- Third quarter total revenue of $3.3
billion
- Reports EPS of $0.41, adjusted
EPS of $0.251
- Reaffirms fiscal 2023 revenue outlook, narrows EPS
range
SEATTLE, Nov. 21,
2023 /PRNewswire/ -- Nordstrom, Inc. (NYSE: JWN)
today reported third quarter net earnings of $67 million, or earnings per diluted share
("EPS") of $0.41, and earnings before
interest and taxes ("EBIT") of $102
million. Excluding a favorable true-up related to the
wind-down of Canadian operations, the Company reported adjusted EPS
of $0.25.1
For the third quarter ended October 28, 2023, net
sales decreased 6.8 percent versus the same period in fiscal 2022.
Gross merchandise value ("GMV") decreased 7.1 percent. Third
quarter net sales include a 270 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 positive 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 6 percent. During the quarter, Nordstrom banner net
sales decreased 9.4 percent and GMV decreased 9.8 percent. Net
sales for Nordstrom Rack decreased 1.8 percent. During the third
quarter, active grew by double-digits, and beauty and accessories
were up by low single-digits, versus 2022.
"In the third quarter we continued to make progress against our
priorities, and we're especially pleased with the resulting
improvements in gross margin and earnings," said Erik Nordstrom, chief executive officer of
Nordstrom, Inc. "Given continued uncertainty and softening consumer
spend, we're remaining agile and focused on serving our
customers."
"Thanks to solid execution by our merchants, we're heading into
holiday in a favorable inventory position across both banners,"
said Pete Nordstrom, president of
Nordstrom, Inc. "We have a strong and relevant assortment of brands
and products we know our customers respond to, and we're excited to
help them celebrate the moments that matter this holiday
season."
As previously announced, on November 15, 2023, the board of
directors declared a quarterly cash dividend of $0.19 per share, payable on December 13,
2023, to shareholders of record at the close of business on
November 28, 2023.
THIRD QUARTER 2023 SUMMARY
- Total Company net sales decreased 6.8 percent and GMV decreased
7.1 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 270 basis points. 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 positive impact on
net sales of approximately 200 basis points compared with the third
quarter of 2022.
- For the Nordstrom banner, net sales decreased 9.4 percent and
GMV decreased 9.8 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 410 basis points. The timing shift of
the Anniversary Sale had a positive impact on Nordstrom banner net
sales of approximately 300 basis points compared with the third
quarter of 2022.
- For the Nordstrom Rack banner, net sales decreased 1.8 percent
compared with the same period in fiscal 2022. Eliminating store
fulfillment for Nordstrom Rack digital orders during the third
quarter of fiscal 2022 negatively impacted third quarter Rack
banner sales by approximately 100 basis points.
- Digital sales decreased 11.3 percent compared with the same
period in fiscal 2022. Eliminating store fulfillment for Nordstrom
Rack digital orders during the third quarter of fiscal 2022
negatively impacted third quarter digital sales by approximately
100 basis points. The timing shift of the Anniversary Sale had a
positive impact on Company digital sales of approximately 400 basis
points compared with the third quarter of 2022. Digital sales
represented 34 percent of total sales during the quarter.
- Gross profit, as a percentage of net sales, of 35.0 percent
increased 180 basis points compared with the same period in fiscal
2022 primarily due to lower markdowns, increased inventory
productivity and lower buying and occupancy costs, partially offset
by deleverage on lower sales.
- Ending inventory decreased 8.8 percent compared with the same
period in fiscal 2022, versus a 6.8 percent decrease in sales.
- Selling, general and administrative ("SG&A") expenses, as a
percentage of net sales, of 36.3 percent decreased 5 basis points
compared with the same period in fiscal 2022. SG&A expenses
increased 200 basis points when compared with adjusted SG&A
expenses in fiscal 2022, primarily due to deleverage from lower
sales and higher labor costs, partially offset by improvements in
variable costs from supply chain efficiency initiatives. Adjusted
SG&A expenses, as a percentage of net sales, of 34.3 percent in
the third quarter of fiscal 2022 excluded a $70 million supply chain technology and related
asset impairment charge.
- EBIT was $102 million in the
third quarter of 2023, compared with $3
million during the same period in fiscal 2022. Adjusted EBIT
of $77 million in the third quarter
of 2023 excluded a $25 million
favorable true-up related to the wind-down of Canadian operations.
Adjusted EBIT of $73 million in the
third quarter of 2022 excluded an impairment charge associated with
supply chain technology and related assets.2
- Interest expense, net, of $24
million decreased from $32
million during the same period in fiscal 2022 due to higher
interest income.
- Income tax expense was $11
million, or 14.2 percent of pretax earnings, compared with
income tax benefit of $9 million, or
30.6 percent of pretax loss, in the same period in fiscal 2022. The
decrease in the rate in the third quarter of fiscal 2023 was driven
by additional tax benefits associated with the wind-down of
Canadian operations.
- The Company ended the third quarter with $1.2 billion in available liquidity, including
$375 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 20
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
|
|
29
|
|
August 17,
2023
|
Olympia, WA
|
|
Cooper Point
Marketplace
|
|
32
|
|
September 7,
2023
|
San Antonio,
TX
|
|
Northwoods
|
|
35
|
|
September 7,
2023
|
Union Gap,
WA
|
|
Valley Mall
|
|
28
|
|
September 14,
2023
|
Salem, OR
|
|
Willamette Town
Center
|
|
25
|
|
September 21,
2023
|
Visalia, CA
|
|
Sequoia Mall
|
|
29
|
|
October 5,
2023
|
Denton, TX
|
|
Denton
Crossing
|
|
25
|
|
October 5,
2023
|
Overland Park,
KS
|
|
Overland
Crossing
|
|
27
|
|
October 12,
2023
|
Allen, TX
|
|
The Village at
Allen
|
|
29
|
|
October 19,
2023
|
San Luis Obispo,
CA
|
|
SLO
Promenade
|
|
24
|
|
October 26,
2023
|
Sacramento,
CA
|
|
The Promenade at
Sacramento Gateway
|
|
26
|
|
October 26,
2023
|
Anaheim Hills,
CA
|
|
Anaheim Hills
Festival
|
|
24
|
|
November 9,
2023
|
The Company has also announced plans to open the following
stores:
City
|
|
Location
|
|
Square
Footage
(000s)
|
|
Timing of
Opening
|
Nordstrom
Rack
|
|
|
|
|
|
|
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
|
Bay Shore,
NY
|
|
Gardiner Manor
Mall
|
|
24
|
|
Spring 2024
|
San Mateo,
CA
|
|
Bridgepointe Shopping
Center
|
|
36
|
|
Fall 2024
|
San Diego,
CA
|
|
Clairemont Town
Square
|
|
26
|
|
Fall 2024
|
Mason, OH
|
|
Deerfield Towne
Center
|
|
30
|
|
Fall 2024
|
San Antonio,
TX
|
|
Bandera
Pointe
|
|
25
|
|
Fall 2024
|
Mooresville,
NC
|
|
Mooresville
Crossing
|
|
28
|
|
Fall 2024
|
Davis, CA
|
|
The Davis
Collection
|
|
25
|
|
Spring 2025
|
The Company had the following store counts as of
quarter-end:
|
October 28,
2023
|
|
October 29,
2022
|
Nordstrom
|
|
|
|
Nordstrom
– U.S.
|
93
|
|
94
|
Nordstrom
– Canada
|
—
|
|
6
|
Nordstrom Local
service hubs
|
6
|
|
7
|
ASOS |
Nordstrom
|
1
|
|
1
|
Nordstrom
Rack
|
|
|
|
Nordstrom Rack
– U.S.
|
258
|
|
242
|
Nordstrom Rack
– Canada
|
—
|
|
7
|
Last Chance clearance
stores
|
2
|
|
2
|
Total
|
360
|
|
359
|
|
Gross store square
footage
|
26,305,000
|
|
27,609,000
|
During the third quarter, the Company closed one U.S. Nordstrom
store and one Nordstrom Local service hub.
FISCAL YEAR 2023 OUTLOOK
The Company updated its financial outlook for fiscal 2023, which
includes a 53rd week and reflects the true-up related to the
wind-down of Canadian operations and related tax impacts recorded
in the third quarter:
- 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 1.8 to 2.1 percent of
sales
- Adjusted EBIT margin (excluding charges related to the
wind-down of Canadian operations) of 3.8 to 4.1 percent of
sales3
- Income tax rate of approximately 21 percent, including an
approximately 800 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 $0.74 to $0.94,
excluding the impact of share repurchase activity, if any
- Adjusted EPS (excluding charges related to the wind-down of
Canadian operations) of $1.90 to
$2.10, 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 third quarter 2023
financial results and fiscal 2023 outlook at 4:45 p.m.
EST 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 13742508, until the close of business on
November 28, 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, July 29, 2023 and
October 28, 2023, to be filed with
the SEC on or about December 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 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
|
|
Nine Months
Ended
|
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
Net sales
|
$3,200
|
|
$3,433
|
|
$9,926
|
|
$10,891
|
Credit card revenues,
net
|
120
|
|
113
|
|
347
|
|
320
|
Total
revenues
|
3,320
|
|
3,546
|
|
10,273
|
|
11,211
|
Cost of sales and
related buying and occupancy costs
|
(2,080)
|
|
(2,294)
|
|
(6,488)
|
|
(7,211)
|
Selling, general and
administrative expenses
|
(1,163)
|
|
(1,249)
|
|
(3,466)
|
|
(3,722)
|
Canada wind-down
costs
|
25
|
|
—
|
|
(284)
|
|
—
|
Earnings before
interest and income taxes
|
102
|
|
3
|
|
35
|
|
278
|
Interest expense,
net
|
(24)
|
|
(32)
|
|
(78)
|
|
(101)
|
Earnings (loss) before
income taxes
|
78
|
|
(29)
|
|
(43)
|
|
177
|
Income tax (expense)
benefit
|
(11)
|
|
9
|
|
43
|
|
(51)
|
Net earnings
(loss)
|
$67
|
|
($20)
|
|
$—
|
|
$126
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$0.41
|
|
($0.13)
|
|
$—
|
|
$0.79
|
Diluted
|
$0.41
|
|
($0.13)
|
|
$—
|
|
$0.77
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
162.0
|
|
159.5
|
|
161.5
|
|
160.1
|
Diluted
|
163.6
|
|
159.5
|
|
161.5
|
|
162.3
|
|
|
|
|
|
|
|
|
Percent of net
sales:
|
|
|
|
|
|
|
|
Gross
profit
|
35.0 %
|
|
33.2 %
|
|
34.6 %
|
|
33.8 %
|
Selling, general and
administrative expenses
|
36.3 %
|
|
36.4 %
|
|
34.9 %
|
|
34.2 %
|
Earnings before
interest and income taxes
|
3.2 %
|
|
0.1 %
|
|
0.4 %
|
|
2.6 %
|
NORDSTROM,
INC.
CONSOLIDATED BALANCE
SHEETS
(unaudited; amounts in
millions)
|
|
|
October 28,
2023
|
|
January 28,
2023
|
|
October 29,
2022
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$375
|
|
$687
|
|
$293
|
Accounts receivable,
net
|
322
|
|
265
|
|
288
|
Merchandise
inventories
|
2,626
|
|
1,941
|
|
2,878
|
Prepaid expenses and
other current assets
|
392
|
|
316
|
|
348
|
Total current
assets
|
3,715
|
|
3,209
|
|
3,807
|
|
|
|
|
|
|
Land, property and
equipment (net of accumulated depreciation of
$8,258, $8,289 and $8,135)
|
3,187
|
|
3,351
|
|
3,373
|
Operating lease
right-of-use assets
|
1,402
|
|
1,470
|
|
1,490
|
Goodwill
|
249
|
|
249
|
|
249
|
Other assets
|
460
|
|
466
|
|
476
|
Total
assets
|
$9,013
|
|
$8,745
|
|
$9,395
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Borrowings under
revolving line of credit
|
$—
|
|
$—
|
|
$100
|
Accounts
payable
|
1,890
|
|
1,238
|
|
2,073
|
Accrued salaries,
wages and related benefits
|
245
|
|
291
|
|
242
|
Current portion of
operating lease liabilities
|
232
|
|
258
|
|
256
|
Other current
liabilities
|
1,092
|
|
1,203
|
|
1,168
|
Current portion of
long-term debt
|
250
|
|
—
|
|
—
|
Total current
liabilities
|
3,709
|
|
2,990
|
|
3,839
|
|
|
|
|
|
|
Long-term debt,
net
|
2,611
|
|
2,856
|
|
2,855
|
Non-current operating
lease liabilities
|
1,403
|
|
1,526
|
|
1,544
|
Other
liabilities
|
561
|
|
634
|
|
551
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Common stock, no par
value: 1,000 shares authorized; 162.3, 160.1
and 159.7 shares issued and outstanding
|
3,407
|
|
3,353
|
|
3,334
|
Accumulated
deficit
|
(2,681)
|
|
(2,588)
|
|
(2,669)
|
Accumulated other
comprehensive gain (loss)
|
3
|
|
(26)
|
|
(59)
|
Total shareholders'
equity
|
729
|
|
739
|
|
606
|
Total liabilities
and shareholders' equity
|
$9,013
|
|
$8,745
|
|
$9,395
|
NORDSTROM,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited; amounts in
millions)
|
|
|
Nine Months
Ended
|
|
October 28,
2023
|
|
October 29,
2022
|
Operating
Activities
|
|
|
|
Net earnings
|
$—
|
|
$126
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expenses
|
430
|
|
453
|
Canada wind-down
costs
|
207
|
|
—
|
Asset
impairment
|
—
|
|
80
|
Right-of-use asset
amortization
|
132
|
|
141
|
Deferred income taxes,
net
|
2
|
|
(85)
|
Stock-based
compensation expense
|
41
|
|
50
|
Other, net
|
(61)
|
|
(53)
|
Change in operating
assets and liabilities:
|
|
|
|
Merchandise
inventories
|
(687)
|
|
(550)
|
Other current and
noncurrent assets
|
(140)
|
|
(61)
|
Accounts
payable
|
509
|
|
469
|
Accrued salaries,
wages and related benefits
|
(41)
|
|
(142)
|
Lease
liabilities
|
(203)
|
|
(201)
|
Other current and
noncurrent liabilities
|
(82)
|
|
13
|
Net cash provided by
operating activities
|
107
|
|
240
|
|
|
|
|
Investing
Activities
|
|
|
|
Capital
expenditures
|
(375)
|
|
(325)
|
Decrease in cash and
cash equivalents resulting from Canada deconsolidation
|
(33)
|
|
—
|
Proceeds from the sale
of assets and other, net
|
32
|
|
82
|
Net cash used in
investing activities
|
(376)
|
|
(243)
|
|
|
|
|
Financing
Activities
|
|
|
|
Proceeds from
revolving line of credit
|
—
|
|
100
|
Change in cash book
overdrafts
|
37
|
|
21
|
Cash dividends
paid
|
(92)
|
|
(90)
|
Payments for
repurchase of common stock
|
(1)
|
|
(53)
|
Proceeds from
issuances under stock compensation plans
|
19
|
|
18
|
Other, net
|
(6)
|
|
(19)
|
Net cash used in
financing activities
|
(43)
|
|
(23)
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
—
|
|
(3)
|
Net decrease in cash
and cash equivalents
|
(312)
|
|
(29)
|
Cash and cash
equivalents at beginning of period
|
687
|
|
322
|
Cash and cash
equivalents at end of period
|
$375
|
|
$293
|
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
|
|
Nine Months
Ended
|
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
Net earnings
(loss)
|
$67
|
|
($20)
|
|
$—
|
|
$126
|
Income tax expense
(benefit)
|
11
|
|
(9)
|
|
(43)
|
|
51
|
Interest expense,
net
|
24
|
|
32
|
|
78
|
|
101
|
Earnings before
interest and income taxes
|
102
|
|
3
|
|
35
|
|
278
|
Canada wind-down
costs
|
(25)
|
|
—
|
|
284
|
|
—
|
Supply chain
impairment
|
—
|
|
70
|
|
—
|
|
70
|
Trunk Club wind-down
costs
|
—
|
|
—
|
|
—
|
|
18
|
Gain on sale of
interest in a corporate office building
|
—
|
|
—
|
|
—
|
|
(51)
|
Adjusted
EBIT
|
77
|
|
73
|
|
319
|
|
315
|
Depreciation and
amortization expenses
|
145
|
|
152
|
|
430
|
|
453
|
Amortization of
developer reimbursements
|
(17)
|
|
(18)
|
|
(52)
|
|
(54)
|
Adjusted
EBITDA
|
$205
|
|
$207
|
|
$697
|
|
$714
|
|
|
|
|
|
|
|
|
Net
sales
|
$3,200
|
|
$3,433
|
|
$9,926
|
|
$10,891
|
Net earnings
(loss) as a % of net sales
|
2.1 %
|
|
(0.6 %)
|
|
— %
|
|
1.2 %
|
EBIT margin
%
|
3.2 %
|
|
0.1 %
|
|
0.4 %
|
|
2.6 %
|
Adjusted EBIT margin
%
|
2.4 %
|
|
2.1 %
|
|
3.2 %
|
|
2.9 %
|
The following is a reconciliation of diluted EPS to adjusted
EPS:
|
Quarter
Ended
|
|
Nine Months
Ended
|
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
Diluted
EPS
|
$0.41
|
|
($0.13)
|
|
$—
|
|
$0.77
|
Canada wind-down
costs
|
(0.15)
|
|
—
|
|
1.74
|
|
—
|
Supply chain
impairment
|
—
|
|
0.44
|
|
—
|
|
0.44
|
Trunk Club wind-down
costs
|
—
|
|
—
|
|
—
|
|
0.11
|
Gain on sale of
interest in a corporate office building
|
—
|
|
—
|
|
—
|
|
(0.31)
|
Income tax impact on
adjustments1
|
(0.01)
|
|
(0.11)
|
|
(0.58)
|
|
(0.06)
|
Adjusted
EPS
|
$0.25
|
|
$0.20
|
|
$1.16
|
|
$0.95
|
|
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 nine
months ended October 28, 2023,
compared with the quarter and nine months ended October 29, 2022:
|
Quarter
Ended
|
|
Nine Months
Ended
|
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
Net
sales:
|
|
|
|
|
|
|
|
Nordstrom
|
$2,051
|
|
$2,264
|
|
$6,570
|
|
$7,324
|
Nordstrom
Rack
|
1,149
|
|
1,169
|
|
3,356
|
|
3,567
|
Total net
sales
|
$3,200
|
|
$3,433
|
|
$9,926
|
|
$10,891
|
|
|
|
|
|
|
|
|
Net sales (decrease)
increase:
|
|
|
|
|
|
|
|
Nordstrom
|
(9.4 %)
|
|
(3.4 %)
|
|
(10.3 %)
|
|
10.7 %
|
Nordstrom
Rack
|
(1.8 %)
|
|
(1.9 %)
|
|
(5.9 %)
|
|
4.7 %
|
Total
Company
|
(6.8 %)
|
|
(2.9 %)
|
|
(8.9 %)
|
|
8.7 %
|
|
|
|
|
|
|
|
|
Digital sales as %
of total net sales1
|
34 %
|
|
34 %
|
|
35 %
|
|
37 %
|
|
|
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 nine months
ended October 28, 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
|
0.9 %
|
|
1.1 %
|
Income tax
expense
|
0.2 %
|
|
0.3 %
|
Interest expense,
net
|
0.7 %
|
|
0.7 %
|
Expected EBIT as a % of
net sales
|
1.8 %
|
|
2.1 %
|
|
|
|
|
Canada wind-down
costs
|
2.0 %
|
|
2.0 %
|
Expected adjusted
EBIT margin
|
3.8 %
|
|
4.1 %
|
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
|
$0.74
|
|
$0.94
|
Canada wind-down
costs
|
1.74
|
|
1.74
|
Income tax impact on
adjustments
|
(0.58)
|
|
(0.58)
|
Expected adjusted
EPS
|
$1.90
|
|
$2.10
|
NORDSTROM, INC.
ADJUSTED RETURN ON
INVESTED CAPITAL ("ADJUSTED ROIC")
(NON-GAAP FINANCIAL
MEASURE)
(unaudited; 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.
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 after tax 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
|
|
October 28,
2023
|
|
October 29,
2022
|
Net
earnings
|
$119
|
|
$326
|
Income tax (benefit)
expense
|
(2)
|
|
117
|
Interest
expense
|
136
|
|
138
|
Earnings before
interest and income tax expense
|
253
|
|
581
|
|
|
|
|
Operating lease
interest1
|
86
|
|
85
|
Non-operating related
adjustments2
|
284
|
|
38
|
Adjusted net operating
profit
|
623
|
|
704
|
Adjusted estimated
income tax expense3
|
(144)
|
|
(186)
|
Adjusted net
operating profit after tax
|
$479
|
|
$518
|
|
|
|
|
Average total
assets
|
$8,956
|
|
$9,227
|
Average non-current
deferred property incentives in excess of operating lease
right-of-use
(ROU) assets4
|
(167)
|
|
(205)
|
Average non-interest
bearing current liabilities
|
(3,134)
|
|
(3,369)
|
Non-operating related
adjustments5
|
294
|
|
(7)
|
Adjusted average
invested capital
|
$5,949
|
|
$5,646
|
|
|
|
|
Return on
assets
|
1.3 %
|
|
3.5 %
|
Adjusted
ROIC
|
8.1 %
|
|
9.2 %
|
|
|
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 for the four quarters ended October 28, 2023 and a
supply chain impairment charge partially offset by the gain on sale
of our interest in a corporate office building for the four
quarters ended October 29, 2022. See the Adjusted EBIT and Adjusted
EBITDA section, as well as our 2022 Annual Report, for detailed
information on 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 October 28, 2023 and October 29, 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 noncurrent 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 October 28,
2023 and a supply chain impairment charge partially offset by the
gain on sale of our interest in a corporate office building for the
trailing twelve-month period ended October 29, 2022.
|
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 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:
|
October 28,
2023
|
Debt
|
$2,861
|
Operating lease
liabilities
|
1,635
|
Adjusted
debt
|
$4,496
|
|
|
|
Four Quarters
Ended
October 28, 2023
|
Net
earnings
|
$119
|
Income tax
benefit
|
(2)
|
Interest expense,
net
|
106
|
Earnings before
interest and income taxes
|
223
|
|
|
Depreciation and
amortization expenses
|
581
|
Operating lease
cost1
|
270
|
Amortization of
developer reimbursements2
|
69
|
Canada wind-down
costs
|
284
|
Other Revolver covenant
adjustments3
|
46
|
Adjusted
EBITDAR
|
$1,473
|
|
|
Debt to Net
Earnings
|
24.0
|
Adjusted debt to
EBITDAR
|
3.1
|
|
|
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 October 28, 2023, other Revolver covenant adjustments
primarily includes interest income. See our 2022 Annual Report for
detailed information on 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:
|
Nine Months
Ended
|
|
October 28,
2023
|
|
October 29,
2022
|
Net cash provided by
operating activities
|
$107
|
|
$240
|
Capital
expenditures
|
(375)
|
|
(325)
|
Change in cash book
overdrafts
|
37
|
|
21
|
Free Cash
Flow
|
($231)
|
|
($64)
|
INVESTOR
CONTACT:
|
|
James Duies
|
|
|
Nordstrom,
Inc.
|
|
|
InvRelations@Nordstrom.com
|
|
|
|
MEDIA
CONTACT:
|
|
Stephanie
Corzett
|
|
|
Nordstrom,
Inc.
|
|
|
NordstromPR@Nordstrom.com
|
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SOURCE Nordstrom, Inc.