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 endedJanuary 29, 2022 .
EXECUTIVE OVERVIEW
The Company's results for the three months endedJuly 30, 2022 are being compared to the strongest second quarter in the Company's history, the three months endedJuly 31, 2021 . Excluding that unprecedented quarter, the Company's results for the three months endedJuly 30, 2022 were notably better than historical second quarter performances. Comparable retail store sales were flat (as a percentage) for the three months endedJuly 30, 2022 compared to the prior year second quarter. Retail gross margin declined 20 basis point of sales to 41.5% compared to the prior year second quarter record high of 41.7%. The Company continued its efforts to control inventory during the quarter. Inventory increased 7% atJuly 30, 2022 compared toJuly 31, 2021 against a 13% decrease atJuly 31, 2021 compared toAugust 1, 2020 . Selling, general and administrative ("SG&A") expenses for the three months endedJuly 30, 2022 increased to$401.3 million (25.3% of sales) compared to$365.9 million (23.3% of sales) for the prior year second quarter. The increase in SG&A expenses is primarily due to increased payroll and payroll-related expenses in the current highly competitive wage environment which began in 2021 and has continued throughout 2022. For the three months endedJuly 30, 2022 , the Company reported net income of$163.4 million ($9.30 per share) compared to net income of$185.7 million ($8.81 per share) for the prior year second quarter. Cash flows provided by operating activities were$279.1 million for the six months endedJuly 30, 2022 . The Company repurchased approximately 875,000 shares of its outstanding Class A Common Stock for$225.8 million under its stock repurchase plan during the three months endedJuly 30, 2022 . AtJuly 30, 2022 ,$199.7 million of authorization remained under the Company's open stock repurchase plan.
As of
The Company maintained 279 Dillard's stores, including 29 clearance centers, and
an internet store as of
At present, a number of economic and geopolitical factors are affecting theU.S. and world economies (including countries from which we source some of our merchandise): fluctuating gas prices (in part due to the war inUkraine and the resulting sanctions imposed onRussia by theU.S. and other countries), inflation and interest rate increases, increased shipping costs with reduced shipping capacity,U.S. port slowdowns, increasingU.S. wages in a tight labor market as well as some continuing effects from the COVID-19 pandemic. The extent to which our business will be affected by these factors depends on our customer's ability and willingness to accept price increases and our ability to receive merchandise timely. Accordingly, the related financial impact to fiscal 2022 from these factors cannot be reasonably estimated at this time. 15 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
July 30, July 31,
2022 2021
Net sales (in millions) $ 1,588.6 $ 1,570.4
Retail stores sales trend 1 % 72 %Comparable retail stores sales trend - %
*
Gross margin (in millions)$ 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 (in millions)**$ 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
* The Company reported no comparable store sales data for the three months endedJuly 31, 2021 due to the temporary COVID-19-related closures of its brick-and-mortar stores during the second quarter of fiscal 2020 as well as the interdependence between in-store and online sales.
** Cash flow from operations data is for the six months ended
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 most recently completed quarter and the corresponding quarter for the prior fiscal 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. Customers who 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 marketing and servicing alliance withWells Fargo Bank, N.A. ("Wells Fargo Alliance "). Other income includes rental income, shipping and handling fees and gift card breakage. 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 16
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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.
Rentals. Rentals includes expenses for store leases, including contingent rent, data processing and other equipment rentals and office space leases.
Interest and debt expense, net. Interest and debt expense includes interest, net of interest income from demand deposits and short-term investments and capitalized interest, relating to the Company's unsecured notes, subordinated debentures and commitment fees and borrowings, if any, under the Company's credit agreement. Interest and debt expense also includes the amortization of financing costs and interest on finance lease obligations. 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 certain deferred financing fees in connection with the amendment and extension of the Company's secured revolving credit facility, 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
OnMarch 5, 2021 , theU.K. Financial Conduct Authority , which regulates LIBOR, announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative: (a) immediately afterDecember 31, 2021 , in the case of the 1-week and 2-monthU.S. dollar settings; and (b) immediately afterJune 30, 2023 , in the case of the remainingU.S. dollar settings. The 2021 amendment to our credit agreement included an approach to replace LIBOR with a SOFR-based rate. We have not yet transitioned to a SOFR-based rate and will continue to monitor, assess and plan for the replacement of LIBOR with an alternative rate. We also intend to work with theWells Fargo Alliance and any other applicable agreements to determine a suitable alternative reference rate.
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.
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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 Six Months Ended
July 30, July 31, July 30, July 31,
2022 2021 2022 2021
Net sales 100.0 % 100.0 % 100.0 % 100.0 %Service charges and other income 1.8 2.0
1.9 2.1
101.8 102.0 101.9 102.1
Cost of sales 59.2 59.0 56.3 58.7Selling, general and administrative expenses 25.3 23.3 25.1 24.2 Depreciation and amortization 3.0 3.2 2.9 3.3 Rentals 0.3 0.3 0.3 0.4 Interest and debt expense, net 0.6 0.7
0.6 0.8
Other expense 0.1 0.1 0.1 0.2
Gain on disposal of assets - - (0.2) (0.9)
Income before income taxes 13.3 15.3 16.7 15.3
Income taxes 3.0 3.5 3.8 3.4
Net income 10.3 % 11.8 % 13.0 % 11.9 %
Net Sales
Three Months Ended
July 30, July 31,
(in thousands of dollars) 2022 2021 $ Change
Net sales:
Retail operations segment $ 1,552,658 $ 1,539,396 $ 13,262
Construction segment 35,962 30,982 4,980
Total net sales $ 1,588,620 $ 1,570,378 $ 18,242
The percent change in the Company's sales by segment and product category for
the three months ended July 30, 2022 compared to the three months ended July 31,
2021 as well as the sales percentage by segment and product category to total
net sales for the three months ended July 30, 2022 are as follows:
% Change % of
2022 - 2021 Net Sales
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
98
Construction segment 16.1 2
Total 100 %
Net sales from the retail operations segment increased
18
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the three months ended July 30, 2022 compared to the three months ended July 31,
2021 . Sales in men's apparel and accessories increased significantly, while
sales in cosmetics and shoes increased moderately. Sales in ladies' accessories
and lingerie, home and furniture, juniors' and children's apparel and ladies'
apparel decreased moderately.
For the three months ended July 30, 2022 compared to the three months ended July
31, 2021 , the number of sales transactions decreased by 8% while the average
dollars per sales transaction increased by 8%.
We recorded a return asset of $11.6 million and $10.6 million and an allowance
for sales returns of $21.1 million and $19.5 million as of July 30, 2022 and
July 31, 2021 , respectively.
During the three months ended July 30, 2022 , net sales from the construction
segment increased $5.0 million , or approximately 16%, compared to the
three months ended July 31, 2021 due to an increase in construction activity.
The remaining performance obligations related to executed construction contracts
totaled $215.9 million as of July 30, 2022 , increasing approximately 130% from
January 29, 2022 and increasing approximately 317% from July 31, 2021 ,
respectively. We expect these remaining performance obligations to be earned
over the next nine to eighteen months.
Six Months Ended
July 30, July 31,
(in thousands of dollars) 2022 2021 $ Change
Net sales:
Retail operations segment $ 3,133,457 $ 2,836,132 $ 297,325
Construction segment 66,831 62,789 4,042
Total net sales $ 3,200,288 $ 2,898,921 $ 301,367
The percent change in the Company's sales by segment and product category for
the six months ended July 30, 2022 compared to the six months ended July 31,
2021 as well as the sales percentage by segment and product category to total
net sales for the six months ended July 30, 2022 are as follows:
% Change % of
2022 - 2021 Net Sales
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
98
Construction segment 6.4 2
Total 100 %
Net sales from the retail operations segment increased $297.3 million , or
approximately 10%, and sales in comparable stores increased approximately 10%
during the six months ended July 30, 2022 compared to the six months ended July
31, 2021 . Sales in men's apparel and accessories, juniors' and children's
apparel, shoes, cosmetics and ladies' apparel increased significantly. Sales in
home and furniture and ladies' accessories and lingerie increased moderately.
For the six months ended July 30, 2022 compared to the six months ended July 31,
2021 , the number of sales transactions increased by 1% and the average dollars
per sales transaction increased by 10%.
Storewide sales penetration of exclusive brand merchandise for the six months
ended
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During the six months ended
Service Charges and Other Income
Three Six
Three Months Ended Six Months Ended Months Months
July 30, July 31, July 30, July 31, $ Change $ Change(in thousands of dollars) 2022 2021 2022 2021 2022 - 2021 2022-2021 Service charges and other income: Retail operations segment Income fromWells Fargo Alliance $ 16,375 $ 17,735 $ 33,549 $ 35,443 $ (1,360) $ (1,894) Shipping and handling income 9,848 10,223 20,070 18,704 (375) 1,366 Other 2,961 2,778 6,614 5,203 183 1,411 29,184 30,736 60,233 59,350 (1,552) 883 Construction segment 83 318 148 696 (235) (548) Total service charges and other income$ 29,267 $ 31,054 $ 60,381 $ 60,046 $ (1,787) $ 335 Gross Margin July 30, July 31, (in thousands of dollars) 2022 2021 $ Change % Change Gross margin: Three months ended Retail operations segment$ 644,921 $ 641,240 $ 3,681 0.6 % Construction segment 2,482 1,928 554 28.7 Total gross margin$ 647,403 $ 643,168 $ 4,235 0.7 % Six months ended Retail operations segment$ 1,393,365 $ 1,194,241 $ 199,124 16.7 % Construction segment 4,269 3,381 888 26.3 Total gross margin$ 1,397,634 $ 1,197,622 $ 200,012 16.7 % Three Months Ended Six Months Ended July 30, July 31, July 30, July 31, 2022 2021 2022 2021 Gross margin as a percentage of segment net sales: Retail operations segment 41.5 % 41.7 44.5 % 42.1 % Construction segment 6.9 6.2 6.4 5.4 Total gross margin as a percentage of net sales 40.8 41.0
43.7 41.3
Gross margin, as a percentage of sales, decreased to 40.8% from 41.0% during the three months endedJuly 30, 2022 compared to the three months endedJuly 31, 2021 , respectively. Gross margin from retail operations, as a percentage of sales, decreased to 41.5% from 41.7% during the three months endedJuly 30, 2022 compared to the three months endedJuly 31, 2021 , respectively. Gross margin decreased moderately in home and furniture, shoes and juniors' and children's apparel. Gross margin decreased slightly ladies' accessories and lingerie and ladies' apparel. Gross margin increased slightly in cosmetics, while increasing moderately in men's apparel and accessories. Gross margin, as a percentage of sales, increased to 43.7% from 41.3% during the six months endedJuly 30, 2022 compared to the six months endedJuly 31, 2021 , respectively. 20 Table of Contents
Gross margin from retail operations, as a percentage of sales, increased to 44.5% from 42.1% during the six months endedJuly 30, 2022 compared to the six months endedJuly 31, 2021 , respectively. Management attributes the improvement in gross margin to positive customer response to the company's merchandise assortment combined with continued inventory management leading to decreased markdowns in the first six months of 2022. Gross margin increased significantly in men's apparel and accessories, while increasing moderately in ladies' apparel. Gross margin increased slightly in juniors' and children's apparel and cosmetics, while remaining flat in shoes. Gross margin decreased slightly in ladies' accessories and lingerie and home and furniture. Inventory increased 7% in total as ofJuly 30, 2022 compared toJuly 31, 2021 . A 1% change in the dollar amount of markdowns would have impacted net income by approximately$2 million and$3 million for the three and six months endedJuly 30, 2022 , respectively. We source a significant portion of our private label and exclusive brand merchandise from countries that continue to be impacted by the COVID-19 virus. Additionally, many of our branded merchandise vendors may also source a significant portion of their merchandise from these same countries. Manufacturing capacity in those countries has been significantly impacted by the pandemic and in some countries the pandemic continues to negatively impact our supply chain, resulting in shipping delays as well as increased shipping costs. Additionally, disruptions continue in the global transportation network, and it is unclear when these issues will be resolved. TheCalifornia ports ofLos Angeles andLong Beach , which together handle a significant portion ofUnited States merchandise imports, including our own, have experienced and are continuing to experience delays in processing imported merchandise, thereby resulting in untimely deliveries of merchandise. Further shipping delays may occur if the ongoing west coast port labor contract negotiations fail.The United States is also currently experiencing a shortage of truck drivers, trucks and truck parts, which may impact overall costs of transportation and the timely delivery of merchandise.
At present, while monitoring all of these situations closely, management is unable to quantify the effects of these factors on the Company's results of operations and inventory position for fiscal 2022.
Selling, General and Administrative Expenses ("SG&A")
July 30, July 31,
(in thousands of dollars) 2022 2021 $ Change % Change
SG&A:
Three months ended
Retail operations segment $ 399,451 $ 364,212 $ 35,239 9.7 %
Construction segment 1,881 1,656 225 13.6
Total SG&A $ 401,332 $ 365,868 $ 35,464 9.7 %
Six months ended
Retail operations segment $ 798,320 $ 699,355 $ 98,965 14.2 %
Construction segment 3,785 3,127 658 21.0
Total SG&A $ 802,105 $ 702,482 $ 99,623 14.2 %
Three Months Ended Six Months Ended
July 30, July 31, July 30, July 31,
2022 2021 2022 2021
SG&A as a percentage of segment net sales:
Retail operations segment 25.7 % 23.7 % 25.5 % 24.7 %
Construction segment 5.2 5.3 5.7 5.0
Total SG&A as a percentage of net sales 25.3 23.3
25.1 24.2
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SG&A increased to 25.3% of sales during the three months ended July 30, 2022
compared to 23.3% of sales during the three months ended July 31, 2021 , an
increase of $35.5 million . SG&A from retail operations increased to 25.7% of
sales for the three months ended July 30, 2022 compared to 23.7% of sales for
the three months ended July 31, 2021 , an increase of $35.2 million .
SG&A increased to 25.1% of sales during the six months ended July 30, 2022
compared to 24.2% of sales during the six months ended July 31, 2021 , an
increase of $99.6 million . SG&A from retail operations increased to 25.5% of
sales for the six months ended July 30, 2022 compared to 24.7% of sales for the
six months ended July 31, 2021 , an increase of $99.0 million .
The dollar increase in operating expenses in both the three and six-month
periods is primarily due to increased payroll and payroll-related expenses in
the current highly competitive wage environment. Payroll expense and related
payroll taxes for the three months ended July 30, 2022 was $272.7 million
compared to $246.7 million for the three months ended July 31, 2021 , increasing
$26.0 million . Payroll expense and related payroll taxes for the six months
ended July 30, 2022 was $545.0 million compared to $472.1 million for the
six months ended July 31, 2021 , increasing $72.9 million . The Company remains
focused on hiring, developing and retaining talented associates.
Other Expense
July 30, July 31,
(in thousands of dollars) 2022 2021 $ Change % Change
Other expense:
Three months ended
Retail operations segment $ 1,936 $ 2,134 $ (198) (9.3) %
Construction segment - - - -
Total other expense $ 1,936 $ 2,134 $ (198) (9.3) %
Six months ended
Retail operations segment $ 3,872 $ 7,098 $ (3,226) (45.4) %
Construction segment - - - -
Total other expense $ 3,872 $ 7,098 $ (3,226) (45.4) %
Other expense decreased $3.2 million during the six months ended July 30, 2022
compared to the six months ended July 31, 2021 primarily due to the write-off of
certain deferred financing fees in connection with the amendment and extension
of the Company's secured revolving credit facility during the first quarter
of
fiscal 2021.
Gain on Disposal of Assets
July 30, July 31,
(in thousands of dollars) 2022 2021 $ Change
Gain on disposal of assets:
Three months ended
Retail operations segment $ (1) $ (6) $ 5
Construction segment - (3) 3
Total gain on disposal of assets
Six months ended Retail operations segment$ (7,241) $ (24,679) $ 17,438 Construction segment 3 (3) 6
Total gain on disposal of assets
During the six months endedJuly 30, 2022 , the Company recorded proceeds of$8.1 million primarily from the sale of one store property, resulting in a gain of$7.2 million that was recorded in gain on disposal of assets. 22
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During the six months ended
Income Taxes
The Company's estimated federal and state effective income tax rate was approximately 22.4% and 22.8% for the three months endedJuly 30, 2022 andJuly 31, 2021 , respectively. During the three months endedJuly 30, 2022 andJuly 31, 2021 , income tax expense differed from what would be computed using the statutory federal income tax rate primarily due to the effects of state and local income taxes. The Company's estimated federal and state effective income tax rate was approximately 22.5% for the six months endedJuly 30, 2022 andJuly 31, 2021 . During the six months endedJuly 30, 2022 andJuly 31, 2021 , income tax expense differed from what would be computed using the statutory federal income tax rate primarily due to the effects of state and local income taxes. The Company expects the fiscal 2022 federal and state effective income tax rate to approximate 22%. This rate may change if results of operations for fiscal 2022 differ from management's current expectations. Changes in the Company's assumptions and judgments can materially affect amounts recognized in the condensed consolidated financial statements.
FINANCIAL CONDITION
A summary of net cash flows for the six months endedJuly 30, 2022 andJuly 31, 2021 follows: Six Months Ended July 30, July 31, (in thousands of dollars) 2022 2021 $ Change Operating Activities$ 279,050 $ 492,301 $ (213,251) Investing Activities (72,886) (9,101) (63,785) Financing Activities (430,067) (174,065) (256,002) Total (Decrease) Increase in Cash and Cash Equivalents$ (223,903) $
309,135
Net cash flows from operations decreased
Wells Fargo owns and manages the Dillard's private label cards under theWells Fargo Alliance . The Company recognized income of$33.5 million and$35.4 million from theWells Fargo Alliance during the six months endedJuly 30, 2022 andJuly 31, 2021 , respectively. During the six months endedJuly 31, 2021 , the Company received proceeds from insurance of$2.3 million for claims filed for merchandise losses related to storm damage incurred at two stores. Capital expenditures were$61.1 million and$41.2 million for the six months endedJuly 30, 2022 andJuly 31, 2021 , respectively. The capital expenditures were primarily related to equipment purchases, the continued construction of one new store and the remodeling of existing stores. During the six months endedJuly 30, 2022 , the Company opened a new store atUniversity Place inOrem, Utah (160,000 square feet). The Company also announced plans to replace a leased building atWestgate Mall inAmarillo, Texas with a newly remodeled owned facility in the fall of 2022. The Company has also confirmed its commitment to open a new store atThe Empire Mall inSioux Falls, South Dakota , which is expected to open in the fall of 2023 and will mark the Company's 30th state of operation. During the six months endedJuly 30, 2022 , the Company received cash proceeds of$8.1 million and recorded a related gain of$7.2 million , primarily from the sale of a 200,000 square foot location at Provo Towne Centre inProvo, Utah , which closed during the second quarter of fiscal 2022. During the first quarter of fiscal 2022, the Company closed 23
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its leased clearance center atUniversity Square Mall inTampa, Florida (80,000 square feet). During the third quarter of fiscal 2022, the Company closed its owned location at theEast Hills Mall inSt. Joseph, Missouri (100,000 square feet) and its leased location at the Sikes Senter inWichita Falls, Texas (150,000 square feet). There were no material costs associated or expected with any of these store closures. We remain committed to closing under-performing stores where appropriate and may incur future closing costs related to such stores when they close. During the six months endedJuly 31, 2021 , the Company received cash proceeds of$29.3 million and recorded a related gain of$24.7 million , primarily from the sale of three store properties. During the six months endedJuly 30, 2022 , the Company received proceeds from insurance of$4.8 million primarily from life insurance proceeds related to one policy. During the six months endedJuly 31, 2021 , the Company received proceeds from insurance of$2.8 million for claims filed for building losses related to storm damage incurred at two stores.
During the six months ended
The Company had cash on hand of$492.9 million as ofJuly 30, 2022 . The Company maintains a credit facility ("credit agreement") 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 credit agreement provides a borrowing capacity of$800 million , subject to certain limitations as outlined in the credit agreement, with a$200 million expansion option. InApril 2021 , the Company amended the credit agreement (the "2021 amendment"). See Note 7, Revolving Credit Agreement, in the "Notes to Condensed Consolidated Financial Statements," in Part I, Item I hereof for additional information. During the six months endedJuly 31, 2021 , the Company paid$3.0 million in issuance costs related to the 2021 amendment, which were recorded in other assets on the condensed consolidated balance sheet, and the Company recognized a loss on the early extinguishment of debt of$2.8 million for the write-off of certain remaining deferred financing fees related to the previous agreement. This charge was recorded in other expense on the condensed consolidated statement of income.
At
During the six months endedJuly 30, 2022 , the Company repurchased 1.6 million shares of Class A Common Stock at an average price of$256.10 per share for$412.3 million (including the accrual of$6.0 million of share repurchases that had not settled as ofJuly 30, 2022 ) under its stock repurchase plans, and the Company paid$16.2 million for share repurchases that had not yet settled but were accrued atJanuary 29, 2022 . During the six months endedJuly 31, 2021 , the Company repurchased 1.4 million shares of Class A Common Stock at an average price of$125.81 per share for$171.0 million (including the accrual of$6.8 million of share repurchases that had not settled as ofJuly 31, 2021 ) under its stock repurchase plan. As ofJuly 30, 2022 ,$199.7 million of authorization remained under the Company's open stock repurchase plan. The ultimate disposition of the repurchased stock has not been determined. See Note 8, Stock Repurchase Programs, in the "Notes to Condensed Consolidated Financial Statements," in Part I, Item I hereof for additional information. OnAugust 16, 2022 , the Inflation Reduction Act of 2022 ("the Act") was signed into law. Under the Act share repurchases afterDecember 31, 2022 will be subject to a 1% excise tax. This excise tax and the remaining corporate tax changes included in the Act are not expected to have a material impact on the Company's financial statements. The Company expects to finance its operations during fiscal 2022 from cash on hand, cash flows generated from operations and, if necessary, 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. 24
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There have been no material changes in the information set forth under caption "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 endedJanuary 29, 2022 .
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.
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 1 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 2022 and beyond, statements concerning the opening of new stores or the closing of existing stores, statements regarding our competitive position, statements concerning capital expenditures and sources of liquidity, statements regarding the expected impact of the COVID-19 pandemic and related government responses, including the CARES Act and other subsequently-enacted COVID-19 stimulus packages, statements concerning share repurchases, statements concerning pension contributions, statements concerning changes in loss trends, settlements and other costs related to our self-insurance programs, statements regarding the expected phase out of LIBOR, statements concerning expectations regarding the payment of dividends, statements regarding the impacts of inflation in fiscal 2022 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 including inflation and changes in traffic at malls and shopping centers; 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 and interest rates on 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 the Company's ability to meet labor needs amid nationwide labor shortages and an intense competition for talent; changes in consumer spending patterns, debt levels and their ability to meet credit obligations; high levels of unemployment; changes in tax legislation (including the Inflation Reduction Act of 2022); 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
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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; global conflicts (including the recent conflict inUkraine ) 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 endedJanuary 29, 2022 , 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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