduced hours. Sales performance in these stores since re-opening and throughMay 30th was approximately 68% of prior year sales on corresponding days. As ofJune 2, 2020 , all Dillard's stores had been re-opened. 18
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Table of Contents 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
May 2, May 4,
2020 2019
Net sales (in millions) $ 786.7 $ 1,465.4
Retail stores sales trend (47 )% 1 %
Gross profit (in millions) $ 98.2 $ 537.7
Gross profit as a percentage of net sales 12.5 % 36.7 %
Retail gross profit as a percentage of net sales 12.8 % 37.8 %
Selling, general and administrative expenses as a
percentage of net sales 36.9 % 27.6 %
Cash flow (used in) provided by operations (in
millions) $ (111.1 ) $ 48.4
Total retail store count at end of period 285
289
Retail sales per square foot $ 16 $
30
Retail store inventory trend (14 )% 3 % Annualized retail merchandise inventory turnover 1.6 2.1 General Net sales. Net sales includes merchandise sales of comparable and non-comparable stores and revenue recognized on contracts ofCDI 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 current quarter and the corresponding quarter for the prior 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. Customerswho 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 private label card alliance withWells Fargo Bank, N.A . ("Wells Fargo Alliance "). Other income includes rental income, shipping and handling fees, gift card breakage and lease income on leased departments. 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), insurance, employment taxes, advertising, management information systems, legal and other corporate level expenses. Buying expenses consist of payroll, employee benefits and travel for design, buying and merchandising personnel.
Depreciation and amortization. Depreciation and amortization expenses include depreciation and amortization on property and equipment.
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Rentals. Rentals includes expenses for store leases, including contingent rent, office space and data processing and other equipment rentals.
Interest and debt expense, net. Interest and debt expense includes interest, net of interest income and capitalized interest, relating to the Company's unsecured notes, subordinated debentures and borrowings under the Company's credit facility. Interest and debt expense also includes gains and losses on note repurchases, if any, amortization of financing costs and interest on finance lease liabilities.
Other expense. Other expense includes the interest cost and net actuarial loss components of net periodic benefit costs related to the Company's unfunded, nonqualified defined benefit plan and charges related to the write-off of deferred financing fees, if any.
Gain on disposal of assets. Gain on disposal of assets includes the net gain or loss on the sale or disposal of property and equipment, as well as gains from insurance proceeds in excess of the cost basis of insured assets, if any.
LIBOR
The use of LIBOR is expected to be phased out by the end of 2021. At this time, there is no definitive information regarding the future utilization of LIBOR beyond 2021 or of any particular replacement rate. Going forward, we intend to work with our lenders to use a suitable alternative reference rate for the amended credit agreement, theWells Fargo Alliance and any other applicable agreements. We will continue to monitor, assess and plan for the phase out of LIBOR. Seasonality Our business, like many other retailers, is subject to seasonal influences, with a significant portion of sales and income typically realized during the last quarter of our fiscal year due to the holiday season. Because of the seasonality of our business, results from any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year. 20
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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
May 2, May 4,
2020 2019
Net sales 100.0 % 100.0 %
Service charges and other income 4.4 2.2
104.4 102.2
Cost of sales 87.5 63.3
Selling, general and administrative expenses 36.9 27.6 Depreciation and amortization
6.5 3.6
Rentals 0.7 0.4
Interest and debt expense, net 1.6 0.8
Other expense 0.3 0.1
Gain on disposal of assets - (0.5 )
(Loss) income before income taxes (29.0 ) 6.9
Income taxes (benefit) (8.4 ) 1.5
Net (loss) income (20.6 )% 5.4 %
Net Sales
Three Months Ended
May 2, May 4,
(in thousands of dollars) 2020 2019 $ Change
Net sales:
Retail operations segment
35,628 44,919 (9,291 )
Total net sales $ 786,655 $ 1,465,441 $ (678,786 )
The percent change in the Company's sales by segment and product category for
the three months ended May 2, 2020 compared to the three months ended May 4,
2019 as well as the sales percentage by segment and product category to total
net sales for the three months ended May 2, 2020 are as follows:
% Change % of
2020 - 2019 Net Sales
Retail operations segment
Cosmetics (40.2 )% 15 %
Ladies' apparel (52.2 ) 22
Ladies' accessories and lingerie (45.8 ) 14
Juniors' and children's apparel (50.3 ) 10
Men's apparel and accessories (46.7 ) 16
Shoes (46.1 ) 15
Home and furniture (40.1 ) 3
95
Construction segment (20.7 ) 5
Total 100 %
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Net sales from the retail operations segment decreased 47% during the three months endedMay 2, 2020 compared to the three months endedMay 4, 2019 primarily due to the impact of the COVID-19 pandemic. The Company reported no comparable store sales data for the quarter due to the temporary closure of its brick-and-mortar stores as well as the interdependence between in-store and online sales. Sales in all product categories decreased significantly over the first quarter last year.
We recorded a return asset of
During the three months endedMay 2, 2020 , net sales from the construction segment decreased$9.3 million or 20.7% compared to the three months endedMay 4, 2019 due to a decrease in construction activity. The remaining performance obligations related to executed construction contracts totaled$145.4 million as ofMay 2, 2020 , decreasing approximately 7% fromFebruary 1, 2020 and increasing approximately 18% fromMay 4, 2019 , respectively. We expect the backlog to be earned over the next nine to eighteen months.
Service Charges and Other Income
Three Months Ended Three Months
$ Change
(in thousands of dollars) May 2, 2020 May 4, 2019 2020-2019
Service charges and other income:
Retail operations segment
Income from Wells Fargo Alliance $ 20,800 $ 21,146 $ (346 )
Shipping and handling income 11,567 6,077 5,490
Leased department income 372 1,123 (751 )
Other 1,748 3,350 (1,602 )
34,487 31,696 2,791
Construction segment 434 798 (364 )
Total service charges and other income $ 34,921 $
32,494
Service charges and other income is composed primarily of income from theWells Fargo Alliance . Income from the alliance remained relatively flat during the three months endedMay 2, 2020 compared to the three months endedMay 4, 2019 . Shipping and handling income increased during the three months endedMay 2, 2020 compared to the three months endedMay 4, 2019 primarily due to the increase in online orders and ship-from-store capabilities from closed store locations. Gross Profit (in thousands of dollars) May 2, 2020 May 4, 2019 $ Change % Change Gross profit: Three months ended Retail operations segment$ 96,034 $ 536,371 $ (440,337 ) (82.1 )% Construction segment 2,152 1,303 849 65.2 Total gross profit$ 98,186 $ 537,674 $ (439,488 ) (81.7 )% Three Months Ended May 2, 2020 May 4, 2019
Gross profit as a percentage of segment net sales: Retail operations segment
12.8 % 37.8 %
Construction segment 6.0 2.9
Total gross profit as a percentage of net sales 12.5 36.7
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Gross profit, as a percentage of sales, decreased to 12.5% from 36.7% during the
three months ended
Gross profit from retail operations, as a percentage of sales, decreased to 12.8% from 37.8% during the three months endedMay 2, 2020 compared to the three months endedMay 4, 2019 primarily due to increased markdowns taken as a result of the impact of the COVID-19 pandemic. Gross margin decreased significantly in all product categories except cosmetics which declined moderately.
Gross profit from the construction segment increased 314 basis points of
construction sales for the three months ended
Inventory decreased 14% in total as of
A
1% change in the dollar amount of markdowns would have impacted the net loss by
approximately
Selling, General and Administrative Expenses ("SG&A")
(in thousands of dollars) May 2, 2020 May 4, 2019 $ Change % Change SG&A: Three months ended Retail operations segment$ 288,557 $ 403,292 $ (114,735 ) (28.4 )% Construction segment 1,889 1,868 21 1.1 Total SG&A$ 290,446 $ 405,160 $ (114,714 ) (28.3 )% Three Months Ended May 2, 2020 May 4, 2019 SG&A as a percentage of segment net sales: Retail operations segment 38.4 % 28.4 % Construction segment 5.3 4.2 Total SG&A as a percentage of net sales 36.9 27.6 SG&A decreased by$114.7 million and increased as a percentage of net sales to 36.9% from 27.6% during the three months endedMay 2, 2020 compared to the three months endedMay 4, 2019 . SG&A from retail operations increased to 38.4% from 28.4% of net sales during the three months endedMay 2, 2020 compared to the three months endedMay 4, 2019 . The decrease in SG&A dollars was primarily attributable to decreases in payroll expense. The Company furloughed store associates as stores closed due to the COVID-19 pandemic. Additionally, furlough actions were implemented in certain corporate and support facility functions. At the peak of store closures, approximately 90% of Dillard's 38,000 associates were furloughed. The Company was able to reduce payroll expense by$4.2 million through the employee retention credit available under the CARES Act. 23
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Depreciation and Amortization
(in thousands of dollars) May 2, 2020 May 4, 2019 $ Change % Change Depreciation and amortization: Three months ended Retail operations segment$ 50,732 $ 52,194 $ (1,462 ) (2.8 )% Construction segment 169 170
(1 ) (0.6 )
Total depreciation and amortization
Interest and Debt Expense, Net (in thousands of dollars) May 2, 2020 May 4, 2019 $ Change % Change Interest and debt expense (income), net: Three months ended Retail operations segment$ 12,291 $ 11,264 $ 1,027 9.1 % Construction segment (21 ) (27 ) 6 22.2 Total interest and debt expense, net$ 12,270 $ 11,237 $ 1,033 9.2 % Net interest and debt expense increased$1.0 million and total weighted average debt increased by$237.9 million during the three months endedMay 2, 2020 compared to the three months endedMay 4, 2019 primarily due to an increase in short term borrowings under the credit facility. The Company borrowed$779 million under the credit facility onMarch 25, 2020 and repaid the full amount onApril 30, 2020 concurrent with the execution of the amended credit agreement. Gain on Disposal of Assets (in thousands of dollars) May 2, 2020 May 4, 2019 $ Change Gain on disposal of assets: Three months ended Retail operations segment$ (18 ) $ (7,400 ) $ 7,382 Construction segment (1 ) -
(1 )
Total gain on disposal of assets
During the three months ended
Income Taxes The Company expects to be in a net operating loss position for the fiscal year. The CARES Act, signed into law onMarch 27, 2020 , allows for net operating loss carryback to years in which the statutory federal tax rate was 35%. The Company's estimated federal and state effective income tax rate was approximately 29.0% and 22.0% for the three months endedMay 2, 2020 andMay 4, 2019 , respectively. During the three months endedMay 2, 2020 , income tax benefit differed from what would be computed using the current statutory federal tax rate of 21% primarily due to the recognition of a net tax benefit of$14.8 million related to the carryback provision of the CARES Act. This net tax benefit was comprised of tax expense of$25.2 million for the remeasurement of beginning deferred tax assets and liabilities and tax benefit of$40.0 million for the impact of the net operating loss carryback. Income tax benefit for the quarter also included the effects of federal tax credits and state and local income taxes.
During the three months ended
Due to uncertainty relating to the impacts of COVID-19 on the Company's business
operations, the Company is not providing an expected fiscal 2020 federal and
state effective income tax rate.
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Table of Contents FINANCIAL CONDITION A summary of net cash flows for the three months endedMay 2, 2020 andMay 4, 2019 follows: Three Months Ended (in thousands of dollars) May 2, 2020 May 4, 2019 $ Change Operating Activities$ (111,125 ) $ 48,357 $ (159,482 ) Investing Activities (19,904 ) (5,087 ) (14,817 ) Financing Activities (76,054 ) (18,294 ) (57,760 ) Total (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash$ (207,083 ) $ 24,976
Net cash flows from operations decreased$159.5 million during the three months endedMay 2, 2020 compared to the three months endedMay 4, 2019 primarily due to significant decreases in net income, primarily due to decreases in sales, partially offset by changes in working capital.
The Company took a number of actions to enhance liquidity during the first quarter as the COVID-19 pandemic progressed, including the following:
? Extended vendor payment terms
? Canceled, suspended and significantly delayed merchandise shipments
? Reduced merchandise purchases during the quarter by 33%
? Reviewed and reduced discretionary operating and capital expenditures
? Reduced payroll expense
? Executed aggressive promotional markdowns to clear inventory
Wells Fargo owns and manages the Dillard's private label cards under theWells Fargo Alliance . Under theWells Fargo Alliance , Wells Fargo establishes and owns private label card accounts for our customers, retains the benefits and risks associated with the ownership of the accounts, provides key customer service functions, including new account openings, transaction authorization, billing adjustments and customer inquiries, receives the finance charge income and incurs the bad debts associated with those accounts. Pursuant to theWells Fargo Alliance , we receive on-going cash compensation from Wells Fargo based upon the portfolio's earnings. The compensation received from the portfolio is determined monthly and has no recourse provisions. The amount the Company receives is dependent on the level of sales on Wells Fargo accounts, the level of balances carried on Wells Fargo accounts by Wells Fargo customers, payment rates on Wells Fargo accounts, finance charge rates and other fees on Wells Fargo accounts, the level of credit losses for the Wells Fargo accounts as well as Wells Fargo's ability to extend credit to our customers. We participate in the marketing of the private label cards, which includes the cost of customer reward programs.The Wells Fargo Alliance expires in fiscal 2024. The Company received income of$20.8 million and$21.1 million from theWells Fargo Alliance during the three months endedMay 2, 2020 andMay 4, 2019 , respectively. The Company is unable to quantify the impact of the COVID-19 pandemic on the portfolio's earnings and the on-going cash compensation from theWells Fargo Alliance . Capital expenditures were$20.2 million and$18.7 million for the three months endedMay 2, 2020 andMay 4, 2019 , respectively. The capital expenditures were primarily related to equipment purchases and the remodeling of existing stores during the current year. During the three months endedMay 4, 2019 , the Company received cash proceeds of$13.4 million and recorded a related gain of$7.4 million for the sale of two store locations inBoardman, Ohio andBoynton Beach, Florida . The proceeds from theBoardman, Ohio store were held in escrow for the acquisition of replacement property under like-kind exchange agreements. The escrow accounts were administered by an intermediary. Pursuant to the like-kind exchange agreements, the cash was restricted for a maximum of 180 days from the date of the property sale pending the acquisition of replacement property. As ofMay 4, 2019 , the acquisition of replacement property had not yet occurred; therefore, the proceeds were classified as restricted cash on the condensed consolidated balance sheets. 25
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During the first quarter of 2020, the Company opened an 85,000 square foot expansion atColumbia Mall inColumbia, Missouri (dual-anchor location totaling 185,000 square feet). During the second quarter of 2020, the Company plans to replace a 100,000 square foot leased facility atRichland Fashion Mall inWaco, Texas with a 125,000 square foot owned facility (dual-anchor location totaling 190,000 square feet). The Company has announced upcoming store closures atCentral Mall inLawton, Oklahoma (100,000 square feet); Crossroads Center inWaterloo, Iowa (150,000 square feet); andNorth Plains Mall inClovis, New Mexico (62,000 square feet). The Company expects to close the locations during the second quarter of 2020 with minimal closing costs. We remain committed to closing under-performing stores where appropriate and may incur future closing costs related to such stores when they close. The Company had cash on hand of$70.0 million as ofMay 2, 2020 . As part of our overall liquidity management strategy and for peak working capital requirements, the Company maintained an unsecured credit facility that provided a borrowing capacity of$800 million with a$200 million expansion option ("credit agreement") until the credit agreement was amended inApril 2020 (the "amended credit agreement"). After giving effect to the amendment, the amended credit agreement became secured by certain deposit accounts of the Company and certain inventory of certain subsidiaries. The amended credit agreement is available to the Company 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 rate of interest on borrowings under the amended credit agreement is LIBOR plus 1.75%, and the commitment fee for unused borrowings is 0.30% per annum. So long as availability exceeds$100 million and no event of default occurs and is continuing, there are no financial covenant requirements under the amended credit agreement. The Company paid$2.9 million in issuance costs related to the amended credit agreement, which were recorded in other assets on the condensed consolidated balance sheets. As part of the Company's liquidity strategy during the COVID-19 pandemic, inMarch 2020 , the Company borrowed$779 million under the credit agreement, which was repaid concurrent with the execution of the amended credit agreement. AtMay 2, 2020 , no borrowings were outstanding, and letters of credit totaling$21.0 million were issued under the amended credit agreement leaving unutilized availability under the facility of$779.0 million . During the three months endedMay 2, 2020 , the Company repurchased 1.0 million shares of Class A Common Stock at an average price of$61.91 per share for$61.8 million under the Company'sMarch 2018 Plan. Additionally, the Company paid$7.3 million for share repurchases that had not yet settled but were accrued atFebruary 1, 2020 . During the three months endedMay 4, 2019 , the Company repurchased 0.2 million shares of Class A Common Stock at an average price of$70.85 per share for$17.4 million (including the accrual of$2.0 million of share repurchases that had not settled as ofMay 4, 2019 ) under the Company'sMarch 2018 Plan. AtMay 2, 2020 ,$206.9 million of authorization remained under theMarch 2018 Plan. The ultimate disposition of the repurchased stock has not been determined. The COVID-19 pandemic has had a significant negative effect on the Company's liquidity and net sales. Due to heightened uncertainty relating to the impacts of COVID-19 on the Company's business operations, including the duration and impact on overall customer demand, our liquidity and net sales may be further impacted if we are unable to appropriately manage our inventory levels and expenses. The Company expects to finance its operations during fiscal 2020 from cash on hand, cash flows generated from operations and utilization of the credit facility. Depending upon our actual and anticipated sources and uses of liquidity, the Company will from time to time consider other possible financing transactions, the proceeds of which could be used to fund working capital or for other corporate purposes. There have been no material changes in the information set forth under caption "Contractual Obligations and Commercial Commitments" in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in the Company's Annual Report on Form 10-K for the fiscal year endedFebruary 1, 2020 . 26
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OFF-BALANCE-SHEET ARRANGEMENTS
The Company has not created, and is not party to, any special-purpose entities
or off-balance-sheet arrangements for the purpose of raising capital, incurring
debt or operating the Company's business. The Company does not have any
off-balance-sheet arrangements or relationships that are reasonably likely to
materially affect the Company's financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or the availability of capital resources.
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NEW ACCOUNTING STANDARDS
For information with respect to new accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 2, Accounting Standards, in the "Notes to Condensed Consolidated Financial Statements," in Part I, Item I hereof.
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 2020 and beyond, statements concerning the opening of new stores or the closing of existing stores, statements concerning capital expenditures and sources of liquidity, statements concerning share repurchases, statements concerning pension contributions, statements regarding the expected phase out of LIBOR 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) the COVID-19 pandemic and its effects on public health, our supply chain, the health and well-being of our employees and customers, and the retail industry in general; other general retail industry conditions and macro-economic conditions; 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 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 consumer spending patterns, debt levels and their ability to meet credit obligations; changes in tax legislation; changes in legislation, affecting such matters as the cost of employee benefits or credit card income; 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; other epidemic, pandemic or public health issues; potential disruption of international trade and supply chain efficiencies; any government-ordered restrictions on the movement of the general public or the mandated or voluntary closing of retail stores in response to the COVID-19 pandemic; world conflict and the possible impact on consumer spending patterns and other economic and demographic changes of similar or dissimilar nature. The Company's filings with theSecurities and Exchange Commission , including its Annual Report on Form 10-K for the fiscal year endedFebruary 1, 2020 , contain other information on factors that may affect financial results or cause actual results to differ materially from forward-looking statements.
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