Company Announcements

Nordstrom Reports Second Quarter 2024 Earnings

  • Sales positive across both banners and digital during second quarter
  • Reports EPS of $0.72, adjusted EPS of $0.961
  • Updates fiscal 2024 outlook

SEATTLE , Aug. 27, 2024 /PRNewswire/ -- Nordstrom, Inc. (NYSE: JWN) today reported second quarter net earnings of $122 million, or earnings per diluted share ("EPS") of $0.72, and earnings before interest and taxes ("EBIT") of $190 million. Excluding a charge primarily related to supply chain asset impairment, the Company reported adjusted EBIT of $244 million and adjusted EPS of $0.96.1

For the second quarter ended August 3, 2024, net sales increased 3.4 percent versus the same period in fiscal 2023, and total Company comparable sales increased 1.9 percent. Gross merchandise value ("GMV") increased 3.5 percent. Anniversary Sale timing, with one week shifting from the third quarter to the second quarter, had a positive impact of approximately 100 basis points on net sales compared with 2023. During the quarter, Nordstrom banner net sales and comparable sales each increased 0.9 percent. Net sales for Nordstrom Rack increased 8.8 percent and comparable sales increased 4.1 percent.

"Our second quarter results were solid, and we're encouraged by the continued topline strength in both banners and the progress we're making to expand gross margin and increase profitability," said Erik Nordstrom, chief executive officer of Nordstrom, Inc. "We're confident in our outlook for the remainder of the year and look forward to sustaining the momentum we've built as we execute on our 2024 priorities."

In the second quarter, active, women's apparel, beauty and kids had the strongest growth versus 2023. During the Anniversary Sale, including one day that fell in the third quarter, the top growing categories were beauty, active and home.

"We're pleased with the Anniversary Sale and the enthusiastic response from our loyal customers. They were highly engaged throughout the event and responded favorably to our assortment, experiences and service," said Pete Nordstrom, president of Nordstrom, Inc. "We appreciate our team's continued efforts to help our customers feel good and look their best."

As previously announced, on August 21, 2024, the board of directors declared a quarterly cash dividend of $0.19 per share, payable on September 18, 2024, to shareholders of record at the close of business on September 3, 2024.

SECOND  QUARTER 2024 SUMMARY

  • Total Company net sales increased 3.4 percent and comparable sales increased 1.9 percent compared with the same period in fiscal 2023. GMV increased 3.5 percent. The timing shift of the Anniversary Sale, with one day falling in the third quarter of 2024 versus eight days in 2023, had a positive impact on net sales of approximately 100 basis points compared with the second quarter of 2023.
  • Nordstrom banner net sales and comparable sales each increased 0.9 percent compared with the same period in fiscal 2023. GMV increased 1.1 percent. The timing shift of the Anniversary Sale had a positive impact on Nordstrom banner net sales of approximately 200 basis points compared with the second quarter of 2023.
  • Nordstrom Rack banner net sales increased 8.8 percent and comparable sales increased 4.1 percent compared with the same period in fiscal 2023.
  • Digital sales increased 6.2 percent compared with the same period in fiscal 2023. The timing shift of the Anniversary Sale had a positive impact on Company digital sales of approximately 100 basis points compared with the second quarter of 2023. Digital sales represented 37 percent of total sales during the quarter.
  • Gross profit, as a percentage of net sales, of 36.6 percent increased 155 basis points compared with the same period in fiscal 2023, primarily due to strong regular price sales and leverage on higher total sales.
  • Ending inventory increased 8.3 percent compared with the same period in fiscal 2023, versus a 3.4 percent increase in sales.
  • Selling, general and administrative ("SG&A") expenses, as a percentage of net sales, of 34.4 percent increased 160 basis points compared with the same period in fiscal 2023, due to a charge primarily related to supply chain asset impairment and a 2023 gain on the sale of a real estate asset, partially offset by leverage on higher sales. Excluding the $54 million charge primarily related to supply chain asset impairment, adjusted SG&A expenses, as a percentage of net sales, were 33.0 percent.
  • EBIT was $190 million in the second quarter of 2024, compared with $192 million during the same period in fiscal 2023. Adjusted EBIT of $244 million excluded the charge primarily related to supply chain asset impairment.2
  • Interest expense, net, of $26 million was flat compared with $26 million during the same period in fiscal 2023.
  • Income tax expense was $42 million, or 25.7 percent of pretax earnings, compared with income tax expense of $29 million, or 17.2 percent of pretax earnings, in the same period in fiscal 2023. The increase in the second quarter of fiscal 2024 was driven primarily by the favorable resolution of certain tax matters in the second quarter of fiscal 2023.
  • The Company ended the second quarter with $1.5 billion in available liquidity, including $679 million in cash.

STORES UPDATE

To date in fiscal 2024, the Company has opened eleven stores:

City


Location


Square Footage

(000s)


Timing of Opening

Nordstrom Rack







Pinole, CA


Pinole Vista Crossing


23


March 7, 2024

Snellville, GA


Presidential Markets


35


March 7, 2024

Kennesaw, GA


Barrett Place


25


March 21, 2024

Macedonia, OH


Macedonia Gateway


28


April 11, 2024

Gilroy, CA


Gilroy Crossing


25


April 25, 2024

Jacksonville Beach, FL


South Beach Regional


30


May 2, 2024

Queen Creek, AZ


Queen Creek Marketplace


28


May 16, 2024

Elk Grove, CA


The Ridge Elk Grove


25


May 30, 2024

Wheaton, IL


Danada Square East


29


May 30, 2024

Oceanside, CA


Pacific Coast Plaza


32


June 6, 2024

Bay Shore, NY


Gardiner Manor Mall


24


June 13, 2024

 

The Company has also announced plans to open the following stores:

City


Location


Square Footage

(000s)


Timing of Opening

Nordstrom Rack







San Antonio, TX


Bandera Pointe


25


September 5, 2024

Franklin, TN


Cool Springs Market


24


September 5, 2024

San Mateo, CA


Bridgepointe Shopping Center


36


September 12, 2024

San Diego, CA


Clairemont Town Square


26


September 19, 2024

Mooresville, NC


Mooresville Crossing


28


September 26, 2024

Houston, TX


Meyerland Plaza


34


September 26, 2024

Mason, OH


Deerfield Towne Center


30


October 3, 2024

Fort Myers, FL


Bell Tower


31


October 10, 2024

Raleigh, NC


Triangle Town Place


32


October 10, 2024

Noblesville, IN


Hamilton Town Center


25


October 17, 2024

Omaha, NE


Village Pointe


30


October 24, 2024

Tarzana, CA


Village Walk


25


November 1, 2024

Davis, CA


The Davis Collection


25


Spring 2025

Matthews, NC


Sycamore Commons


25


Spring 2025

Geneva, IL


Randall Square


25


Spring 2025

Manalapan Township, NJ


Manalapan Commons


26


Spring 2025

Apple Valley, MN


Fischer Marketplace


30


Spring 2025

Houston, TX


Westchase Shopping Center


30


Spring 2025

Morrisville, NC


Park West Village


25


Spring 2025

Coral Springs, FL


Pine Ridge Square


31


Fall 2025

Surprise, AZ


Prasada North


26


Fall 2025

 

The Company had the following store counts as of quarter-end:


August 3, 2024


July 29, 2023

Nordstrom




Nordstrom

93


94

Nordstrom Local service hubs

6


7

ASOS | Nordstrom


1

Nordstrom Rack




Nordstrom Rack

269


247

Last Chance clearance stores

2


2

Total

370


351


Gross store square footage

26,563,000


26,348,000

 

FISCAL YEAR 2024 OUTLOOK

The Company updated its financial outlook for fiscal 2024, which also now reflects the charge primarily related to supply chain asset impairment and related tax impacts recorded in the second quarter, as well as estimated accelerated technology depreciation impacts expected in the second half of fiscal 2024:

  • Revenue range, including retail sales and credit card revenues, of 1.0 percent decline to 1.0 percent growth versus the 53-week fiscal 2023, which includes an approximately 135 basis point unfavorable impact from the 53rd week
  • Comparable sales range of flat to 2.0 percent growth versus 52 weeks in fiscal 2023
  • EBIT margin of 3.0 to 3.4 percent of sales
  • Adjusted EBIT margin of 3.6 to 4.0 percent of sales3
  • Income tax rate of approximately 27 percent
  • EPS of $1.40 to $1.70, excluding the impact of share repurchase activity, if any
  • Adjusted EPS of $1.75 to $2.05, 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 2024 financial results and fiscal 2024 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 13748345, until the close of business on September 3, 2024.

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 interconnected model 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 February 3, 2024, our Form 10-Q for the fiscal quarter ended May 4, 2024, and our Form 10-Q for the fiscal quarter ended August 3, 2024, to be filed with the SEC on or about September 5, 2024. In addition, forward-looking statements contained in this release may be impacted by the actual outcome of events or occurrences related to the Company's announcement of the exploration of possible avenues to enhance shareholder value and the formation of a special committee of the board of directors to consider any proposal which might be brought forward by members of the Nordstrom family to take the Company private. 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. This earnings release includes references to websites, website addresses and additional materials, including reports and blogs, found on those websites. The content of any websites and materials named, hyperlinked or otherwise referenced in this earnings release are not incorporated by reference into this earnings release or in any other report or document we file with the SEC, and any references to such websites and materials are intended to be inactive textual references only. The information on those websites is not part of this earnings release.

1 Adjusted EBIT and adjusted EPS are non-GAAP financial measures. 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


August 3, 2024

July 29, 2023


August 3, 2024

July 29, 2023

Net sales

$3,785

$3,662


$7,006

$6,726

Credit card revenues, net

109

110


223

227

Total revenues

3,894

3,772


7,229

6,953

Cost of sales and related buying and occupancy costs

(2,401)

(2,380)


(4,604)

(4,407)

Selling, general and administrative expenses

(1,303)

(1,200)


(2,456)

(2,304)

Canada wind-down costs


(309)

Earnings (loss) before interest and income taxes

190

192


169

(67)

Interest expense, net

(26)

(26)


(53)

(54)

Earnings (loss) before income taxes

164

166


116

(121)

Income tax (expense) benefit

(42)

(29)


(33)

54

Net earnings (loss)

$122

$137


$83

($67)







Earnings (loss) per share:






Basic

$0.74

$0.85


$0.50

($0.42)

Diluted

$0.72

$0.84


$0.49

($0.42)







Weighted-average shares outstanding:






Basic

164.1

161.7


163.6

161.3

Diluted

168.8

163.2


167.3

161.3







Percent of net sales:






Gross profit

36.6 %

35.0 %


34.3 %

34.5 %

Selling, general and administrative expenses

34.4 %

32.8 %


35.0 %

34.3 %

Earnings (loss) before interest and income taxes

5.0 %

5.3 %


2.4 %

(1.0 %)

 

NORDSTROM, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited; amounts in millions)



August 3, 2024

February 3, 2024

July 29, 2023

Assets




Current assets:




Cash and cash equivalents

$679

$628

$885

Accounts receivable, net

277

334

246

Merchandise inventories

2,144

1,888

1,979

Prepaid expenses and other current assets

348

286

400

Total current assets

3,448

3,136

3,510





Land, property and equipment (net of accumulated depreciation of $8,507, $8,251 and $8,254)

3,063

3,177

3,181

Operating lease right-of-use assets

1,353

1,359

1,381

Goodwill

249

249

249

Other assets

530

523

480

Total assets

$8,643

$8,444

$8,801





Liabilities and Shareholders' Equity




Current liabilities:




Accounts payable

$1,533

$1,236

$1,434

Accrued salaries, wages and related benefits

289

244

375

Current portion of operating lease liabilities

247

240

224

Other current liabilities

1,149

1,102

1,264

Current portion of long-term debt

250

249

Total current liabilities

3,218

3,072

3,546





Long-term debt, net

2,615

2,612

2,609

Noncurrent operating lease liabilities

1,370

1,377

1,392

Other liabilities

492

535

580





Commitments and contingencies








Shareholders' equity:




Common stock, no par value: 1,000 shares authorized; 164.2, 162.4 and
161.7 shares issued and outstanding

3,458

3,418

3,388

Accumulated deficit

(2,518)

(2,578)

(2,717)

Accumulated other comprehensive gain

8

8

3

Total shareholders' equity

948

848

674

Total liabilities and shareholders' equity

$8,643

$8,444

$8,801

 

NORDSTROM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; amounts in millions)



Six Months Ended


August 3, 2024

July 29, 2023

Operating Activities



Net earnings (loss)

$83

($67)

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:



Depreciation and amortization expenses

305

285

Canada wind-down costs

220

Asset impairment

51

Right-of-use asset amortization

92

86

Deferred income taxes, net

(27)

(17)

Stock-based compensation expense

41

28

Other, net

(12)

(47)

Change in operating assets and liabilities:



Merchandise inventories

(157)

(78)

Other current and noncurrent assets

9

(81)

Accounts payable

172

99

Accrued salaries, wages and related benefits

45

89

Lease liabilities

(130)

(134)

Other current and noncurrent liabilities

56

82

Net cash provided by operating activities

528

465




Investing Activities



Capital expenditures

(204)

(225)

Decrease in cash and cash equivalents resulting from Canada deconsolidation

(33)

Proceeds from the sale of assets and other, net

10

29

Net cash used in investing activities

(194)

(229)




Financing Activities



Principal payments on long-term debt

(250)

Change in cash book overdrafts

30

18

Cash dividends paid

(62)

(61)

Payments for repurchase of common stock

(1)

Proceeds from issuances under stock compensation plans

9

13

Other, net

(10)

(7)

Net cash used in financing activities

(283)

(38)




Net increase in cash and cash equivalents

51

198

Cash and cash equivalents at beginning of period

628

687

Cash and cash equivalents at end of period

$679

$885

 

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


August 3, 2024

July 29, 2023


August 3, 2024

July 29, 2023

Net earnings (loss)

$122

$137


$83

($67)

Income tax expense (benefit)

42

29


33

(54)

Interest expense, net

26

26


53

54

Earnings (loss) before interest and income taxes

190

192


169

(67)

Supply chain asset impairment and other

54


54

Canada wind-down costs


309

Adjusted EBIT

244

192


223

242

Depreciation and amortization expenses

150

141


302

285

Amortization of developer reimbursements

(15)

(17)


(29)

(35)

Adjusted EBITDA

$379

$316


$496

$492







Net sales

$3,785

$3,662


$7,006

$6,726

Net earnings (loss) as a % of net sales

3.2 %

3.8 %


1.2 %

(1.0 %)

EBIT margin %

5.0 %

5.3 %


2.4 %

(1.0 %)

Adjusted EBIT margin %

6.4 %

5.3 %


3.2 %

3.6 %

 

The following is a reconciliation of diluted EPS to adjusted EPS:


Quarter Ended


Six Months Ended


August 3, 2024

July 29, 2023


August 3, 2024

July 29, 2023

Diluted EPS

$0.72

$0.84


$0.49

($0.42)

Supply chain asset impairment and other

0.32


0.32

Canada wind-down costs


1.91

Income tax impact on adjustments1

(0.08)


(0.08)

(0.58)

Adjusted EPS

$0.96

$0.84


$0.73

$0.91


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, NordstromU.S. stores and Nordstrom Local. Nordstrom also included Canada operations prior to March 2, 2023, inclusive of Nordstrom.ca, Nordstrom Canadian stores and Nordstrom Rack Canadian stores and ASOS | Nordstrom prior to December 2023. 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 August 3, 2024, compared with the quarter and six months ended July 29, 2023:


Quarter Ended


Six Months Ended


August 3, 2024

July 29, 2023


August 3, 2024

July 29, 2023

Net sales:






Nordstrom

$2,514

$2,491


$4,554

$4,518

Nordstrom Rack

1,271

1,171


2,452

2,208

Total net sales

$3,785

$3,662


$7,006

$6,726







Net sales increase (decrease):






Nordstrom

0.9 %

(10.1 %)


0.8 %

(10.7 %)

Nordstrom Rack

8.8 %

(4.1 %)


11.1 %

(7.9 %)

Total Company

3.4 %

(8.3 %)


4.2 %

(9.8 %)







Digital sales as % of total net sales 1

37 %

36 %


35 %

36 %



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 2024 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 2024 excludes the impacts from certain items that we do not consider representative of our core operating performance. These items include charges primarily related to a supply chain asset impairment in the second quarter of 2024 and accelerated technology depreciation to be recognized in the second half of fiscal 2024.

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 2024 Outlook:


52 Weeks Ending February 1, 2025


Low


High

Expected net earnings as a % of net sales

1.7 %


2.0 %

Income tax expense

0.6 %


0.7 %

Interest expense, net

0.7 %


0.7 %

Expected EBIT as a % of net sales

3.0 %


3.4 %





Supply chain asset impairment and other

0.4 %


0.4 %

Accelerated technology depreciation

0.2 %


0.2 %

Expected adjusted EBIT margin

3.6 %


4.0 %

 

The following is a reconciliation of expected diluted EPS to expected adjusted EPS included within our Fiscal Year 2024 Outlook:


52 Weeks Ending February 1, 2025


Low


High

Expected diluted EPS

$1.40


$1.70

Supply chain asset impairment and other

0.32


0.32

Accelerated technology depreciation

0.15


0.15

Income tax impact on adjustments

(0.12)


(0.12)

Expected adjusted EPS

$1.75


$2.05

 

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. Our Adjusted ROIC calculation excludes certain items that we do not consider representative of our core operating performance. 

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


August 3, 2024

July 29, 2023

Net earnings

$284

$32

Income tax expense (benefit)

100

(22)

Interest expense

137

137

Earnings before interest and income tax expense

521

147




Operating lease interest1

88

85

Non-operating related adjustments2

60

380

Adjusted net operating profit

669

612

Adjusted estimated income tax expense3

(186)

(141)

Adjusted net operating profit after tax

$483

$471




Average total assets

$8,675

$8,986

Average noncurrent deferred property incentives in excess of operating
lease right-of-use (ROU) assets4

(137)

(177)

Average non-interest bearing current liabilities

(2,949)

(3,149)

Non-operating related adjustments2

143

184

Adjusted average invested capital

$5,732

$5,844




Return on assets

3.3 %

0.4 %

Adjusted ROIC

8.4 %

8.1 %

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

Non-operating related adjustments primarily included supply chain impairment charges and the wind-down of our Canadian operations. See the Adjusted EBIT and Adjusted EBITDA section, as well as our 2023 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 August 3, 2024 and July 29, 2023. The adjusted effective tax rate is calculated by dividing adjusted income tax expense 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. 

 

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 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.

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:


August 3, 2024

Debt

$2,615

Operating lease liabilities

1,617

Adjusted debt

$4,232




Four Quarters Ended
August 3, 2024

Net earnings

$284

Income tax expense

100

Interest expense, net

103

Earnings before interest and income taxes

487



Depreciation and amortization expenses

604

Operating lease cost1

286

Amortization of developer reimbursements2

63

Other Revolver covenant adjustments3

100

Adjusted EBITDAR

$1,540



Debt to Net Earnings

9.2

Adjusted debt to EBITDAR

2.7



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 August 3, 2024, other Revolver covenant adjustments primarily included supply chain impairment charges and interest income, partially offset by Canada wind-down adjustments. See the Adjusted EBIT and Adjusted EBITDA section, as well as our 2023 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:


Six Months Ended


August 3, 2024

July 29, 2023

Net cash provided by operating activities

$528

$465

Capital expenditures

(204)

(225)

Change in cash book overdrafts

30

18

Free Cash Flow

$354

$258

 

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.