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
Excluding the unprecedented performance for the three months endedOctober 30, 2021 , the Company's results for the three months endedOctober 29, 2022 were notably better than historical third quarter performances. Comparable retail store sales increased 3% for the three months endedOctober 29, 2022 compared to the prior year third quarter. Retail gross margin declined 100 basis point of sales to 45.7% compared to the prior year record high third quarter gross margin of 46.7%, marking the Company's seventh consecutive quarter of gross margin exceeding 40%. The Company continued its efforts to control inventory during the quarter. Inventory increased 8% atOctober 29, 2022 compared toOctober 30, 2021 , primarily as a result of rising inflation throughout the Company's supply chain. Selling, general and administrative ("SG&A") expenses for the three months endedOctober 29, 2022 increased to$413.8 million (26.8% of sales) compared to$393.2 million (26.5% of sales) for the prior year third 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 ended
Cash flows provided by operating activities were$558.4 million for the nine months endedOctober 29, 2022 . The Company repurchased approximately 99,000 shares of its outstanding Class A Common Stock for$24.3 million under its stock repurchase plan during the three months endedOctober 29, 2022 . The Company repurchased approximately 1.7 million shares of its outstanding Class A Common Stock for$436.6 million under its stock repurchase plans during the nine months endedOctober 29, 2022 . AtOctober 29, 2022 ,$175.4 million of authorization remained under the Company's open stock repurchase plan.
As of
OnNovember 17, 2022 , the Company announced that its Board of Directors declared a special dividend of$15.00 per share. The dividend is payable on the Class A and Class B Common Stock of the Company onJanuary 9, 2023 to shareholders of record as ofDecember 15, 2022 .
The Company maintained 277 Dillard's stores, including 28 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, uncertainty around shipping costs and 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. 16 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
October 29, October 30,
2022 2021
Net sales (in millions) $ 1,544.1 $ 1,481.0
Retail stores sales trend 3 % 47 %Comparable retail stores sales trend 3 % 48 % Gross margin (in millions)$ 688.5 $ 684.7 Gross margin as a percentage of net sales 44.6 % 46.2 % Retail gross margin as a percentage of retail net sales 45.7 % 46.7 % Selling, general and administrative expenses as a percentage of net sales 26.8 % 26.5 % Cash flow provided by operations (in millions)*$ 558.4 $ 728.1 Total retail store count at end of period 277 280 Retail sales per square foot $ 33 $ 31 Retail store inventory trend 8 % (1) % Annualized retail merchandise inventory turnover 2.4 2.5
* Cash flow from operations data is for the nine 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 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. 17
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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 Nine Months Ended
October 29, October 30, October 29, October 30,
2022 2021 2022 2021Net sales 100.0 % 100.0 % 100.0 % 100.0 % Service charges and other income 1.9 2.1
1.9 2.1
101.9 102.1 101.9 102.1
Cost of sales 55.4 53.8 56.0 57.0Selling, general and administrative expenses 26.8 26.5 25.6 25.0 Depreciation and amortization 3.0 3.4 3.0 3.3 Rentals 0.3 0.3 0.3 0.3 Interest and debt expense, net 0.5 0.7 0.6 0.8 Other expense 0.1 0.1 0.1 0.2 Gain on disposal of assets - -
(0.2) (0.6)
Income before income taxes 15.7 17.2 16.4 15.9
Income taxes 3.6 3.9 3.7 3.6
Net income 12.2 % 13.3 % 12.7 % 12.4 %
Net Sales
Three Months Ended
October 29, October 30,
(in thousands of dollars) 2022 2021 $ Change
Net sales:
Retail operations segment $ 1,499,072 $ 1,460,184 $ 38,888
Construction segment 45,070 20,815 24,255
Total net sales $ 1,544,142 $ 1,480,999 $ 63,143
The percent change in the Company's sales by segment and product category for
the three months ended October 29, 2022 compared to the three months ended
October 30, 2021 as well as the sales percentage by segment and product category
to total net sales for the three months ended October 29, 2022 are as follows:
% Change % of
2022 - 2021 Net Sales
Retail operations segment
Cosmetics 7.5 % 14 %
Ladies' apparel 2.4 21
Ladies' accessories and lingerie (1.6) 13
Juniors' and children's apparel (6.3) 10
Men's apparel and accessories 6.1 20
Shoes 4.4 16
Home and furniture 5.0 3
97
Construction segment 116.5 3
Total 100 %
Net sales from the retail operations segment increased
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For the three months endedOctober 29, 2022 compared to the three months endedOctober 30, 2021 , the number of sales transactions decreased by 5%, while the average dollars per sales transaction increased by 8%. We recorded a return asset of$13.8 million and$11.0 million and an allowance for sales returns of$27.3 million and$22.3 million as ofOctober 29, 2022 andOctober 30, 2021 , respectively. During the three months endedOctober 29, 2022 , net sales from the construction segment increased$24.3 million , or approximately 117%, compared to the three months endedOctober 30, 2021 , due to an increase in construction activity. The remaining performance obligations related to executed construction contracts totaled$232.7 million as ofOctober 29, 2022 , increasing approximately 148% fromJanuary 29, 2022 and increasing approximately 176% fromOctober 30, 2021 , respectively. We expect these remaining performance obligations to be earned over the next nine to eighteen months. Nine Months Ended October 29, October 30, (in thousands of dollars) 2022 2021 $ Change Net sales: Retail operations segment$ 4,632,529 $ 4,296,316 $ 336,213 Construction segment 111,901 83,604 28,297 Total net sales$ 4,744,430 $ 4,379,920 $ 364,510 The percent change in the Company's sales by segment and product category for the nine months endedOctober 29, 2022 compared to the nine months endedOctober 30, 2021 as well as the sales percentage by segment and product category to total net sales for the nine months endedOctober 29, 2022 are as follows:
% Change % of
2022 - 2021 Net Sales
Retail operations segment
Cosmetics 8.7 % 13 %
Ladies' apparel 6.9 23
Ladies' accessories and lingerie 0.8 14
Juniors' and children's apparel 5.3 10
Men's apparel and accessories 14.9 20
Shoes 9.0 15
Home and furniture 4.2 3
98
Construction segment 33.8 2
Total 100 %
Net sales from the retail operations segment increased $336.2 million , or
approximately 8%, and sales in comparable stores increased approximately 8%
during the nine months ended October 29, 2022 compared to the nine months ended
October 30, 2021 . Sales in men's apparel and accessories, shoes, cosmetics,
ladies' apparel and juniors' and children's apparel increased significantly.
Sales in home and furniture increased moderately, while sales in ladies'
accessories and lingerie increased slightly.
For the nine months ended October 29, 2022 compared to the nine months ended
October 30, 2021 , the number of sales transactions decreased by 1%, while the
average dollars per sales transaction increased by 9%.
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During the nine months ended
Service Charges and Other Income
Three Nine
Three Months Ended Nine Months Ended Months Months
October 29, October 30, October 29, October 30, $ Change $ Change
(in thousands of dollars) 2022 2021 2022 2021 2022 - 2021 2022-2021
Service charges and other income:
Retail operations segment
Income from Wells Fargo Alliance $ 16,761 $ 18,701 $ 50,310 $ 54,143 $ (1,940) $ (3,833)
Shipping and handling income 9,533 9,672
29,603 28,376 (139) 1,227
Other 2,590 2,665 9,204 7,869 (75) 1,335
28,884 31,038 89,117 90,388 (2,154) (1,271)
Construction segment 46 (125) 194 571 171 (377)
Total service charges and other income
Gross Margin
October 29, October 30,
(in thousands of dollars) 2022 2021 $ Change % Change
Gross margin:
Three months ended
Retail operations segment $ 685,643 $ 682,317 $ 3,326 0.5 %
Construction segment 2,822 2,406 416 17.3
Total gross margin $ 688,465 $ 684,723 $ 3,742 0.5 %
Nine months ended
Retail operations segment $ 2,079,008 $ 1,876,558 $ 202,450 10.8 %
Construction segment 7,091 5,787 1,304 22.5
Total gross margin $ 2,086,099 $ 1,882,345 $ 203,754 10.8 %
Three Months Ended Nine Months Ended
October 29, October 30,
2022 2021 2022 2021
Gross margin as a percentage of segment net
sales:
Retail operations segment 45.7 % 46.7 % 44.9 % 43.7 %
Construction segment 6.3 11.6 6.3 6.9
Total gross margin as a percentage of net
sales 44.6 46.2 44.0 43.0
Gross margin, as a percentage of sales, decreased to 44.6% from 46.2% during the
three months ended October 29, 2022 compared to the three months ended October
30, 2021 , respectively.
Gross margin from retail operations, as a percentage of sales, decreased to
45.7% from 46.7% during the three months ended
Gross margin, as a percentage of sales, increased to 44.0% from 43.0% during the nine months endedOctober 29, 2022 compared to the nine months endedOctober 30, 2021 , respectively. 21 Table of Contents
Gross margin from retail operations, as a percentage of sales, increased to 44.9% from 43.7% during the nine months endedOctober 29, 2022 compared to the nine months endedOctober 30, 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 nine months of 2022. Gross margin increased moderately in men's apparel and accessories and ladies' apparel, while increasing slightly in juniors' and children's apparel and cosmetics. Gross margin remained flat in shoes. Gross margin decreased slightly in ladies' accessories and lingerie, while decreasing moderately in home and furniture. Total inventory increased 8% as ofOctober 29, 2022 compared toOctober 30, 2021 , primarily as a result of rising inflation throughout the Company's supply chain. A 1% change in the dollar amount of markdowns would have impacted net income by approximately$1 million and$5 million for the three and nine months endedOctober 29, 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. This issue 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, have experienced delays in processing imported merchandise, thereby resulting in untimely deliveries of merchandise. While these ports are currently operating with few delays, further shipping delays may occur if the ongoing west coast port labor contract negotiations fail or if the ongoing labor contract negotiations related toUnited States railroads, which move goods out of these ports, fail.
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")
October 29, October 30,
(in thousands of dollars) 2022 2021 $ Change % Change
SG&A:
Three months ended
Retail operations segment $ 411,888 $ 391,463 $ 20,425 5.2 %
Construction segment 1,950 1,728 222 12.8
Total SG&A $ 413,838 $ 393,191 $ 20,647 5.3 %
Nine months ended
Retail operations segment $ 1,210,208 $ 1,090,818 $ 119,390 10.9 %
Construction segment 5,735 4,855 880 18.1
Total SG&A $ 1,215,943 $ 1,095,673 $ 120,270 11.0 %
Three Months Ended Nine Months Ended
October 29, October 30, October 29, October 30,
2022 2021 2022 2021
SG&A as a percentage of segment net sales:
Retail operations segment 27.5 % 26.8 % 26.1 % 25.4 %
Construction segment 4.3 8.3 5.1 5.8
Total SG&A as a percentage of net sales 26.8 26.5 25.6 25.0
SG&A increased to 26.8% of sales during the three months ended October 29, 2022
compared to 26.5% of sales during the three months ended October 30, 2021 , an
increase of $20.6 million . SG&A from retail operations increased to
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27.5% of sales for the three months ended
SG&A increased to 25.6% of sales during the nine months endedOctober 29, 2022 compared to 25.0% of sales during the nine months endedOctober 30, 2021 , an increase of$120.3 million . SG&A from retail operations increased to 26.1% of sales for the nine months endedOctober 29, 2022 compared to 25.4% of sales for the nine months endedOctober 30, 2021 , an increase of$119.4 million . The dollar increase in operating expenses in both the three and nine-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 endedOctober 29, 2022 was$276.3 million compared to$261.5 million for the three months endedOctober 30, 2021 , increasing$14.8 million . Payroll expense and related payroll taxes for the nine months endedOctober 29, 2022 was$821.3 million compared to$733.5 million for the nine months endedOctober 30, 2021 , increasing$87.8 million . The Company remains focused on hiring, developing and retaining talented associates.
Interest and Debt Expense, Net
October 29, October 30,
(in thousands of dollars) 2022 2021 $ Change % Change
Interest and debt expense (income), net:
Three months ended
Retail operations segment $ 6,984 $ 10,557 $ (3,573) (33.8) %
Construction segment (27) (7) (20) 285.7Total interest and debt expense, net$ 6,957 $ 10,550
$ (3,593) (34.1) % Nine months ended Retail operations segment$ 27,154 $ 32,889 $ (5,735) (17.4) % Construction segment (46) (33) (13) 39.4
Total interest and debt expense, net$ 27,108 $ 32,856
Net interest and debt expense decreased$3.6 million and$5.7 million during the three and nine months endedOctober 29, 2022 compared to the three and nine months endedOctober 30, 2021 , respectively. The net decrease is primarily due to an increase in interest income from increasing rates on cash and cash equivalent balances and the purchases of short-term investments in the current year that did not occur in the prior period. Interest income was$3.8 million and$0.5 million for the three months endedOctober 29, 2022 andOctober 30, 2021 , respectively. Interest income was$5.8 million and$1.1 million for the nine months endedOctober 29, 2022 andOctober 30, 2021 , respectively. 23 Table of Contents Other Expense October 29, October 30, (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) % Nine months ended Retail operations segment$ 5,808 $ 9,232 $ (3,424) (37.1) % Construction segment - - - - Total other expense$ 5,808 $ 9,232 $ (3,424) (37.1) % Other expense decreased$3.4 million during the nine months endedOctober 29, 2022 compared to the nine months endedOctober 30, 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 October 29, October 30, (in thousands of dollars) 2022 2021 $ Change (Gain) loss on disposal of assets: Three months ended Retail operations segment $ (2) $ (4)$ 2 Construction segment - - -
Total gain on disposal of assets $ (2) $ (4) $
2
Nine months ended
Retail operations segment $ (7,243) $ (24,683) $ 17,440
Construction segment 3 (3) 6
Total gain on disposal of assets
During the nine months endedOctober 29, 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. During the nine months endedOctober 30, 2021 , the Company recorded proceeds of$29.3 million primarily from the sale of three store properties, resulting in a gain of$24.7 million that was recorded in gain on disposal of assets.
Income Taxes
The Company's estimated federal and state effective income tax rate was approximately 22.6% and 22.5% for the three months endedOctober 29, 2022 andOctober 30, 2021 , respectively. During the three months endedOctober 29, 2022 andOctober 30, 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 nine months endedOctober 29, 2022 andOctober 30, 2021 . During the nine months endedOctober 29, 2022 andOctober 30, 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 21%. This rate includes an expected federal income tax benefit due to a deduction related to that portion of the special dividend of 24
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$15.00 per share to be paid to theDillard's, Inc. Investment and Employee Stock Ownership Plan. 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 nine months endedOctober 29, 2022 andOctober 30, 2021 follows: Nine Months Ended October 29, October 30, (in thousands of dollars) 2022 2021 $ Change Operating Activities$ 558,421 $ 728,083 $ (169,662) Investing Activities (278,606) (45,179) (233,427) Financing Activities (463,866) (423,522) (40,344) Total (Decrease) Increase in Cash and Cash Equivalents$ (184,051) $
259,382
Net cash flows from operations decreased$169.7 million during the nine months endedOctober 29, 2022 compared to the nine months endedOctober 30, 2021 . This decrease was primarily due to changes in working capital items, notably increases in merchandise inventories and trade accounts payable and accrued expenses and other liabilities. Wells Fargo owns and manages the Dillard's private label cards under theWells Fargo Alliance . The Company recognized income of$50.3 million and$54.1 million from theWells Fargo Alliance during the nine months endedOctober 29, 2022 andOctober 30, 2021 , respectively. During the nine months endedOctober 30, 2021 , the Company received proceeds from insurance of$2.9 million for claims filed for merchandise losses related to storm damage incurred at two stores. Capital expenditures were$94.8 million and$79.7 million for the nine months endedOctober 29, 2022 andOctober 30, 2021 , respectively. The capital expenditures were primarily related to equipment purchases, the continued construction of new stores and the remodeling of existing stores. During the nine months endedOctober 29, 2022 , the Company opened a new store atUniversity Place inOrem, Utah (160,000 square feet). InNovember 2022 , the Company opened its newly remodeled owned facility atWestgate Mall inAmarillo, Texas , which replaces a leased building at that same location where the Company operates a dual-anchor format. The Company also plans to open a new store atThe Empire Mall inSioux Falls, South Dakota in the fall of 2023, which will mark the Company's 30th state of operation. During the nine months endedOctober 29, 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 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 nine months ended
During the nine months endedOctober 29, 2022 , the Company received proceeds from insurance of$4.9 million primarily from life insurance proceeds related to one policy. During the nine months endedOctober 30, 2021 , the Company received proceeds from insurance of$3.8 million for claims filed for building losses related to storm damage incurred at two stores. 25
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During the nine months ended
The Company had cash and cash equivalents of$532.7 million as ofOctober 29, 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 1 hereof for additional information. During the nine months endedOctober 30, 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 nine months endedOctober 29, 2022 , the Company repurchased 1.7 million shares of Class A Common Stock at an average price of$255.49 per share for$436.6 million 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 nine months endedOctober 30, 2021 , the Company repurchased 2.6 million shares of Class A Common Stock at an average price of$158.40 per share for$410.3 million under its stock repurchase plans. As ofOctober 29, 2022 ,$175.4 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 1 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. OnNovember 17, 2022 , the Company announced that its Board of Directors declared a special dividend of$15.00 per share. The dividend is payable on the Class A and Class B Common Stock of the Company onJanuary 9, 2023 to shareholders of record as ofDecember 15, 2022 . The Company expects to fund the dividend from cash flows from operations. 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.
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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 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, 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 supply chain disruptions and 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 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; 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. 27
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