Business Segments

12 Months Ended

Feb. 01, 2020

The Company operates in two reportable segments: the operation of retail department stores and a general contracting construction company.

For the Company's retail operations reportable segment, the Company determined its operating segments on a store by store basis. Each store's operating performance has been aggregated into one reportable segment. The Company's operating segments are aggregated for financial reporting purposes because they are similar in each of the following areas: economic characteristics, class of consumer, nature of products and distribution methods. Revenues from external customers are derived from merchandise sales, and the Company does not rely on any major customers as a source of revenue. Across all stores, the Company operates one store format under the Dillard's name where each store offers the same general mix of merchandise with similar categories and similar customers. The Company believes that disaggregating its operating segments would not provide meaningful additional information.

The following table summarizes the percentage of net sales by segment and major product line:



	Percentage of Net Sales
	Fiscal 2019		Fiscal 2018		Fiscal 2017
Retail operations segment:
Cosmetics	14	%	14	%	14	%
Ladies' apparel	22		22		23
Ladies' accessories and lingerie	15		15		16
Juniors' and children's apparel	9		9		8
Men's apparel and accessories	18		17		17
Shoes	15		15		16
Home and furniture	4		4		4
	97		96		98
Construction segment	3		4		2
Total	100	%	100	%	100	%

The following tables summarize certain segment information, including the reconciliation of those items to the Company's consolidated operations.



(in thousands of dollars)	Retail Operations		Fiscal 2019 Construction			Consolidated
Net sales from external customers	$	6,012,170	$	191,350		$	6,203,520
Gross profit	1,960,255		7,287			1,967,542
Depreciation and amortization	221,643		706			222,349
Interest and debt expense (income), net	46,337		(110		)	46,227
Income before income taxes and income on and equity in earnings of joint ventures	133,398		493			133,891
Income on and equity in earnings of joint ventures	—		—			—
Total assets	3,387,404		42,853			3,430,257



(in thousands of dollars)	Retail Operations		Fiscal 2018 Construction			Consolidated
Net sales from external customers	$	6,120,758	$	235,351		$	6,356,109
Gross profit	2,056,010		8,579			2,064,589
Depreciation and amortization	223,175		640			223,815
Interest and debt expense (income), net	52,574		(56		)	52,518
Income before income taxes and income on and equity in earnings of joint ventures	203,330		4,632			207,962
Income on and equity in earnings of joint ventures	31		—			31
Total assets	3,384,277		47,092			3,431,369



(in thousands of dollars)	Retail Operations		Fiscal 2017 Construction			Consolidated
Net sales from external customers	$	6,108,037	$	153,440		$	6,261,477
Gross profit	2,054,969		6,790			2,061,759
Depreciation and amortization	230,946		649			231,595
Interest and debt expense (income), net	62,638		(58		)	62,580
Income before income taxes and income on and equity in earnings of joint ventures	210,969		1,720			212,689
Income on and equity in earnings of joint ventures	835		—			835
Total assets	3,650,393		32,310			3,682,703

Intersegment construction revenues of $33.6 million, $30.2 million and $47.4 million were eliminated during consolidation and have been excluded from net sales for fiscal years 2019, 2018 and 2017, respectively.

The retail operations segment gives rise to contract liabilities through the loyalty program and through the issuances of gift cards. The loyalty program liability and a portion of the gift card liability is included in trade accounts payable and accrued expenses, and a portion of the gift card liability is included in other liabilities on the consolidated balance sheets. Our retail operations segment contract liabilities are as follows:



Retail
(in thousands of dollars)	February 1, 2020		February 2, 2019	February 3, 2018
Contract liabilities	$	75,229	72,852	73,059

During fiscal 2019 and fiscal 2018, the Company recorded $53.4 million and $55.3 million, respectively, in revenue that was previously included in the retail operations contract liability balances of $72.9 million and $73.1 million, at February 2, 2019 and February 3, 2018, respectively.

Construction contracts give rise to accounts receivable, contract assets and contract liabilities. We record accounts receivable based on amounts billed to customers. We also record costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) in other current assets and trade accounts payable and accrued expenses in the consolidated balance sheets, respectively. The amounts included in the consolidated balance sheets are as follows:



Construction
(in thousands of dollars)	February 1, 2020		February 2, 2019		February 3, 2018
Accounts receivable	$	28,522	$	31,867	$	20,136
Costs and estimated earnings in excess of billings on uncompleted contracts	2,179		1,165		1,213
Billings in excess of costs and estimated earnings on uncompleted contracts	5,737		7,414		5,503

During fiscal 2019 and fiscal 2018, the Company recorded $7.2 million and $5.2 million, respectively, in revenue that was previously included in billings in excess of costs and estimated earnings on uncompleted contracts of $7.4 million and $5.5 million at February 2, 2019 and February 3, 2018, respectively.

The remaining performance obligations related to executed construction contracts totaled $156.5 million and $143.9 million at February 1, 2020 and February 2, 2019, respectively.