SEATTLE, Nov. 23, 2021 /PRNewswire/ -- Nordstrom, Inc.
(NYSE: JWN) today reported third quarter net earnings of
$64 million or $0.39 per diluted share, with earnings before
interest and taxes ("EBIT") of $127
million.
For the third quarter ended October 30, 2021, net sales
increased 18 percent versus the same period in fiscal 2020 and
decreased 1 percent versus the same period in fiscal 2019. The
timing of this year's Anniversary Sale, with approximately one week
falling into the third quarter of 2021, had a positive impact of
approximately 200 basis points on net sales compared with fiscal
2019.
During the quarter, Nordstrom banner net sales increased 3
percent versus the third quarter of fiscal 2019, which included an
approximately 300 basis point positive impact from Anniversary Sale
timing, while net sales for Nordstrom Rack decreased 8 percent
versus the third quarter of fiscal 2019. Sales in the home, active,
designer and beauty categories had the strongest growth compared
with the third quarter of 2019. Geographically, Nordstrom
comparable store sales in the Southern regions, including
Southern California, grew 8
percent versus 2019 and outperformed the Northern regions.
Comparable sales in suburban area stores continued to be stronger
than urban stores in the third quarter, with both improving
sequentially over the second quarter.
"We have long benefited from a commitment to customer service,
new and compelling merchandise, innovative brand partnerships and
interconnected digital and physical assets. However, we need to
move faster to capitalize on these strengths and profitably grow
market share. We're taking action to improve performance at
Nordstrom Rack, including optimizing inventory levels, better
balancing price points and increasing brand awareness. Work is also
underway to improve merchandise margin across the Company and
ensure we have the visibility and flexibility we need to serve our
customers seamlessly, despite global supply chain challenges," said
Erik Nordstrom, chief executive
officer of Nordstrom, Inc. "In the third quarter, we made continued
progress toward our strategic and financial goals, driven by strong
digital growth, the integrated capabilities enabled by our Market
Strategy and increased net sales in our Nordstrom banner stores,
but we are focused on accelerating our transformation and improving
results."
Nordstrom continues to expand customer choice counts as part of
its evolving merchandising strategy. Alternative partnership models
beyond traditional wholesale arrangements grew to nearly 8 percent
as a share of total sales, and the Company's recently announced
partnerships with Fanatics and ASOS will provide a broader
assortment in new and existing categories for customers, without a
corresponding increase in owned inventory for the Company.
"Taking lessons learned from this year's Anniversary Sale, the
team has combined the art of merchandising with data-driven
insights to put the right assortment in the right place at the
right time," said Pete Nordstrom,
president and chief brand officer of Nordstrom, Inc. "For the
holiday season, we are excited about our plans to use our
integrated network of stores and digital platforms to showcase
holiday dressing, decor and gift offerings, and provide festive
experiences and convenient services that make shopping easy and
enjoyable for our customers."
As Nordstrom continues to strengthen its financial position, the
Company remains on track to reduce its leverage ratio to
approximately three times, and be in a position to return cash to
shareholders, by the end of 2021.
THIRD QUARTER 2021 SUMMARY
- Total Company net sales increased 18 percent compared with the
same period in fiscal 2020, during which the entire Anniversary
Sale temporarily shifted to the third quarter. Net sales decreased
1 percent relative to the same period in fiscal 2019. The timing of
this year's Anniversary Sale, with approximately one week falling
into the third quarter of 2021, had a positive impact on net sales
of approximately 200 basis points compared with the third quarter
of 2019.
- For the Nordstrom banner, net sales increased 11 percent and 3
percent compared with the same periods in fiscal 2020 and fiscal
2019, respectively. The timing of this year's Anniversary Sale had
a positive impact on Nordstrom banner net sales of approximately
300 basis points compared with the third quarter of 2019. For the
Nordstrom Rack banner, net sales increased 35 percent and decreased
8 percent compared with the same periods in fiscal 2020 and fiscal
2019, respectively.
- Digital sales decreased 12 percent compared with the same
period in fiscal 2020, during which the Anniversary Sale
temporarily shifted to the third quarter of that year, and
increased 20 percent compared with the same period in fiscal 2019.
The timing of this year's Anniversary Sale had a positive impact on
Company digital sales of approximately 400 basis points compared
with the third quarter of 2019. Digital sales represented 40
percent of total sales during the quarter.
- Gross profit, as a percentage of net sales, of 35 percent
increased 230 basis points compared with the same period in fiscal
2020 primarily due to fewer markdowns and leverage from higher net
sales. Gross profit, as a percentage of net sales, increased 80
basis points compared with the same period in fiscal 2019, driven
by increased leverage on lower buying and occupancy costs as well
as higher merchandise margins.
- Ending inventory increased 13 percent compared with the same
period in fiscal 2019, versus a 1 percent decrease in sales. The
change in inventory levels versus 2019 was due to the Company's
actions to pull forward receipts to support early holiday sales and
mitigate continuing supply chain backlogs.
- Selling, general and administrative ("SG&A") expenses, as a
percentage of net sales, of 34 percent increased 230 basis points
compared with the same period in fiscal 2020 primarily as a result
of labor cost pressure, partially offset by leverage on higher
sales. SG&A expenses, as a percentage of net sales, increased
260 basis points compared with the same period in fiscal 2019 as a
result of fulfillment and labor cost pressures, partially offset by
continued benefit from resetting the cost structure in 2020.
- EBIT was $127 million in the
third quarter of 2021, compared with $106
million during the same period in fiscal 2020 primarily due
to higher sales volume and improved merchandise margins, partially
offset by labor cost pressure. EBIT was $66
million lower than the third quarter of fiscal 2019 due to
fulfillment and labor cost pressures, partially offset by continued
benefit from resetting the cost structure in 2020.
- Interest expense, net, of $36
million decreased from $48
million during the same period in fiscal 2020 as a result of
the redemptions of the 8.75% secured notes during the first quarter
of fiscal 2021 and the 4.0% unsecured notes during the second
quarter of fiscal 2021.
- Income tax expense was $27
million, or 30 percent of pretax earnings, compared with
$5 million, or 8 percent of pretax
earnings, in the same period in fiscal 2020. Last year's income tax
included benefits associated with the Coronavirus Aid, Relief, and
Economic Security Act ("CARES Act").
- Third quarter net income of $64
million increased from net income of $53 million during the same period in fiscal
2020, which included a tax benefit associated with the CARES Act of
$19 million.
- The Company ended the third quarter with $867 million in available liquidity, including
$267 million in cash.
FISCAL YEAR 2021 OUTLOOK
The Company is reaffirming the following financial expectations
for fiscal 2021:
- Revenue, including retail sales and credit card revenues, is
expected to grow more than 35 percent versus fiscal 2020
- EBIT margin is expected to be approximately 3.0 to 3.5 percent
of sales
- Income tax rate is expected to be approximately 27 percent
- Leverage ratio is expected to be approximately 3x by
year-end
CONFERENCE CALL INFORMATION
The Company's senior management will host a conference call to
provide a business update and to discuss third quarter 2021
financial results and fiscal 2021 outlook at 4:45 p.m. Eastern Standard Time today. To listen
to the live call online and view the speakers' prepared remarks and
the conference call slides, visit the Investor Relations section of
the Company's corporate website at investor.nordstrom.com. An
archived webcast with the speakers' prepared remarks and the
conference call slides will be available in the Quarterly Results
section for one year. Interested parties may also dial
201-689-8354. A telephone replay will be available beginning
approximately three hours after the conclusion of the call by
dialing 877-660-6853 or 201-612-7415 and entering
Conference ID 13724527, until the close of business on
November 30, 2021.
ABOUT NORDSTROM
At Nordstrom, Inc. (NYSE: JWN), we exist to help our customers
feel good and look their best. Since starting as a shoe store in
1901, how to best serve customers has been at the center of every
decision we make. This heritage of service is the foundation we're
building on as we provide convenience and true connection for our
customers. Our digital-first platform enables us to serve customers
when, where and how they want to shop – whether that's in-store at
more than 350 Nordstrom, Nordstrom Local and Nordstrom Rack
locations or digitally through our Nordstrom and Rack apps and
websites. Through it all, we remain committed to leaving the world
better than we found it.
Certain statements in this press release contain or may
suggest "forward-looking" information (as defined in the Private
Securities Litigation Reform Act of 1995) that involves risks and
uncertainties that could cause results to be materially different
from expectations. The words "will," "may," "designed to,"
"outlook," "believes," "should," "targets," "anticipates,"
"assumptions," "plans," "expects" or "expectations," "intends,"
"estimates," "forecasts," "guidance" and similar expressions
identify certain of these forward-looking statements. The Company
also may provide forward-looking statements in oral statements or
other written materials released to the public. All statements
contained or incorporated in this press release or in any other
public statements that address such future events or expectations
are forward-looking statements. Important factors that could cause
actual results to differ materially from these forward-looking
statements are detailed in the Company's Annual Report on Form 10-K
for the fiscal year ended January 30, 2021 and its Form 10-Qs
for the fiscal quarters ended May 1,
2021 and July 31, 2021. These
forward-looking statements are not guarantees of future performance
and speak only as of the date made, and, except as required by law,
the Company undertakes no obligation to update or revise any
forward-looking statements to reflect subsequent events, new
information or future circumstances.
NORDSTROM,
INC.
|
CONSOLIDATED
STATEMENTS OF EARNINGS
|
(unaudited; amounts
in millions, except per share amounts)
|
|
|
Quarter
Ended
|
|
Nine Months
Ended
|
|
October 30,
2021
|
|
October 31,
2020
|
|
October 30,
2021
|
|
October 31,
2020
|
Net sales
|
$
|
3,534
|
|
|
$
|
3,002
|
|
|
$
|
10,020
|
|
|
$
|
6,806
|
|
Credit card revenues,
net
|
103
|
|
|
87
|
|
|
283
|
|
|
264
|
|
Total
revenues
|
3,637
|
|
|
3,089
|
|
|
10,303
|
|
|
7,070
|
|
Cost of sales and
related buying and occupancy costs
|
(2,294)
|
|
|
(2,019)
|
|
|
(6,646)
|
|
|
(5,235)
|
|
Selling, general and
administrative expenses
|
(1,216)
|
|
|
(964)
|
|
|
(3,464)
|
|
|
(2,912)
|
|
Earnings (loss)
before interest and income taxes1
|
127
|
|
|
106
|
|
|
193
|
|
|
(1,077)
|
|
Interest expense,
net2
|
(36)
|
|
|
(48)
|
|
|
(213)
|
|
|
(133)
|
|
Earnings (loss)
before income taxes
|
91
|
|
|
58
|
|
|
(20)
|
|
|
(1,210)
|
|
Income tax (expense)
benefit
|
(27)
|
|
|
(5)
|
|
|
(2)
|
|
|
487
|
|
Net earnings
(loss)1,2
|
$
|
64
|
|
|
$
|
53
|
|
|
$
|
(22)
|
|
|
$
|
(723)
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.40
|
|
|
$
|
0.34
|
|
|
$
|
(0.14)
|
|
|
$
|
(4.60)
|
|
Diluted1,2
|
$
|
0.39
|
|
|
$
|
0.34
|
|
|
$
|
(0.14)
|
|
|
$
|
(4.60)
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
159.2
|
|
|
157.5
|
|
|
158.9
|
|
|
157.0
|
|
Diluted
|
162.5
|
|
|
158.2
|
|
|
158.9
|
|
|
157.0
|
|
|
|
|
|
|
|
|
|
Percent of net
sales:
|
|
|
|
|
|
|
|
Gross
profit
|
35.1
|
%
|
|
32.8
|
%
|
|
33.7
|
%
|
|
23.1
|
%
|
Selling, general and
administrative expenses
|
34.4
|
%
|
|
32.1
|
%
|
|
34.6
|
%
|
|
42.8
|
%
|
Earnings (loss)
before interest and income taxes
|
3.6
|
%
|
|
3.5
|
%
|
|
1.9
|
%
|
|
(15.8)
|
%
|
|
|
1
|
In 2020, we incurred
COVID-19 related charges, which reduced net earnings for the nine
months ended October 31, 2020 by $166 or $1.06 per diluted
share. These charges consisted primarily of asset impairments from
store closures, premium pay and benefits, and restructuring
charges, which were slightly offset by credits from the Coronavirus
Aid, Relief, and Economic Security Act ("CARES Act"). In the third
quarter of 2020, the additional tax benefit associated with the
estimated loss carryback under the CARES Act increased net earnings
by $19 or $0.12 per diluted share.
|
2
|
In the first quarter
of 2021, we incurred charges related to our debt refinancing that
increased interest expense by $88. Collectively, these charges
reduced net earnings for the nine months ended October 30, 2021 by
$64 or $0.41 per diluted share.
|
NORDSTROM,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited; amounts
in millions)
|
|
|
October 30,
2021
|
|
January 30,
2021
|
|
October 31,
2020
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
267
|
|
|
$
|
681
|
|
|
$
|
889
|
|
Accounts receivable,
net
|
273
|
|
|
245
|
|
|
256
|
|
Merchandise
inventories
|
2,863
|
|
|
1,863
|
|
|
1,860
|
|
Prepaid expenses and
other
|
374
|
|
|
853
|
|
|
902
|
|
Total current
assets
|
3,777
|
|
|
3,642
|
|
|
3,907
|
|
|
|
|
|
|
|
Land, property and
equipment (net of accumulated depreciation of $7,617, $7,159 and
$6,987)
|
3,558
|
|
|
3,732
|
|
|
3,770
|
|
Operating lease
right-of-use assets
|
1,527
|
|
|
1,581
|
|
|
1,611
|
|
Goodwill
|
249
|
|
|
249
|
|
|
249
|
|
Other
assets
|
423
|
|
|
334
|
|
|
274
|
|
Total
assets
|
$
|
9,534
|
|
|
$
|
9,538
|
|
|
$
|
9,811
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Borrowings under
revolving line of credit
|
$
|
200
|
|
|
$
|
—
|
|
|
$
|
200
|
|
Accounts
payable
|
2,310
|
|
|
1,960
|
|
|
2,053
|
|
Accrued salaries,
wages and related benefits
|
276
|
|
|
352
|
|
|
254
|
|
Current portion of
operating lease liabilities
|
240
|
|
|
260
|
|
|
269
|
|
Other current
liabilities
|
1,063
|
|
|
1,048
|
|
|
1,119
|
|
Current portion of
long-term debt
|
—
|
|
|
500
|
|
|
499
|
|
Total current
liabilities
|
4,089
|
|
|
4,120
|
|
|
4,394
|
|
|
|
|
|
|
|
Long-term debt,
net
|
2,851
|
|
|
2,769
|
|
|
2,767
|
|
Non-current operating
lease liabilities
|
1,602
|
|
|
1,687
|
|
|
1,726
|
|
Other
liabilities
|
633
|
|
|
657
|
|
|
672
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Common stock, no par
value: 1,000 shares authorized; 159.3, 157.8 and 157.7 shares
issued and outstanding
|
3,269
|
|
|
3,205
|
|
|
3,190
|
|
Accumulated
deficit
|
(2,852)
|
|
|
(2,830)
|
|
|
(2,863)
|
|
Accumulated other
comprehensive loss
|
(58)
|
|
|
(70)
|
|
|
(75)
|
|
Total shareholders'
equity
|
359
|
|
|
305
|
|
|
252
|
|
Total liabilities
and shareholders' equity
|
$
|
9,534
|
|
|
$
|
9,538
|
|
|
$
|
9,811
|
|
NORDSTROM,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited; amounts
in millions)
|
|
|
Nine Months
Ended
|
|
October 30,
2021
|
|
October 31,
2020
|
Operating
Activities
|
|
|
|
Net loss
|
$
|
(22)
|
|
|
$
|
(723)
|
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
Depreciation and
amortization expenses
|
477
|
|
|
505
|
|
Asset
impairment
|
—
|
|
|
137
|
|
Right-of-use asset
amortization
|
130
|
|
|
126
|
|
Deferred income taxes,
net
|
25
|
|
|
39
|
|
Stock-based
compensation expense
|
64
|
|
|
50
|
|
Other, net
|
81
|
|
|
13
|
|
Change in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(27)
|
|
|
(57)
|
|
Merchandise
inventories
|
(687)
|
|
|
175
|
|
Prepaid expenses and
other assets
|
408
|
|
|
(641)
|
|
Accounts
payable
|
90
|
|
|
409
|
|
Accrued salaries,
wages and related benefits
|
(76)
|
|
|
(254)
|
|
Other current
liabilities
|
15
|
|
|
(72)
|
|
Lease
liabilities
|
(218)
|
|
|
(163)
|
|
Other
liabilities
|
17
|
|
|
20
|
|
Net cash provided by
(used in) operating activities
|
277
|
|
|
(436)
|
|
|
|
|
|
Investing
Activities
|
|
|
|
Capital
expenditures
|
(361)
|
|
|
(311)
|
|
Other, net
|
(17)
|
|
|
20
|
|
Net cash used in
investing activities
|
(378)
|
|
|
(291)
|
|
|
|
|
|
Financing
Activities
|
|
|
|
Proceeds from
revolving line of credit
|
400
|
|
|
800
|
|
Payments on revolving
line of credit
|
(200)
|
|
|
(600)
|
|
Proceeds from
long-term borrowings
|
675
|
|
|
600
|
|
Principal payments on
long-term borrowings
|
(1,100)
|
|
|
—
|
|
(Decrease) increase in
cash book overdrafts
|
(4)
|
|
|
39
|
|
Cash dividends
paid
|
—
|
|
|
(58)
|
|
Proceeds from
issuances under stock compensation plans
|
14
|
|
|
16
|
|
Tax withholding on
share-based awards
|
(15)
|
|
|
(8)
|
|
Make-whole premium
payment and other, net
|
(85)
|
|
|
(16)
|
|
Net cash (used in)
provided by financing activities
|
(315)
|
|
|
773
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
2
|
|
|
(10)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(414)
|
|
|
36
|
|
Cash and cash
equivalents at beginning of period
|
681
|
|
|
853
|
|
Cash and cash
equivalents at end of period
|
$
|
267
|
|
|
$
|
889
|
|
NORDSTROM, INC.
SUMMARY OF NET SALES
(unaudited; amounts in millions)
Our Nordstrom brand includes Nordstrom.com, TrunkClub.com,
Nordstrom-branded U.S. stores, Canada, which includes Nordstrom.ca, Nordstrom
Canadian stores and Nordstrom Rack Canadian stores, and Nordstrom
Local. Our Nordstrom Rack brand includes NordstromRack.com,
Nordstrom Rack-branded U.S. stores, Last Chance clearance stores
and, prior to the first quarter of 2021, HauteLook.com. The
following table summarizes net sales for the quarter and nine
months ended October 30, 2021,
compared with the quarter and nine months ended October 31, 2020:
|
Quarter
Ended
|
|
Nine Months
Ended
|
|
October 30,
2021
|
|
October 31,
2020
|
|
October 30,
2021
|
|
October 31,
2020
|
Net
sales:
|
|
|
|
|
|
|
|
Nordstrom
|
$
|
2,343
|
|
|
$
|
2,120
|
|
|
$
|
6,614
|
|
|
$
|
4,543
|
|
Nordstrom
Rack
|
1,191
|
|
|
882
|
|
|
3,406
|
|
|
2,263
|
|
Total net
sales
|
$
|
3,534
|
|
|
$
|
3,002
|
|
|
$
|
10,020
|
|
|
$
|
6,806
|
|
|
|
|
|
|
|
|
|
Net sales increase
(decrease):
|
|
|
|
|
|
|
|
Nordstrom
|
10.5
|
%
|
|
(6.6)
|
%
|
|
45.6
|
%
|
|
(34.4)
|
%
|
Nordstrom
Rack
|
35.2
|
%
|
|
(32.0)
|
%
|
|
50.6
|
%
|
|
(39.9)
|
%
|
Total
Company
|
17.7
|
%
|
|
(15.8)
|
%
|
|
47.2
|
%
|
|
(36.4)
|
%
|
|
|
|
|
|
|
|
|
Digital sales as %
of total net sales1
|
40
|
%
|
|
54
|
%
|
|
42
|
%
|
|
56
|
%
|
|
|
1
|
Sales conducted
through a digital platform such as our websites or mobile apps.
Digital sales may be self-guided by the customer, as in a
traditional online order, or facilitated by a salesperson using a
virtual styling or selling tool, such as Nordstrom Trunk Club or
Style Board. Digital sales may be delivered to the customer or
picked up in our Nordstrom stores, Nordstrom Rack stores or
Nordstrom Local service hubs. Digital sales also include a reserve
for estimated returns.
|
NORDSTROM, INC.
ADJUSTED RETURN ON INVESTED CAPITAL ("ADJUSTED ROIC")
(NON-GAAP FINANCIAL MEASURE)
(unaudited; dollar amounts in millions)
We believe that Adjusted ROIC is a useful financial measure for
investors in evaluating the efficiency and effectiveness of the
capital we have invested in our business to generate returns over
time. In addition, we have incorporated it in our executive
incentive measures and we believe it is an important indicator of
shareholders' return over the long term.
Adjusted ROIC is not a measure of financial performance under
GAAP and should be considered in addition to, and not as a
substitute for, return on assets, net earnings, total assets or
other GAAP financial measures. Our method of calculating non-GAAP
financial measures may differ from other companies' methods and
therefore may not be comparable to those used by other companies.
The financial measure calculated under GAAP which is most directly
comparable to Adjusted ROIC is return on assets. The following is a
reconciliation of return on assets to Adjusted ROIC:
|
Four Quarters
Ended
|
|
October 30,
2021
|
|
October 31,
2020
|
Net earnings
(loss)
|
$
|
11
|
|
|
$
|
(530)
|
|
Less: income tax
benefit
|
(49)
|
|
|
(417)
|
|
Add: interest
expense
|
262
|
|
|
176
|
|
Earnings (loss)
before interest and income tax expense
|
224
|
|
|
(771)
|
|
|
|
|
|
Add: operating lease
interest1
|
89
|
|
|
97
|
|
Adjusted net
operating income (loss)
|
313
|
|
|
(674)
|
|
|
|
|
|
(Less) Add: estimated
income tax (benefit) expense
|
(406)
|
|
|
297
|
|
Adjusted net
operating loss after tax
|
$
|
(93)
|
|
|
$
|
(377)
|
|
|
|
|
|
Average total
assets
|
$
|
9,489
|
|
|
$
|
9,825
|
|
Less: average
deferred property incentives in excess of operating lease
right-of-use (ROU) assets2
|
(243)
|
|
|
(287)
|
|
Less: average
non-interest bearing current liabilities
|
(3,423)
|
|
|
(3,215)
|
|
Average invested
capital
|
$
|
5,823
|
|
|
$
|
6,323
|
|
|
|
|
|
Return on
assets3
|
0.1
|
%
|
|
(5.4)
|
%
|
Adjusted
ROIC3
|
(1.6)
|
%
|
|
(6.0)
|
%
|
|
|
1
|
We add back the
operating lease interest to reflect how we manage our business.
Operating lease interest is a component of operating lease cost
recorded in occupancy costs.
|
2
|
For leases with
property incentives that exceed the ROU assets, we reclassify the
amount from assets to other current liabilities and other
liabilities and reduce average total assets, as this better
reflects how we manage our business.
|
3
|
COVID-19 related
charges for the four quarters ended October 31, 2020 negatively
impacted return on assets by approximately 170 basis points and
Adjusted ROIC by approximately 270 basis points.
|
NORDSTROM, INC.
ADJUSTED DEBT TO EBITDAR (NON-GAAP FINANCIAL MEASURE)
(unaudited; dollar amounts in millions)
Adjusted Debt to earnings (loss) before interest, income taxes,
depreciation, amortization and rent ("EBITDAR") is one of our key
financial metrics and we believe that our debt levels are best
analyzed using this measure, as it provides a reflection of our
creditworthiness that could impact our credit rating and borrowing
costs. This metric is calculated in accordance with our Revolver
covenant and is a key component in assessing whether our revolving
credit facility is secured or unsecured, as well as our ability to
make dividend payments and share repurchases. Our goal is to manage
debt levels to maintain an investment-grade credit rating while
operating with an efficient capital structure.
Adjusted Debt to EBITDAR is not a measure of financial
performance under GAAP and should be considered in addition to, and
not as a substitute for, debt to net earnings, net earnings, debt
or other GAAP financial measures. Our method of determining
non-GAAP financial measures may differ from other companies'
methods and therefore may not be comparable to those used by other
companies. The following is a reconciliation of debt to net
earnings to Adjusted Debt to EBITDAR:
|
October 30,
2021
|
Debt
|
$
|
3,051
|
|
Add: estimated
capitalized operating lease liability1
|
1,374
|
|
Adjusted
Debt
|
$
|
4,425
|
|
|
|
|
Four Quarters
Ended
October 30, 2021
|
Net
earnings
|
$
|
11
|
|
Less: income tax
benefit
|
(49)
|
|
Add: interest
expense, net
|
261
|
|
Adjusted earnings
before interest and income taxes
|
$
|
223
|
|
|
|
Add: depreciation and
amortization expenses
|
643
|
|
Add: rent expense,
net2
|
229
|
|
Add: other Revolver
covenant adjustments3
|
1
|
|
Adjusted
EBITDAR
|
$
|
1,096
|
|
|
|
Debt to Net
Earnings
|
271.0
|
|
Adjusted Debt to
EBITDAR
|
4.04
|
|
|
|
1
|
Based upon the
estimated lease liability as of the end of the period, calculated
as the trailing four quarters of rent expense multiplied by six, a
method of estimating the debt we would record for our leases that
are classified as operating if they had met the criteria for a
capital lease or we had purchased the property and is calculated
under the previous lease standard (ASC 840), consistent with our
Revolver covenant calculation requirements. The estimated lease
liability is not calculated in accordance with, nor an alternative
for, GAAP and should not be considered in isolation or as a
substitution for our results reported under GAAP.
|
2
|
Rent expense, net of
amortization of developer reimbursements, is added back for
consistency with our Revolver covenant calculation requirements,
and is calculated under the previous lease standard (ASC
840).
|
3
|
Other adjusting items
to reconcile net earnings to Adjusted EBITDAR as defined by our
Revolver covenant include interest income and certain non-cash
charges where relevant.
|
NORDSTROM, INC.
FREE CASH FLOW (NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts in millions)
Free Cash Flow is one of our key liquidity measures and, when
used in conjunction with GAAP measures, we believe it provides
investors with a meaningful analysis of our ability to generate
cash from our business.
Free Cash Flow is not a measure of financial performance under
GAAP and should be considered in addition to, and not as a
substitute for, operating cash flows or other financial measures
prepared in accordance with GAAP. Our method of calculating
non-GAAP financial measures may differ from other companies'
methods and therefore may not be comparable to those used by other
companies. The financial measure calculated under GAAP which is
most directly comparable to Free Cash Flow is net cash provided by
(used in) operating activities. The following is a reconciliation
of net cash provided by (used in) operating activities to Free Cash
Flow:
|
Nine Months
Ended
|
|
October 30,
2021
|
|
October 31,
2020
|
Net cash provided
by (used in) operating activities
|
$
|
277
|
|
|
$
|
(436)
|
|
Less: capital
expenditures
|
(361)
|
|
|
(311)
|
|
(Less) Add: change in
cash book overdrafts
|
(4)
|
|
|
39
|
|
Free Cash
Flow
|
$
|
(88)
|
|
|
$
|
(708)
|
|
NORDSTROM, INC.
ADJUSTED EBITDA (NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts in millions)
Adjusted earnings (loss) before interest, income taxes,
depreciation and amortization ("EBITDA") is one of our key
financial metrics to reflect our view of cash flow from net
earnings. Adjusted EBITDA excludes significant items which are
non-operating in nature in order to evaluate our core operating
performance against prior periods. The financial measure calculated
under GAAP which is most directly comparable to Adjusted EBITDA is
net earnings.
Adjusted EBITDA is not a measure of financial performance under
GAAP and should be considered in addition to, and not as a
substitute for net earnings, overall change in cash or liquidity of
the business as a whole. Our method of calculating a non-GAAP
financial measure may differ from other companies' methods and
therefore may not be comparable to those used by other companies.
The following is a reconciliation of net loss to Adjusted
EBITDA:
|
Nine Months
Ended
|
|
October 30,
2021
|
|
October 31,
2020
|
Net
loss
|
$
|
(22)
|
|
|
$
|
(723)
|
|
Add (Less): income
tax expense (benefit)
|
2
|
|
|
(487)
|
|
Add: interest
expense, net
|
213
|
|
|
133
|
|
Earnings (loss)
before interest and income taxes
|
193
|
|
|
(1,077)
|
|
|
|
|
|
Add: depreciation and
amortization expenses
|
477
|
|
|
505
|
|
Less: amortization of
developer reimbursements
|
(59)
|
|
|
(65)
|
|
Add: asset
impairments
|
—
|
|
|
137
|
|
Adjusted
EBITDA
|
$
|
611
|
|
|
$
|
(500)
|
|
INVESTOR
CONTACT:
|
|
Heather
Hollander
|
|
|
Nordstrom,
Inc.
|
|
|
InvRelations@Nordstrom.com
|
|
|
|
MEDIA
CONTACT:
|
|
Gigi Ganatra
Duff
|
|
|
Nordstrom,
Inc.
|
|
|
NordstromPR@Nordstrom.com
|
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SOURCE Nordstrom, Inc.