- Total Company sales increase 12 percent
- Reports EPS of $0.77 and
adjusted EPS of $0.811
- Updating fiscal year outlook to reflect revised plans for
second half
SEATTLE, Aug. 23,
2022 /PRNewswire/ -- Nordstrom, Inc. (NYSE: JWN)
today reported second quarter net earnings of $126 million and earnings per diluted share
("EPS") of $0.77 for the quarter
ended July 30, 2022. Excluding costs
associated with the wind-down of Trunk Club, the Company reported
adjusted earnings per share of $0.81.1
For the second quarter, net sales increased 12.0 percent versus
the same period in fiscal 2021, exceeding pre-pandemic sales
levels, and gross merchandise value ("GMV") increased 12.2
percent. Anniversary Sale timing, with one week shifting from the
third quarter to the second quarter, had a positive impact of
approximately 200 basis points on net sales compared with 2021.
During the quarter, Nordstrom banner net sales increased 14.7
percent and GMV increased 14.9 percent. Net sales for Nordstrom
Rack increased 6.3 percent.
"We delivered solid results in the second quarter, with topline
growth, increased profitability and continued progress in our
strategic initiatives," said Erik
Nordstrom, chief executive officer of Nordstrom, Inc. "While
our quarterly results were consistent with our previous outlook,
customer traffic and demand decelerated significantly beginning in
late June, predominantly at Nordstrom Rack. We are adjusting our
plans and taking action to navigate this dynamic in the short term,
including aligning inventory and expenses to recent trends, and we
remain confident in our ability to deliver on our long-term
strategic and financial goals."
In the second quarter, men's apparel had the strongest
growth versus 2021, and shoes, women's apparel and beauty also had
double-digit growth, as customers updated their wardrobes and
returned to occasions. Total Anniversary event sales increased 5
percent, including one day of the event that fell in the third
quarter.
"We elevated the customer experience and increased engagement
during this year's Anniversary Sale, and we're proud of our team's
execution and dedication to customers," said Pete Nordstrom, president and chief brand
officer of Nordstrom, Inc. "As we look to the second half of the
year, we are aggressively right-sizing our inventory while
investing in supply chain and merchandising capabilities that will
benefit us in 2023 and beyond."
As previously announced on August 17, 2022, the board of
directors declared a quarterly cash dividend of $0.19 per share to be paid to shareholders of
record at the close of business on August 30, 2022, payable on
September 14, 2022. During the second quarter, the Company
repurchased 1.5 million shares of its common stock for $35 million under its $500
million share repurchase program, which was previously
announced as authorized by the board of directors on May 18, 2022. A total capacity of $465 million remains available under this share
repurchase authorization.
SECOND QUARTER 2022 SUMMARY
- Total Company net sales increased 12.0 percent and GMV
increased 12.2 percent compared with the same period in fiscal
2021. The timing shift of the Anniversary Sale, with one day
falling into the third quarter of 2022 versus roughly one week in
2021, had a positive impact on net sales of approximately 200 basis
points compared with the second quarter of 2021.
- For the Nordstrom banner, net sales increased 14.7 percent,
improving sequentially from the first quarter versus pre-pandemic
sales levels, and GMV increased 14.9 percent compared with the same
period in fiscal 2021. The timing shift of the Anniversary Sale had
a positive impact on Nordstrom banner net sales of approximately
400 basis points compared with the second quarter of 2021.
- For the Nordstrom Rack banner, net sales increased 6.3 percent
compared with the same period in fiscal 2021, improving
sequentially from the first quarter versus pre-pandemic sales
levels.
- Digital sales increased 6.3 percent compared with the same
period in fiscal 2021. The timing shift of the Anniversary Sale had
a positive impact on Company digital sales of approximately 400
basis points compared with the second quarter of 2021. Digital
sales represented 38 percent of total sales during the
quarter.
- Gross profit, as a percentage of net sales, of 35.2 percent
increased 65 basis points compared with the same period in fiscal
2021 primarily due to leverage on buying and occupancy costs,
partially offset by higher markdown rates.
- Ending inventory increased 9.9 percent compared with the same
period in fiscal 2021, versus a 12.0 percent increase in
sales.
- Selling, general and administrative expenses, as a percentage
of net sales, of 32.8 percent decreased 15 basis points compared
with the same period in fiscal 2021 primarily due to leverage on
higher sales, partially offset by higher labor expense.
- Earnings before interest and tax ("EBIT") was $202 million in the second quarter of 2022,
compared with $151 million during the
same period in fiscal 2021, primarily due to higher sales,
partially offset by higher markdowns and higher labor expense.
Adjusted EBIT of $210 million for the
second quarter of 2022 excluded costs associated with the wind-down
of Trunk Club.2
- Interest expense, net, of $34
million decreased from $40
million during the same period in fiscal 2021 as a result of
the redemption of $500 million of
unsecured notes in the second quarter of 2021.
- Income tax expense was $42
million, or 25.2 percent of pretax earnings, compared with
$31 million, or 27.9 percent of
pretax earnings, in the same period in fiscal 2021.
- The Company ended the second quarter with $1.3 billion in available liquidity, including
$494 million in cash and the full
$800 million available on its
revolving line of credit. In May
2022, the Company entered into a new $800 million revolving credit agreement expiring
in May 2027, replacing its previous
revolving credit agreement that was scheduled to expire in
September 2023.
STORES UPDATE
To date in fiscal 2022, the Company has opened one store:
City
|
|
Location
|
|
Square
Footage
(000s)
|
|
Timing of
Opening
|
ASOS |
Nordstrom
|
|
|
|
|
|
|
Los Angeles,
CA
|
|
The Grove
|
|
30
|
|
May 20, 2022
|
The Company has also announced plans to open or relocate the
following stores:
City
|
|
Location
|
|
Square
Footage
(000s)
|
|
Timing of
Opening
|
Nordstrom
Rack
|
|
|
|
|
|
|
Phoenix, AZ
|
|
Desert Ridge
Marketplace
|
|
23.5
|
|
Fall 2022
|
Riverside,
CA
|
|
Canyon Springs
Marketplace
|
|
30
|
|
Fall 2022
|
Birmingham,
AL
|
|
The Summit (relocation
from River Ridge)
|
|
27
|
|
Spring 2023
|
Los Angeles,
CA
|
|
NOHO West
|
|
26
|
|
Spring 2023
|
Chattanooga,
TN
|
|
The Terrace at Hamilton
Place
|
|
24
|
|
Spring 2023
|
Wichita, KS
|
|
Bradley Fair
|
|
28
|
|
Spring 2023
|
The Company had the following store counts as of
quarter-end:
|
July 30,
2022
|
|
July 31,
2021
|
Nordstrom
|
|
|
|
Nordstrom
– U.S.
|
94
|
|
94
|
Nordstrom
– Canada
|
6
|
|
6
|
Nordstrom Local
service hubs
|
7
|
|
7
|
ASOS |
Nordstrom
|
1
|
|
—
|
Nordstrom
Rack
|
|
|
|
Nordstrom Rack
– U.S.
|
240
|
|
240
|
Nordstrom Rack
– Canada
|
7
|
|
7
|
Last Chance clearance
stores
|
2
|
|
2
|
Total
|
357
|
|
356
|
|
Gross store square
footage
|
27,555,000
|
|
27,569,000
|
FISCAL YEAR 2022 OUTLOOK3
The Company is updating its financial expectations for fiscal
2022 as follows:
|
Prior
Outlook
|
Current
Outlook
|
Revenue growth,
including retail sales and credit card revenues
|
6 to 8
percent
|
5 to 7
percent
|
EBIT margin, as percent
of sales
|
5.8 to 6.2
percent
|
4.5 to 4.9
percent
|
Adjusted EBIT
margin3
|
5.6 to 6.0
percent
|
4.3 to 4.7
percent
|
Income tax
rate
|
Approximately 27
percent
|
Approximately 27
percent
|
EPS, excluding the
impact of share repurchase activity, if any
|
$3.38 to
$3.68
|
$2.45 to
$2.75
|
Adjusted EPS, excluding
the impact of share repurchase activity, if
any3
|
$3.20 to
$3.50
|
$2.30 to
$2.60
|
Leverage ratio by
year-end
|
Approximately 2.5
times
|
Below 2.9
times
|
CONFERENCE CALL INFORMATION
The Company's senior management will host a conference call to
provide a business update and to discuss second quarter 2022
financial results and fiscal 2022 outlook at 4:45 p.m. EDT 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 13731473, until the close of business on
August 30, 2022.
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 29, 2022 and its Form 10-Q
for the fiscal quarter ended April 30, 2022. 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. In addition, the actual
timing, price, manner and amounts of future share repurchases, if
any, will be subject to market and economic conditions and
applicable Securities and Exchange Commission rules.
______________
|
1 Adjusted
earnings per share is a non-GAAP financial measure. Refer to the
"Adjusted EBIT, Adjusted EBITDA and Adjusted EPS" section of this
release for additional information as well as reconciliations
between the Company's GAAP and non-GAAP financial
results.
|
2 Adjusted
EBIT is a non-GAAP financial measure. Refer to the "Adjusted EBIT,
Adjusted EBITDA and Adjusted EPS" section of this release for
additional information as well as reconciliations between the
Company's GAAP and non-GAAP financial results.
|
3 Adjusted
EBIT margin and adjusted EPS are non-GAAP financial measures. Refer
to the "Forward-Looking Non-GAAP Measures" section of this release
for additional information as well as reconciliations between the
Company's GAAP and non-GAAP financial expectations.
|
NORDSTROM,
INC. CONSOLIDATED STATEMENTS OF
EARNINGS (unaudited; amounts in millions, except per share
amounts)
|
|
|
Quarter
Ended
|
|
Six Months
Ended
|
|
July 30,
2022
|
|
July 31,
2021
|
|
July 30,
2022
|
|
July 31,
2021
|
Net sales
|
$
3,991
|
|
$
3,565
|
|
$
7,458
|
|
$
6,486
|
Credit card revenues,
net
|
104
|
|
92
|
|
207
|
|
180
|
Total
revenues
|
4,095
|
|
3,657
|
|
7,665
|
|
6,666
|
Cost of sales and
related buying and occupancy costs
|
(2,586)
|
|
(2,332)
|
|
(4,917)
|
|
(4,351)
|
Selling, general and
administrative expenses
|
(1,307)
|
|
(1,174)
|
|
(2,473)
|
|
(2,249)
|
Earnings before
interest and income taxes
|
202
|
|
151
|
|
275
|
|
66
|
Interest expense,
net
|
(34)
|
|
(40)
|
|
(69)
|
|
(177)
|
Earnings (loss) before
income taxes
|
168
|
|
111
|
|
206
|
|
(111)
|
Income tax (expense)
benefit
|
(42)
|
|
(31)
|
|
(60)
|
|
25
|
Net earnings
(loss)
|
$
126
|
|
$
80
|
|
$
146
|
|
$
(86)
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.78
|
|
$
0.50
|
|
$
0.91
|
|
$
(0.54)
|
Diluted
|
$
0.77
|
|
$
0.49
|
|
$
0.90
|
|
$
(0.54)
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
160.6
|
|
159.0
|
|
160.3
|
|
158.7
|
Diluted
|
162.9
|
|
162.8
|
|
162.9
|
|
158.7
|
|
|
|
|
|
|
|
|
Percent of net
sales:
|
|
|
|
|
|
|
|
Gross profit
|
35.2 %
|
|
34.6 %
|
|
34.1 %
|
|
32.9 %
|
Selling, general and
administrative expenses
|
32.8 %
|
|
32.9 %
|
|
33.2 %
|
|
34.7 %
|
Earnings before
interest and income taxes
|
5.1 %
|
|
4.2 %
|
|
3.7 %
|
|
1.0 %
|
NORDSTROM,
INC. CONSOLIDATED BALANCE SHEETS (unaudited;
amounts in millions)
|
|
|
July 30,
2022
|
|
January 29,
2022
|
|
July 31,
2021
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
494
|
|
$
322
|
|
$
487
|
Accounts receivable,
net
|
300
|
|
255
|
|
317
|
Merchandise
inventories
|
2,399
|
|
2,289
|
|
2,182
|
Prepaid expenses and
other
|
408
|
|
306
|
|
475
|
Total current
assets
|
3,601
|
|
3,172
|
|
3,461
|
|
|
|
|
|
|
Land, property and
equipment (net of accumulated depreciation of $7,943, $7,737 and
$7,471)
|
3,443
|
|
3,562
|
|
3,573
|
Operating lease
right-of-use assets
|
1,466
|
|
1,496
|
|
1,532
|
Goodwill
|
249
|
|
249
|
|
249
|
Other assets
|
403
|
|
390
|
|
415
|
Total
assets
|
$
9,162
|
|
$
8,869
|
|
$
9,230
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
1,747
|
|
1,529
|
|
1,961
|
Accrued salaries,
wages and related benefits
|
302
|
|
383
|
|
487
|
Current portion of
operating lease liabilities
|
253
|
|
242
|
|
238
|
Other current
liabilities
|
1,254
|
|
1,160
|
|
1,170
|
Total current
liabilities
|
3,556
|
|
3,314
|
|
3,856
|
|
|
|
|
|
|
Long-term debt,
net
|
2,853
|
|
2,853
|
|
2,849
|
Non-current operating
lease liabilities
|
1,526
|
|
1,556
|
|
1,619
|
Other
liabilities
|
564
|
|
565
|
|
638
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Common stock, no par
value: 1,000 shares authorized; 159.8, 159.4 and 158.9 shares
issued and outstanding
|
3,314
|
|
3,283
|
|
3,245
|
Accumulated
deficit
|
(2,601)
|
|
(2,652)
|
|
(2,916)
|
Accumulated other
comprehensive loss
|
(50)
|
|
(50)
|
|
(61)
|
Total shareholders'
equity
|
663
|
|
581
|
|
268
|
Total liabilities
and shareholders' equity
|
$
9,162
|
|
$
8,869
|
|
$
9,230
|
NORDSTROM,
INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited; amounts in millions)
|
|
|
Six Months
Ended
|
|
July 30,
2022
|
|
July 31,
2021
|
Operating
Activities
|
|
|
|
Net earnings
(loss)
|
$
146
|
|
$
(86)
|
Adjustments to
reconcile net earnings (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expenses
|
301
|
|
321
|
Right-of-use asset
amortization
|
93
|
|
90
|
Deferred income taxes,
net
|
(31)
|
|
17
|
Stock-based
compensation expense
|
39
|
|
45
|
Other, net
|
(41)
|
|
80
|
Change in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(17)
|
|
(72)
|
Merchandise
inventories
|
(38)
|
|
(189)
|
Prepaid expenses and
other assets
|
(99)
|
|
314
|
Accounts
payable
|
133
|
|
(88)
|
Accrued salaries,
wages and related benefits
|
(82)
|
|
137
|
Other current
liabilities
|
97
|
|
123
|
Lease
liabilities
|
(133)
|
|
(156)
|
Other
liabilities
|
5
|
|
9
|
Net cash provided by
operating activities
|
373
|
|
545
|
|
|
|
|
Investing
Activities
|
|
|
|
Capital
expenditures
|
(215)
|
|
(217)
|
Proceeds from the sale
of assets and other, net
|
82
|
|
(13)
|
Net cash used in
investing activities
|
(133)
|
|
(230)
|
|
|
|
|
Financing
Activities
|
|
|
|
Proceeds from
revolving line of credit
|
—
|
|
200
|
Payments on revolving
line of credit
|
—
|
|
(200)
|
Proceeds from
long-term borrowings
|
—
|
|
675
|
Principal payments on
long-term borrowings
|
—
|
|
(1,100)
|
Increase in cash book
overdrafts
|
36
|
|
6
|
Cash dividends
paid
|
(60)
|
|
—
|
Payments for
repurchase of common stock
|
(35)
|
|
—
|
Proceeds from
issuances under stock compensation plans
|
9
|
|
7
|
Tax withholding on
share-based awards
|
(14)
|
|
(13)
|
Make-whole premium
payment and other, net
|
(4)
|
|
(86)
|
Net cash used in
financing activities
|
(68)
|
|
(511)
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
—
|
|
2
|
Net increase (decrease)
in cash and cash equivalents
|
172
|
|
(194)
|
Cash and cash
equivalents at beginning of period
|
322
|
|
681
|
Cash and cash
equivalents at end of period
|
$
494
|
|
$
487
|
NORDSTROM, INC.
SUMMARY OF NET
SALES
(unaudited; dollars 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, Nordstrom
Local, and ASOS | Nordstrom. Our Nordstrom Rack brand includes
NordstromRack.com, Nordstrom Rack-branded U.S. stores and Last
Chance clearance stores. The following table summarizes net sales
for the quarter and six months ended July
30, 2022, compared with the quarter and six months ended
July 31, 2021:
|
Quarter
Ended
|
|
Six Months
Ended
|
|
July 30,
2022
|
|
July 31,
2021
|
|
July 30,
2022
|
|
July 31,
2021
|
Net
sales:
|
|
|
|
|
|
|
|
Nordstrom
|
$
2,771
|
|
$
2,417
|
|
$
5,060
|
|
$
4,270
|
Nordstrom
Rack
|
1,220
|
|
1,148
|
|
2,398
|
|
2,216
|
Total net
sales
|
$
3,991
|
|
$
3,565
|
|
$
7,458
|
|
$
6,486
|
|
|
|
|
|
|
|
|
Net sales
increase:
|
|
|
|
|
|
|
|
Nordstrom
|
14.7 %
|
|
126.7 %
|
|
18.5 %
|
|
76.3 %
|
Nordstrom
Rack
|
6.3 %
|
|
61.4 %
|
|
8.2 %
|
|
60.4 %
|
Total
Company
|
12.0 %
|
|
100.5 %
|
|
15.0 %
|
|
70.5 %
|
|
|
|
|
|
|
|
|
Digital sales as %
of total net sales1
|
38 %
|
|
40 %
|
|
38 %
|
|
42 %
|
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. 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 includes
a reserve for estimated returns.
|
NORDSTROM, INC.
ADJUSTED EBIT,
ADJUSTED EBITDA AND ADJUSTED EPS
(NON-GAAP FINANCIAL
MEASURES)
(unaudited; amounts in millions, except per share
amounts)
Adjusted earnings before interest and income taxes ("EBIT"),
adjusted earnings before interest, income taxes, depreciation and
amortization ("EBITDA") and adjusted earnings (loss) per diluted
share ("EPS") are key financial metrics and, when used in
conjunction with GAAP measures, we believe they provide useful
information for evaluating our core business performance, enable
comparison of financial results across periods and allow for
greater transparency with respect to key metrics used by management
for financial and operational decision-making. Adjusted EBIT,
adjusted EBITDA and adjusted EPS exclude certain items that we do
not consider representative of our core operating performance. The
financial measure calculated under GAAP which is most directly
comparable to adjusted EBIT and adjusted EBITDA is net earnings.
The financial measure calculated under GAAP which is most directly
comparable to adjusted EPS is earnings (loss) per diluted
share.
Adjusted EBIT, adjusted EBITDA and adjusted EPS are not measures
of financial performance under GAAP and should be considered in
addition to, and not as a substitute for, net earnings, operating
cash flows, earnings (loss) per share, earnings (loss) per diluted
share or other financial measures performed in accordance with
GAAP. Our method of determining non-GAAP financial measures may
differ from other companies' financial measures and therefore may
not be comparable to methods used by other companies.
The following is a reconciliation of net earnings (loss) to
adjusted EBIT and adjusted EBITDA:
|
Quarter
Ended
|
|
Six Months
Ended
|
|
July 30,
2022
|
|
July 31,
2021
|
|
July 30,
2022
|
|
July 31,
2021
|
Net earnings
(loss)
|
$
126
|
|
$
80
|
|
$
146
|
|
$
(86)
|
Add (Less): income tax
expense (benefit)
|
42
|
|
31
|
|
60
|
|
(25)
|
Add: interest expense,
net
|
34
|
|
40
|
|
69
|
|
177
|
Earnings before
interest and income taxes
|
202
|
|
151
|
|
275
|
|
66
|
|
|
|
|
|
|
|
|
Add: Trunk Club
wind-down costs
|
8
|
|
—
|
|
18
|
|
—
|
Less: gain on sale of
interest in a corporate office building
|
—
|
|
—
|
|
(51)
|
|
—
|
Adjusted
EBIT
|
210
|
|
151
|
|
242
|
|
66
|
|
|
|
|
|
|
|
|
Add: depreciation and
amortization expenses
|
149
|
|
159
|
|
301
|
|
321
|
Less: amortization of
developer reimbursements
|
(18)
|
|
(20)
|
|
(37)
|
|
(40)
|
Adjusted
EBITDA
|
$
341
|
|
$
290
|
|
$
506
|
|
$
347
|
The following is a reconciliation of earnings (loss) per diluted
share to adjusted EPS:
|
Quarter
Ended
|
|
Six Months
Ended
|
|
July 30,
2022
|
|
July 31,
2021
|
|
July 30,
2022
|
|
July 31,
2021
|
Earnings (loss) per
diluted share1
|
$
0.77
|
|
$
0.49
|
|
$
0.90
|
|
$
(0.54)
|
Add: Trunk Club
wind-down costs
|
0.05
|
|
—
|
|
0.11
|
|
—
|
Less: gain on sale of
interest in a corporate office building
|
—
|
|
—
|
|
(0.31)
|
|
—
|
Add: debt refinancing
charges included within interest expense, net
|
—
|
|
—
|
|
—
|
|
0.56
|
(Less) Add: income tax
impact on adjustments2
|
(0.01)
|
|
—
|
|
0.05
|
|
(0.15)
|
Adjusted
EPS
|
$
0.81
|
|
$
0.49
|
|
$
0.75
|
|
$
(0.13)
|
1 Due to the
anti-dilutive effect resulting from the adjusted net loss, the
impact of potentially dilutive shares on the adjusted per share
amounts has been omitted from the calculation of weighted-average
shares for earnings (loss) per share for the six months ended
July 31, 2021.
|
2 The income
tax impact of non-GAAP adjustments is calculated using the
estimated tax rate for the respective non-GAAP
adjustment.
|
NORDSTROM, INC.
FISCAL YEAR 2022
FORWARD-LOOKING NON-GAAP MEASURES
(NON-GAAP FINANCIAL
MEASURES)
(unaudited)
Our adjusted EBIT as a percent of net sales ("adjusted EBIT
margin") and adjusted EPS outlook for fiscal year 2022 excludes the
impacts from certain items that we do not consider representative
of our core operating performance. These items include the expected
full fiscal year 2022 impact associated with the Trunk Club
wind-down costs recognized in the first half of 2022 and the gain
on the sale of our interest in a corporate office building
recognized in the first quarter of 2022.
The following is a reconciliation of net earnings as a percent
of net sales to adjusted EBIT margin included within our Fiscal
Year 2022 Outlook:
|
52 Weeks Ending
January 28, 2023
|
|
Low
|
|
High
|
Expected net
earnings as a % of net sales
|
2.6 %
|
|
2.9 %
|
Add: income tax
expense
|
1.0 %
|
|
1.1 %
|
Add: interest expense,
net
|
0.9 %
|
|
0.9 %
|
Expected earnings
before interest and income taxes as a % of net sales
|
4.5 %
|
|
4.9 %
|
|
|
|
|
Add: Trunk Club
wind-down costs
|
0.1 %
|
|
0.1 %
|
Less: gain on sale of
interest in a corporate office building
|
(0.3 %)
|
|
(0.3 %)
|
Expected adjusted
EBIT margin
|
4.3 %
|
|
4.7 %
|
The following is a reconciliation of earnings per diluted share
to adjusted EPS included within our Fiscal Year 2022 Outlook:
|
52 Weeks Ending
January 28, 2023
|
|
Low
|
|
High
|
Expected earnings
per diluted share
|
$
2.45
|
|
$
2.75
|
Add: Trunk Club
wind-down costs
|
0.11
|
|
0.11
|
Less: gain on sale of
interest in a corporate office building
|
(0.31)
|
|
(0.31)
|
Add: income tax impact
on adjustments
|
0.05
|
|
0.05
|
Expected adjusted
EPS
|
$
2.30
|
|
$
2.60
|
NORDSTROM, INC.
ADJUSTED RETURN ON
INVESTED CAPITAL ("ADJUSTED ROIC")
(NON-GAAP FINANCIAL
MEASURE)
(unaudited; dollars 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
shows the components to reconcile the return on assets calculation
to Adjusted ROIC:
|
Four Quarters
Ended
|
|
July 30,
2022
|
|
July 31,
2021
|
Net
earnings
|
$
410
|
|
$
1
|
Add (Less): income tax
expense (benefit)
|
153
|
|
(72)
|
Add: interest
expense
|
140
|
|
274
|
Earnings before
interest and income tax expense
|
703
|
|
203
|
|
|
|
|
Add: operating lease
interest1
|
84
|
|
92
|
Adjusted net operating
profit
|
787
|
|
295
|
|
|
|
|
Less: estimated income
tax expense2
|
(214)
|
|
(300)
|
Adjusted net
operating profit (loss) after tax
|
$
573
|
|
$
(5)
|
|
|
|
|
Average total
assets
|
$
9,194
|
|
$
9,489
|
Less: average
non-current deferred property incentives in excess of operating
lease right-of-use (ROU) assets3
|
(214)
|
|
(255)
|
Less: average
non-interest bearing current liabilities
|
(3,396)
|
|
(3,267)
|
Average invested
capital
|
$
5,584
|
|
$
5,967
|
|
|
|
|
Return on
assets
|
4.5 %
|
|
— %
|
Adjusted
ROIC
|
10.3 %
|
|
(0.1 %)
|
1 Operating lease interest is a
component of operating lease cost recorded in occupancy costs. We
add back operating lease interest for purposes of calculating
adjusted net operating profit for consistency with the treatment of
interest expense on our debt.
|
2 Estimated
income tax expense is calculated by multiplying the adjusted net
operating profit by the effective tax rate for the trailing twelve
month periods ended July 30, 2022 and July 31, 2021. The effective
tax rate is calculated by dividing income tax expense (benefit) by
earnings (loss) before income taxes for the same trailing twelve
month periods.
|
3 For leases
with property incentives that exceed the ROU assets, we reclassify
the amount from assets to other current liabilities and other
liabilities on the Condensed Consolidated Balance Sheets. The
current and non-current amounts are used to reduce average total
assets above, as this better reflects how we manage our
business.
|
NORDSTROM, INC.
ADJUSTED DEBT TO
EBITDAR (NON-GAAP FINANCIAL MEASURE)
(unaudited; dollars in
millions)
Adjusted debt to earnings 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 which could impact our credit rating and borrowing
costs. This metric is calculated in accordance with the updates in
our new 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 achieve and
maintain investment-grade credit ratings 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 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 financial measure calculated under GAAP which
is most directly comparable to Adjusted debt to EBITDAR is debt to
net earnings. The following shows the components to reconcile the
debt to net earnings calculation to Adjusted debt to EBITDAR:
|
July 30,
2022
|
Debt
|
$
2,853
|
Add: operating lease
liabilities
|
1,779
|
Adjusted
debt
|
$
4,632
|
|
|
|
Four Quarters
Ended
July 30, 2022
|
Net
earnings
|
$
410
|
Add: income tax
expense
|
153
|
Add: interest expense,
net
|
138
|
Adjusted earnings
before interest and income taxes
|
701
|
|
|
Add: depreciation and
amortization expenses
|
595
|
Add: operating lease
cost1
|
272
|
Add: amortization of
developer reimbursements2
|
75
|
Less: other Revolver
covenant adjustments3
|
(22)
|
Adjusted
EBITDAR
|
$
1,621
|
|
|
Debt to Net
Earnings
|
7.0
|
Adjusted debt to
EBITDAR
|
2.9
|
1 Operating lease cost is fixed rent
expense, including fixed common area maintenance expense, net of
developer reimbursement amortization.
|
2 Amortization of developer
reimbursements is a non-cash reduction of operating lease cost and
is therefore added back to operating lease cost for purposes of our
Revolver covenant calculation.
|
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 and other gains and losses where relevant.
For the four quarters ended July 30, 2022, other Revolver covenant
adjustments primarily included a gain on sale of the Company's
interest in a corporate office building, partially offset by costs
associated with the wind-down of Trunk Club.
|
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 a
non-GAAP financial measure 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 operating activities. The following is a reconciliation
of net cash provided by operating activities to Free Cash Flow:
|
Six Months
Ended
|
|
July 30,
2022
|
|
July 31,
2021
|
Net cash provided by
operating activities
|
$
373
|
|
$
545
|
Less: capital
expenditures
|
(215)
|
|
(217)
|
Add: change in cash
book overdrafts
|
36
|
|
6
|
Free Cash
Flow
|
$
194
|
|
$
334
|
INVESTOR
CONTACT:
|
|
Heather
Hollander
|
|
|
Nordstrom,
Inc.
|
|
|
InvRelations@Nordstrom.com
|
|
|
|
MEDIA
CONTACT:
|
|
Stephanie
Corzett
|
|
|
Nordstrom,
Inc.
|
|
|
NordstromPR@Nordstrom.com
|
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SOURCE Nordstrom, Inc.