- Reports EPS of $0.84, compared
to EPS of $0.77 and adjusted EPS of
$0.81 in the prior
year1
- Results reflect continued progress on Company's key
priorities of Nordstrom Rack improvement, inventory
productivity and supply chain optimization
- Reaffirms fiscal 2023 revenue and adjusted earnings
outlook
SEATTLE, Aug. 24,
2023 /PRNewswire/ -- Nordstrom, Inc. (NYSE: JWN)
today reported second quarter net earnings of $137 million, or earnings per diluted share
("EPS") of $0.84, and earnings before
interest and taxes ("EBIT") of $192
million.
For the second quarter ended July 29, 2023, net sales
decreased 8.3 percent versus the same period in fiscal 2022,
compared to a decrease of 11.6 percent in the first quarter,
reflecting sequential improvement in sales at both Nordstrom and Nordstrom Rack. Gross merchandise
value ("GMV") decreased 8.5 percent. Second quarter net sales
include a 275 basis point negative impact from the wind-down
of Canadian operations. Anniversary Sale timing, with one week
shifting from the second quarter to the third quarter, had a
negative impact of approximately 200 basis points on net sales
compared with 2022. Excluding the impacts of the Canadian
wind-down and Anniversary Sale timing shift, net sales would have
been down approximately 4 percent. During the quarter, Nordstrom
banner net sales decreased 10.1 percent and GMV decreased 10.4
percent. Net sales for Nordstrom Rack decreased 4.1 percent.
"We've worked hard to improve our operating model, and our solid
results reflect the continued progress we made against our top
priorities to improve Nordstrom Rack performance, increase
inventory productivity and deliver efficiencies through supply
chain optimization," said Erik
Nordstrom, chief executive officer of Nordstrom, Inc. "These
2023 priorities improve the way we operate and drive profitability
in the near term, and better position us to succeed and deliver
value to our shareholders in the long-term. Looking ahead, we
remain confident in our ability to deliver on these priorities, all
while keeping the customer at the center of everything we do."
In the second quarter, active and beauty grew by low
single-digits versus 2022. Kids' apparel and men's apparel
performed better than average for the quarter.
"Our annual Anniversary Sale was a successful event, especially
among our most loyal customers. We were pleased by strong
sell-through of new merchandise from the best brands, both in
stores and online," said Pete
Nordstrom, president and chief brand officer of Nordstrom,
Inc. "In the second quarter, we were also encouraged
by sequential improvement in sales trends at both Nordstrom
and Rack. We remain focused on managing inventory with greater
discipline, improving mix and productivity, and thank our teams for
their hard work in bringing it all to life for our customers."
As previously announced, on August 16, 2023, the board of
directors declared a quarterly cash dividend of $0.19 per share, payable on September 13,
2023, to shareholders of record at the close of business on
August 29, 2023.
SECOND QUARTER 2023 SUMMARY
- Total Company net sales decreased 8.3 percent, improving
sequentially from the first quarter decrease of 11.6 percent, and
GMV decreased 8.5 percent compared with the same period in fiscal
2022. The wind-down of Canadian operations had a negative impact on
total Company net sales of 275 basis points. The second quarter of
2023 included no sales from Canadian operations, compared with a
full quarter of sales from Canadian operations in the second
quarter of 2022. The timing shift of the Anniversary Sale, with
roughly one week falling into the third quarter of 2023 versus one
day in 2022, had a negative impact on net sales of approximately
200 basis points compared with the second quarter of 2022.
- For the Nordstrom banner, net sales decreased 10.1 percent,
improving sequentially from the first quarter decrease of 11.4
percent, and GMV decreased 10.4 percent compared with the same
period in fiscal 2022. The wind-down of Canadian operations had a
negative impact on Nordstrom banner net sales of 400 basis points.
The timing shift of the Anniversary Sale had a negative impact on
Nordstrom banner net sales of approximately 300 basis points
compared with the second quarter of 2022.
- For the Nordstrom Rack banner, net sales decreased 4.1 percent
compared with the same period in fiscal 2022, improving
sequentially from the first quarter decrease of 11.9 percent.
Eliminating store fulfillment for Nordstrom Rack digital orders
during the third quarter of fiscal 2022 negatively impacted second
quarter Rack banner sales by approximately 500 basis points.
- Digital sales decreased 12.9 percent compared with the same
period in fiscal 2022. Collectively, eliminating store fulfillment
for Nordstrom Rack digital orders during the third quarter of
fiscal 2022 and sunsetting Trunk Club during the second quarter of
fiscal 2022 negatively impacted second quarter digital sales by
approximately 500 basis points. The timing shift of the Anniversary
Sale had a negative impact on Company digital sales of
approximately 300 basis points compared with the second quarter of
2022. Digital sales represented 36 percent of total sales during
the quarter.
- Gross profit, as a percentage of net sales, of 35.0 percent
decreased 20 basis points compared with the same period in fiscal
2022 primarily due to deleverage on lower sales, partially offset
by lower buying and occupancy costs.
- Ending inventory decreased 17.5 percent compared with the same
period in fiscal 2022, versus an 8.3 percent decrease in sales,
reflecting continued strong discipline.
- SG&A expenses, as a percentage of net sales, of 32.8
percent was flat compared with the same period in fiscal 2022
primarily due to improvements in variable costs from supply chain
efficiency initiatives and more favorable carrier rates than
expected, and a gain on the sale of a real estate asset. These were
offset by higher labor costs and deleverage from lower sales.
- EBIT was $192 million in the
second quarter of 2023, compared with $202
million during the same period in fiscal 2022. Adjusted EBIT
of $210 million in the second quarter
of 2022 excluded costs associated with the wind-down of Trunk
Club.2
- Interest expense, net, of $26
million decreased from $34
million during the same period in fiscal 2022 due to higher
interest income.
- Income tax expense was $29
million, or 17.2 percent of pretax earnings, compared with
income tax expense of $42 million, or
25.2 percent of pretax earnings, in the same period in fiscal 2022.
The decrease in the second quarter of fiscal 2023 was driven by the
favorable resolution of certain tax matters.
- The Company ended the second quarter with $1.7 billion in available liquidity, including
$885 million in cash and the full
$800 million available on its
revolving line of credit.
STORES UPDATE
To date in fiscal 2023, the Company has opened or relocated nine
stores:
City
|
|
Location
|
|
Square
Footage (000s)
|
|
Timing of
Opening
|
Nordstrom
Rack
|
|
|
|
|
|
|
Los Angeles,
CA
|
|
NOHO West
|
|
26
|
|
April 13,
2023
|
Clovis, CA
|
|
Clovis
Crossing
|
|
31
|
|
April 13,
2023
|
Delray Beach,
FL
|
|
Delray Place
|
|
26
|
|
May 11, 2023
|
Chattanooga,
TN
|
|
The Terrace at Hamilton
Place
|
|
24
|
|
May 18, 2023
|
Las Vegas,
NV
|
|
Best in the
West
|
|
31
|
|
May 18, 2023
|
Birmingham,
AL
|
|
The Summit (relocation
from River Ridge)
|
|
27
|
|
May 25, 2023
|
Wichita, KS
|
|
Bradley Fair
|
|
28
|
|
May 25, 2023
|
San Clemente,
CA
|
|
San Clemente
Plaza
|
|
32
|
|
May 25, 2023
|
Aurora, CO
|
|
Southlands
|
|
30
|
|
August 17,
2023
|
The Company has also announced plans to open the following
stores:
City
|
|
Location
|
|
Square Footage
(000s)
|
|
Timing of
Opening
|
Nordstrom
Rack
|
|
|
|
|
|
|
Union Gap,
WA
|
|
Valley Mall
|
|
28
|
|
Fall 2023
|
Olympia, WA
|
|
Cooper Point
Marketplace
|
|
32
|
|
Fall 2023
|
Salem, OR
|
|
Willamette Town
Center
|
|
25
|
|
Fall 2023
|
Anaheim Hills,
CA
|
|
Anaheim Hills
Festival
|
|
24
|
|
Fall 2023
|
Overland Park,
KS
|
|
Overland
Crossing
|
|
27
|
|
Fall 2023
|
San Luis Obispo,
CA
|
|
SLO
Promenade
|
|
24
|
|
Fall 2023
|
Allen, TX
|
|
The Village at
Allen
|
|
29
|
|
Fall 2023
|
Visalia, CA
|
|
Sequoia Mall
|
|
29
|
|
Fall 2023
|
Denton, TX
|
|
Denton
Crossing
|
|
25
|
|
Fall 2023
|
Sacramento,
CA
|
|
The Promenade at
Sacramento Gateway
|
|
26
|
|
Fall 2023
|
San Antonio,
TX
|
|
Northwoods
|
|
35
|
|
Fall 2023
|
Pinole, CA
|
|
Pinole Vista
Crossing
|
|
23
|
|
Spring 2024
|
Kennesaw,
GA
|
|
Barrett
Place
|
|
25
|
|
Spring 2024
|
Elk Grove,
CA
|
|
The Ridge Elk
Grove
|
|
25
|
|
Spring 2024
|
Gilroy, CA
|
|
Gilroy
Crossing
|
|
25
|
|
Spring 2024
|
Oceanside,
CA
|
|
Pacific Coast
Plaza
|
|
31
|
|
Spring 2024
|
Wheaton, IL
|
|
Danada Square
East
|
|
29
|
|
Spring 2024
|
Snellville,
GA
|
|
Presidential
Markets
|
|
35
|
|
Spring 2024
|
Macedonia,
OH
|
|
Macedonia
Gateway
|
|
28
|
|
Spring 2024
|
Jacksonville Beach,
FL
|
|
South Beach
Regional
|
|
30
|
|
Spring 2024
|
Queen Creek,
AZ
|
|
Queen Creek
Marketplace
|
|
28
|
|
Spring 2024
|
San Mateo,
CA
|
|
Bridgepointe Shopping
Center
|
|
36
|
|
Fall 2024
|
Davis, CA
|
|
The Davis
Collection
|
|
25
|
|
Spring 2025
|
The Company had the following store counts as of
quarter-end:
|
July 29,
2023
|
|
July 30,
2022
|
Nordstrom
|
|
|
|
Nordstrom
– U.S.
|
94
|
|
94
|
Nordstrom
– Canada
|
—
|
|
6
|
Nordstrom Local
service hubs
|
7
|
|
7
|
ASOS |
Nordstrom
|
1
|
|
1
|
Nordstrom
Rack
|
|
|
|
Nordstrom Rack
– U.S.
|
247
|
|
240
|
Nordstrom Rack
– Canada
|
—
|
|
7
|
Last Chance clearance
stores
|
2
|
|
2
|
Total
|
351
|
|
357
|
|
Gross store square
footage
|
26,348,000
|
|
27,555,000
|
During the second quarter, the Company closed one
U.S. Nordstrom Rack store.
FISCAL YEAR 2023 OUTLOOK
The Company reaffirmed its revenue and adjusted financial
outlook for fiscal 2023, which includes a 53rd week:
- Revenue decline, including retail sales and credit card
revenues, of 4.0 to 6.0 percent versus fiscal 2022, including an
approximately 250 basis point negative impact from the wind-down of
Canadian operations and an approximately 130 basis point positive
impact from the 53rd week
- EBIT margin (including the negative impact of charges related
to the wind-down of Canadian operations) of 1.5 to 2.0 percent of
sales
- Adjusted EBIT margin (excluding charges related to the
wind-down of Canadian operations) of 3.7 to 4.2 percent of
sales3
- Income tax rate of approximately 6 percent, including an
approximately 2,100 basis point favorable impact primarily from the
one-time Canada charges
- EPS (including the negative impact of charges related to the
wind-down of Canadian operations) of $0.60 to $1.00,
excluding the impact of share repurchase activity, if any
- Adjusted EPS (excluding charges related to the wind-down of
Canadian operations) of $1.80 to
$2.20, excluding the impact of share
repurchase activity, if any3
CONFERENCE CALL INFORMATION
The Company's senior management will host a conference call to
provide a business update and to discuss second quarter 2023
financial results and fiscal 2023 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 13740522, until the close of business on
August 31, 2023.
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 28,
2023, and our Form 10-Qs for the fiscal quarters ended
April 29, 2023 and July 29, 2023, to be filed with the SEC on or
about September 1, 2023. In addition,
forward-looking statements contained in this release may be
impacted by the actual outcome of events or occurrences related to
the wind-down of business operations in Canada. 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 the discretion of our
board of directors, contractual commitments, market and economic
conditions and applicable Securities and Exchange Commission
rules.
_______________________________
|
1 Adjusted EPS is a
non-GAAP financial measure. Refer to the "Adjusted EBIT, Adjusted
EBITDA, Adjusted EBIT Margin 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, Adjusted EBIT Margin 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 29,
2023
|
|
July 30,
2022
|
|
July 29,
2023
|
|
July 30,
2022
|
Net sales
|
$3,662
|
|
$3,991
|
|
$6,726
|
|
$7,458
|
Credit card revenues,
net
|
110
|
|
104
|
|
227
|
|
207
|
Total
revenues
|
3,772
|
|
4,095
|
|
6,953
|
|
7,665
|
Cost of sales and
related buying and
occupancy costs
|
(2,380)
|
|
(2,586)
|
|
(4,407)
|
|
(4,917)
|
Selling, general and
administrative expenses
|
(1,200)
|
|
(1,307)
|
|
(2,304)
|
|
(2,473)
|
Canada wind-down
costs
|
—
|
|
—
|
|
(309)
|
|
—
|
Earnings (loss) before
interest and income
taxes
|
192
|
|
202
|
|
(67)
|
|
275
|
Interest expense,
net
|
(26)
|
|
(34)
|
|
(54)
|
|
(69)
|
Earnings (loss) before
income taxes
|
166
|
|
168
|
|
(121)
|
|
206
|
Income tax (expense)
benefit
|
(29)
|
|
(42)
|
|
54
|
|
(60)
|
Net earnings
(loss)
|
$137
|
|
$126
|
|
($67)
|
|
$146
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$0.85
|
|
$0.78
|
|
($0.42)
|
|
$0.91
|
Diluted
|
$0.84
|
|
$0.77
|
|
($0.42)
|
|
$0.90
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
161.7
|
|
160.6
|
|
161.3
|
|
160.3
|
Diluted
|
163.2
|
|
162.9
|
|
161.3
|
|
162.9
|
|
|
|
|
|
|
|
|
Percent of net
sales:
|
|
|
|
|
|
|
|
Gross profit
|
35.0 %
|
|
35.2 %
|
|
34.5 %
|
|
34.1 %
|
Selling, general and
administrative expenses
|
32.8 %
|
|
32.8 %
|
|
34.3 %
|
|
33.2 %
|
Earnings (loss) before
interest and income
taxes
|
5.3 %
|
|
5.1 %
|
|
(1.0 %)
|
|
3.7 %
|
NORDSTROM,
INC. CONSOLIDATED BALANCE SHEETS (unaudited;
amounts in millions)
|
|
|
July 29,
2023
|
|
January 28,
2023
|
|
July 30,
2022
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$885
|
|
$687
|
|
$494
|
Accounts receivable,
net
|
246
|
|
265
|
|
300
|
Merchandise
inventories
|
1,979
|
|
1,941
|
|
2,399
|
Prepaid expenses and
other current assets
|
400
|
|
316
|
|
408
|
Total current
assets
|
3,510
|
|
3,209
|
|
3,601
|
|
|
|
|
|
|
Land, property and
equipment (net of accumulated depreciation of
$8,254, $8,289 and $7,943)
|
3,181
|
|
3,351
|
|
3,443
|
Operating lease
right-of-use assets
|
1,381
|
|
1,470
|
|
1,466
|
Goodwill
|
249
|
|
249
|
|
249
|
Other assets
|
480
|
|
466
|
|
403
|
Total
assets
|
$8,801
|
|
$8,745
|
|
$9,162
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$1,434
|
|
$1,238
|
|
$1,747
|
Accrued salaries,
wages and related benefits
|
375
|
|
291
|
|
302
|
Current portion of
operating lease liabilities
|
224
|
|
258
|
|
253
|
Other current
liabilities
|
1,264
|
|
1,203
|
|
1,254
|
Current portion of
long-term debt
|
249
|
|
—
|
|
—
|
Total current
liabilities
|
3,546
|
|
2,990
|
|
3,556
|
|
|
|
|
|
|
Long-term debt,
net
|
2,609
|
|
2,856
|
|
2,853
|
Non-current operating
lease liabilities
|
1,392
|
|
1,526
|
|
1,526
|
Other
liabilities
|
580
|
|
634
|
|
564
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Common stock, no par
value: 1,000 shares authorized; 161.7,
160.1 and 159.8 shares issued and
outstanding
|
3,388
|
|
3,353
|
|
3,314
|
Accumulated
deficit
|
(2,717)
|
|
(2,588)
|
|
(2,601)
|
Accumulated other
comprehensive gain (loss)
|
3
|
|
(26)
|
|
(50)
|
Total shareholders'
equity
|
674
|
|
739
|
|
663
|
Total liabilities
and shareholders' equity
|
$8,801
|
|
$8,745
|
|
$9,162
|
NORDSTROM,
INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited; amounts in millions)
|
|
|
Six Months
Ended
|
|
July 29,
2023
|
|
July 30,
2022
|
Operating
Activities
|
|
|
|
Net (loss)
earnings
|
($67)
|
|
$146
|
Adjustments to
reconcile net (loss) earnings to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expenses
|
285
|
|
301
|
Canada wind-down
costs
|
220
|
|
—
|
Right-of-use asset
amortization
|
86
|
|
93
|
Deferred income taxes,
net
|
(17)
|
|
(31)
|
Stock-based
compensation expense
|
28
|
|
39
|
Other, net
|
(47)
|
|
(41)
|
Change in operating
assets and liabilities:
|
|
|
|
Merchandise
inventories
|
(78)
|
|
(38)
|
Other current and
noncurrent assets
|
(81)
|
|
(116)
|
Accounts
payable
|
99
|
|
133
|
Accrued salaries,
wages and related benefits
|
89
|
|
(82)
|
Lease
liabilities
|
(134)
|
|
(133)
|
Other current and
noncurrent liabilities
|
82
|
|
102
|
Net cash provided by
operating activities
|
465
|
|
373
|
|
|
|
|
Investing
Activities
|
|
|
|
Capital
expenditures
|
(225)
|
|
(215)
|
Decrease in cash and
cash equivalents resulting from Canada deconsolidation
|
(33)
|
|
—
|
Proceeds from the sale
of assets and other, net
|
29
|
|
82
|
Net cash used in
investing activities
|
(229)
|
|
(133)
|
|
|
|
|
Financing
Activities
|
|
|
|
Change in cash book
overdrafts
|
18
|
|
36
|
Cash dividends
paid
|
(61)
|
|
(60)
|
Payments for
repurchase of common stock
|
(1)
|
|
(35)
|
Proceeds from
issuances under stock compensation plans
|
13
|
|
9
|
Other, net
|
(7)
|
|
(18)
|
Net cash used in
financing activities
|
(38)
|
|
(68)
|
|
|
|
|
Net increase in cash
and cash equivalents
|
198
|
|
172
|
Cash and cash
equivalents at beginning of period
|
687
|
|
322
|
Cash and cash
equivalents at end of period
|
$885
|
|
$494
|
NORDSTROM, INC.
ADJUSTED EBIT,
ADJUSTED EBITDA, ADJUSTED EBIT MARGIN AND ADJUSTED
EPS
(NON-GAAP FINANCIAL
MEASURES)
(unaudited; amounts in millions, except per share
amounts)
The following 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, adjusted EBIT margin 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 (loss). The financial measure calculated
under GAAP which is most directly comparable to adjusted EBIT
margin is net earnings as a percent of net sales. The financial
measure calculated under GAAP which is most directly comparable to
adjusted EPS is diluted EPS.
Adjusted EBIT, adjusted EBITDA, adjusted EBIT margin 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, net earnings as a percent of net sales,
operating cash flows, earnings per share, earnings 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 and net earnings as a percent of
net sales to adjusted EBIT margin:
|
Quarter
Ended
|
|
Six Months
Ended
|
|
July 29,
2023
|
|
July 30,
2022
|
|
July 29,
2023
|
|
July 30,
2022
|
Net earnings
(loss)
|
$137
|
|
$126
|
|
($67)
|
|
$146
|
Income tax expense
(benefit)
|
29
|
|
42
|
|
(54)
|
|
60
|
Interest expense,
net
|
26
|
|
34
|
|
54
|
|
69
|
Earnings (loss) before
interest and income
taxes
|
192
|
|
202
|
|
(67)
|
|
275
|
Canada wind-down
costs
|
—
|
|
—
|
|
309
|
|
—
|
Trunk Club wind-down
costs
|
—
|
|
8
|
|
—
|
|
18
|
Gain on sale of
interest in a corporate office
building
|
—
|
|
—
|
|
—
|
|
(51)
|
Adjusted
EBIT
|
192
|
|
210
|
|
242
|
|
242
|
Depreciation and
amortization expenses
|
141
|
|
149
|
|
285
|
|
301
|
Amortization of
developer reimbursements
|
(17)
|
|
(18)
|
|
(35)
|
|
(37)
|
Adjusted
EBITDA
|
$316
|
|
$341
|
|
$492
|
|
$506
|
|
|
|
|
|
|
|
|
Net
sales
|
$3,662
|
|
$3,991
|
|
$6,726
|
|
$7,458
|
Net earnings
(loss) as a % of net sales
|
3.8 %
|
|
3.1 %
|
|
(1.0 %)
|
|
2.0 %
|
EBIT margin
%
|
5.3 %
|
|
5.1 %
|
|
(1.0 %)
|
|
3.7 %
|
Adjusted EBIT margin
%
|
5.3 %
|
|
5.3 %
|
|
3.6 %
|
|
3.2 %
|
The following is a reconciliation of diluted EPS to adjusted
EPS:
|
Quarter
Ended
|
|
Six Months
Ended
|
|
July 29,
2023
|
|
July 30,
2022
|
|
July 29,
2023
|
|
July 30,
2022
|
Diluted
EPS
|
$0.84
|
|
$0.77
|
|
($0.42)
|
|
$0.90
|
Canada wind-down
costs
|
—
|
|
—
|
|
1.91
|
|
—
|
Trunk Club wind-down
costs
|
—
|
|
0.05
|
|
—
|
|
0.11
|
Gain on sale of
interest in a corporate office
building
|
—
|
|
—
|
|
—
|
|
(0.31)
|
Income tax impact on
adjustments1
|
—
|
|
(0.01)
|
|
(0.58)
|
|
0.05
|
Adjusted
EPS
|
$0.84
|
|
$0.81
|
|
$0.91
|
|
$0.75
|
|
|
1
|
The income tax impact
of non-GAAP adjustments is calculated using the estimated tax rate
for the respective non-GAAP adjustment.
|
NORDSTROM, INC.
SUMMARY OF NET
SALES
(unaudited; amounts in millions)
Our Nordstrom brand includes Nordstrom.com, Nordstrom U.S.
stores, Nordstrom Local and ASOS | Nordstrom. Nordstrom also
included Canada operations prior
to March 2, 2023, inclusive of
Nordstrom.ca, Nordstrom Canadian stores and Nordstrom Rack Canadian
stores, and TrunkClub.com prior to October
2022. Our Nordstrom Rack brand includes NordstromRack.com,
Nordstrom Rack U.S. stores and Last Chance clearance stores. The
following table summarizes net sales for the quarter and six months
ended July 29, 2023, compared with
the quarter and six months ended July 30,
2022:
|
Quarter
Ended
|
|
Six Months
Ended
|
|
July 29,
2023
|
|
July 30,
2022
|
|
July 29,
2023
|
|
July 30,
2022
|
Net
sales:
|
|
|
|
|
|
|
|
Nordstrom
|
$2,491
|
|
$2,771
|
|
$4,518
|
|
$5,060
|
Nordstrom
Rack
|
1,171
|
|
1,220
|
|
2,208
|
|
2,398
|
Total net
sales
|
$3,662
|
|
$3,991
|
|
$6,726
|
|
$7,458
|
|
|
|
|
|
|
|
|
Net sales (decrease)
increase:
|
|
|
|
|
|
|
|
Nordstrom
|
(10.1 %)
|
|
14.7 %
|
|
(10.7 %)
|
|
18.5 %
|
Nordstrom
Rack
|
(4.1 %)
|
|
6.3 %
|
|
(7.9 %)
|
|
8.2 %
|
Total
Company
|
(8.3 %)
|
|
12.0 %
|
|
(9.8 %)
|
|
15.0 %
|
|
|
|
|
|
|
|
|
Digital sales as %
of total net sales1
|
36 %
|
|
38 %
|
|
36 %
|
|
38 %
|
|
|
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.
FISCAL YEAR 2023
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 2023 excludes the
impacts from certain items that we do not consider representative
of our core operating performance. These items include charges from
the wind-down of Canadian operations recognized in the first
quarter of 2023.
The following is a reconciliation of expected net earnings as a
percent of net sales to expected adjusted EBIT margin included
within our Fiscal Year 2023 Outlook:
|
53 Weeks Ending
February 3, 2024
|
|
Low
|
|
High
|
Expected net
earnings as a % of net sales
|
0.7 %
|
|
1.1 %
|
Income tax
expense
|
— %
|
|
0.1 %
|
Interest expense,
net
|
0.8 %
|
|
0.8 %
|
Expected EBIT as a % of
net sales
|
1.5 %
|
|
2.0 %
|
|
|
|
|
Canada wind-down
costs
|
2.2 %
|
|
2.2 %
|
Expected adjusted
EBIT margin
|
3.7 %
|
|
4.2 %
|
The following is a reconciliation of expected diluted EPS to
expected adjusted EPS included within our Fiscal Year 2023
Outlook:
|
53 Weeks Ending
February 3, 2024
|
|
Low
|
|
High
|
Expected diluted
EPS
|
$0.60
|
|
$1.00
|
Canada wind-down
costs
|
1.89
|
|
1.89
|
Income tax impact on
adjustments
|
(0.69)
|
|
(0.69)
|
Expected adjusted
EPS
|
$1.80
|
|
$2.20
|
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.
Beginning in the second quarter of 2023, the Adjusted ROIC
calculation was updated to exclude certain items that we do not
consider representative of our core operating performance. Refer to
non-operating related adjustments included within adjusted net
operating profit and adjusted average invested capital. Prior
periods have been modified to conform with current period
presentation.
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 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 ROIC is return on assets. The following
shows the components to reconcile the return on assets calculation
to Adjusted ROIC:
|
Four Quarters
Ended
|
|
July 29,
2023
|
|
July 30,
2022
|
Net
earnings
|
$32
|
|
$410
|
Income tax (benefit)
expense
|
(22)
|
|
153
|
Interest
expense
|
137
|
|
140
|
Earnings before
interest and income tax expense
|
147
|
|
703
|
|
|
|
|
Operating lease
interest1
|
85
|
|
84
|
Non-operating related
adjustments2
|
380
|
|
(32)
|
Adjusted net operating
profit
|
612
|
|
755
|
Adjusted estimated
income tax expense3
|
(141)
|
|
(206)
|
Adjusted net
operating profit after tax
|
$471
|
|
$549
|
|
|
|
|
Average total
assets
|
$8,986
|
|
$9,194
|
Average non-current
deferred property incentives in excess of operating lease
right-of-use
(ROU) assets4
|
(177)
|
|
(214)
|
Average non-interest
bearing current liabilities
|
(3,149)
|
|
(3,396)
|
Non-operating related
adjustments5
|
184
|
|
(15)
|
Adjusted average
invested capital
|
$5,844
|
|
$5,569
|
|
|
|
|
Return on
assets
|
0.4 %
|
|
4.5 %
|
Adjusted
ROIC
|
8.1 %
|
|
9.9 %
|
|
|
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
|
Non-operating related
adjustments primarily relate to the wind-down of our Canadian
operations and a supply chain impairment charge for the four
quarters ended July 29, 2023 and the gain on sale of interest in a
corporate office building for the four quarters ended July 30,
2022. See the Adjusted EBIT and Adjusted EBITDA section, as well as
our 2022 Annual Report, for detailed information of certain
non-operating related adjustments.
|
3
|
Adjusted estimated
income tax expense is calculated by multiplying the adjusted net
operating profit by the adjusted effective tax rate (which removes
the impact of non-operating related adjustments) for the trailing
twelve-month periods ended July 29, 2023 and July 30, 2022. The
adjusted effective tax rate is calculated by dividing adjusted
income tax by adjusted earnings before income taxes for the same
trailing twelve-month periods.
|
4
|
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.
|
5
|
Non-operating related
adjustments primarily relate to the wind-down of our Canadian
operations for the trailing twelve-month period ended July 29, 2023
and the gain on sale of interest in a corporate office building for
the trailing twelve-month period ended July 30, 2022.
|
NORDSTROM, INC.
ADJUSTED DEBT TO
EBITDAR (NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts 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 ratings and
borrowing costs. This metric is calculated in accordance with the
updates in 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 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 29,
2023
|
Debt
|
$2,858
|
Operating lease
liabilities
|
1,616
|
Adjusted
debt
|
$4,474
|
|
|
|
Four Quarters
Ended
July 29, 2023
|
Net
earnings
|
$32
|
Income tax
benefit
|
(22)
|
Interest expense,
net
|
114
|
Earnings before
interest and income taxes
|
124
|
|
|
Depreciation and
amortization expenses
|
588
|
Operating lease
cost1
|
272
|
Amortization of
developer reimbursements2
|
70
|
Canada wind-down
costs
|
309
|
Other Revolver covenant
adjustments3
|
108
|
Adjusted
EBITDAR
|
$1,471
|
|
|
Debt to Net
Earnings
|
88.8
|
Adjusted debt to
EBITDAR
|
3.0
|
|
|
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, certain non-cash charges
and other gains and losses where relevant. For the four quarters
ended July 29, 2023, other Revolver covenant adjustments primarily
include a supply chain impairment charge. See our 2022 Annual
Report for detailed information of certain non-operating related
adjustments.
|
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 29,
2023
|
|
July 30,
2022
|
Net cash provided by
operating activities
|
$465
|
|
$373
|
Capital
expenditures
|
(225)
|
|
(215)
|
Change in cash book
overdrafts
|
18
|
|
36
|
Free Cash
Flow
|
$258
|
|
$194
|
INVESTOR
CONTACT:
|
|
Sara Penner
|
|
|
Nordstrom,
Inc.
|
|
|
InvRelations@Nordstrom.com
|
|
|
|
MEDIA
CONTACT:
|
|
Stephanie
Corzett
|
|
|
Nordstrom,
Inc.
|
|
|
NordstromPR@Nordstrom.com
|
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SOURCE Nordstrom, Inc.