Nordstrom Reports First Quarter 2024 Earnings
Nordstrom (NYSE: JWN) reported its Q1 2024 earnings, highlighting a net loss of $39 million, or $0.24 per share, and a loss before interest and taxes of $21 million. Net sales increased by 5.1%, with comparable sales up 3.8%. Nordstrom Rack saw a 13.8% rise in net sales and a 7.9% increase in comparable sales. While gross profit was constrained due to timing and other factors, the company reaffirmed its fiscal 2024 outlook. Digital sales marginally declined by 0.2%, representing 34% of total sales. Gross profit margin fell to 31.6%, affected by higher loyalty activity and theft in the supply chain. Despite these challenges, Nordstrom opened nine new stores and plans to open more by the end of 2024.
- Net sales increased by 5.1% YoY.
- Comparable sales rose by 3.8%.
- Nordstrom Rack net sales grew by 13.8%.
- Nordstrom Rack comparable sales up by 7.9%.
- GMV increased by 4.9%.
- Ending inventory decreased by 6.3%.
- SG&A expenses as a percentage of net sales decreased by 20 basis points.
- Interest expense decreased from $28 million to $27 million.
- Company retired $250 million notes using cash on hand.
- Company opened nine new stores in different locations.
- Net loss of $39 million or $0.24 per share.
- Loss before interest and taxes of $21 million.
- Gross profit margin decreased by 225 basis points to 31.6%.
- Gross profit constrained due to higher loyalty activity, theft, and inventory cleanup.
- Digital sales decreased by 0.2%.
- Income tax benefit decreased from $82 million to $9 million.
- Effective tax rate decreased due to unfavorable stock-based compensation.
Insights
Nordstrom's Q1 2024 earnings present a mixed bag of results, with total company net sales increasing by 5.1%, though the company still reported a net loss of $39 million. The standout performance in the quarter was from Nordstrom Rack, with net sales up 13.8% and comparable sales rising 7.9%. This robust performance suggests strong consumer interest in value-oriented retail, which is important as inflation continues to affect consumer spending habits.
However, the gross profit margin declined by 225 basis points to 31.6%, impacted by higher loyalty activity, reserves, external theft in the transportation network and inventory cleanup in the supply chain. The company’s efforts to manage inventory levels and enhance sell-through rates appear to be on track with inventory decreasing by 6.3% versus the same period last year. The firm’s ability to reaffirm its fiscal 2024 outlook despite these challenges is a positive indicator of management's confidence.
From a liquidity perspective, Nordstrom seems well-positioned with $1.2 billion in available liquidity, including $428 million in cash. Furthermore, retiring $250 million notes demonstrates a proactive approach to strengthening the balance sheet. A key point for investors to watch will be how Nordstrom can continue to manage its cost structure amidst inflationary pressures and supply chain issues.
Overall, the reaffirmation of the earnings outlook and the strong performance of Nordstrom Rack gives a cautiously optimistic tone, but declining margins and net losses are areas of concern.
Nordstrom’s first-quarter performance highlights the evolving dynamics in the retail sector, particularly the growing bifurcation between high-end and value segments. The significant growth in Nordstrom Rack’s sales underscores a consumer shift towards more price-sensitive offerings. This trend could be indicative of broader market behavior where consumers, affected by ongoing economic uncertainties, are prioritizing value purchases.
Digital sales, which represent 34% of total sales, decreased slightly by 0.2% compared to last year. This stagnation in digital growth suggests Nordstrom may need to revisit its digital strategy to better compete with pure-play e-commerce competitors. Enhancing the online shopping experience and integrating more personalized services could be pivotal in driving future growth.
The planned opening of multiple new Nordstrom Rack locations is a strategic move to capitalize on the strong performance of this banner. This expansion should help increase market penetration and customer reach. Nevertheless, it will be important to monitor how these new openings impact overall profitability, particularly in the short term, given the associated increase in capital expenditures.
Ultimately, while the sales growth in Nordstrom Rack is promising, broader market challenges and the need for a more robust digital strategy present both opportunities and risks for the company.
- Strong sales growth at both banners during first quarter
- Nordstrom Rack net sales up double-digits, with comparable sales up 8 percent
- Gross profit constrained due to timing and other factors
- Reaffirms fiscal 2024 outlook
For the first quarter ended May 4, 2024, net sales increased 5.1 percent versus the same period in fiscal 2023, and total Company comparable sales increased 3.8 percent. Gross merchandise value ("GMV") increased 4.9 percent. First quarter net sales include a 75 basis point negative impact from the wind-down of Canadian operations. During the quarter, Nordstrom banner net sales increased 0.6 percent and comparable sales increased 1.8 percent. Net sales for Nordstrom Rack increased 13.8 percent and comparable sales increased 7.9 percent.
"The positive sales growth we saw across the company in the first quarter is very encouraging, and we're particularly excited about the progress that our Rack banner is making," said Erik Nordstrom, chief executive officer of Nordstrom, Inc. "While we're pleased with our topline growth, profitability fell short of our expectations. Looking ahead, our strong sales performance gives us momentum heading into the rest of the year and the confidence to reaffirm our 2024 guidance."
In the first quarter, active, kids' apparel and women's apparel had strong double-digit growth versus 2023, and beauty increased by high single-digits.
"We're set up well going forward in regards to the health of our inventory, both in managing levels and providing compelling content with good sell-through," said Pete Nordstrom, president of Nordstrom, Inc. "As we reflect on the legacy that our dad left behind, we've been reminded of his firmly held and consistent values—especially his commitment to serving our customers. Those values have been integral to Nordstrom's growth, and they remain at the core of the decisions we make as a company. We want to thank our teams for bringing our values to life as we stay focused on our priorities for 2024."
As previously announced, on May 22, 2024, the board of directors declared a quarterly cash dividend of
FIRST QUARTER 2024 SUMMARY
- Total Company net sales increased 5.1 percent and comparable sales increased 3.8 percent compared with the same period in fiscal 2023. GMV increased 4.9 percent. The wind-down of Canadian operations had a negative impact on total Company net sales of 75 basis points, as the first quarter of 2023 included one month of Canadian sales.
- Nordstrom banner net sales increased 0.6 percent and comparable sales increased 1.8 percent compared with the same period in fiscal 2023. GMV increased 0.3 percent. The wind-down of Canadian operations had a negative impact on Nordstrom banner net sales of 110 basis points.
- Nordstrom Rack banner net sales increased 13.8 percent and comparable sales increased 7.9 percent compared with the same period in fiscal 2023.
- Digital sales decreased 0.2 percent compared with the same period in fiscal 2023. Digital sales represented 34 percent of total sales during the quarter.
- Gross profit, as a percentage of net sales, of 31.6 percent decreased 225 basis points compared with the same period in fiscal 2023. The strength in first quarter sales drove strong gross profit and leverage, which were more than offset primarily by timing matters related to both higher loyalty activity and reserves, as well as external theft in the Company's transportation network and inventory cleanup in the Company's supply chain as facilities are consolidated.
- Ending inventory decreased 6.3 percent compared with the same period in fiscal 2023, versus a 5.1 percent increase in sales.
- Selling, general and administrative expenses, as a percentage of net sales, of 35.8 percent decreased 20 basis points compared with the same period in fiscal 2023, primarily due to leverage on higher sales and improvements in variable costs in supply chain and across the business, partially offset by higher labor costs.
- Loss before interest and taxes was
$21 million $259 million $50 million $309 million - Interest expense, net, of
$27 million $28 million - Income tax benefit was
$9 million $82 million Canada wind-down, the rate decrease was due to the impact of unfavorable stock-based compensation on pretax loss in 2024, compared with pretax earnings in 2023. - The Company ended the first quarter with
$1.2 billion $428 million $250 million
STORES UPDATE
During and subsequent to the first quarter of 2024, the Company opened nine stores:
City | Location | Square Footage (000s) | Timing of Opening | |||
Nordstrom Rack | ||||||
Pinole Vista Crossing | 23 | March 7, 2024 | ||||
Presidential Markets | 35 | March 7, 2024 | ||||
Barrett Place | 25 | March 21, 2024 | ||||
Macedonia Gateway | 28 | April 11, 2024 | ||||
Gilroy Crossing | 25 | April 25, 2024 | ||||
South Beach Regional | 30 | May 2, 2024 | ||||
Queen Creek Marketplace | 28 | May 16, 2024 | ||||
The Ridge Elk Grove | 25 | May 30, 2024 | ||||
Danada Square East | 29 | May 30, 2024 |
The Company has also announced plans to open the following stores:
City | Location | Square Footage (000s) | Timing of | |||
Nordstrom Rack | ||||||
Pacific Coast Plaza | 31 | June 6, 2024 | ||||
Gardiner Manor Mall | 24 | June 13, 2024 | ||||
Bridgepointe Shopping Center | 36 | Fall 2024 | ||||
Clairemont Town Square | 26 | Fall 2024 | ||||
Deerfield Towne Center | 30 | Fall 2024 | ||||
Bandera Pointe | 25 | Fall 2024 | ||||
Mooresville Crossing | 28 | Fall 2024 | ||||
Cool Springs Market | 24 | Fall 2024 | ||||
Hamilton Town Center | 25 | Fall 2024 | ||||
Village Pointe | 30 | Fall 2024 | ||||
Meyerland Plaza | 34 | Fall 2024 | ||||
Bell Tower | 31 | Fall 2024 | ||||
Triangle Town Place | 32 | Fall 2024 | ||||
The Davis Collection | 25 | Spring 2025 | ||||
Sycamore Commons | 25 | Spring 2025 | ||||
Randall Square | 25 | Spring 2025 | ||||
Manalapan Commons | 26 | Spring 2025 | ||||
Fischer Marketplace | 30 | Spring 2025 |
The Company had the following store counts as of quarter-end:
May 4, 2024 | April 29, 2023 | ||
Nordstrom | |||
Nordstrom | 93 | 94 | |
Nordstrom Local service hubs | 6 | 7 | |
ASOS | Nordstrom | — | 1 | |
Nordstrom Rack | |||
Nordstrom Rack | 264 | 243 | |
Last Chance clearance stores | 2 | 2 | |
Total | 365 | 347 | |
Gross store square footage | 26,425,000 | 26,259,000 | |
FISCAL YEAR 2024 OUTLOOK
The Company reaffirmed its financial outlook for fiscal 2024:
- Revenue range, including retail sales and credit card revenues, of 2.0 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 1.0 percent decline to 2.0 percent growth versus 52 weeks in fiscal 2023
- EBIT margin of 3.5 to 4.0 percent of sales
- Income tax rate of approximately 27 percent
- Earnings per share ("EPS") of
$1.65 $2.05
CONFERENCE CALL INFORMATION
The Company's senior management will host a conference call to provide a business update and to discuss first 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 13746681, until the close of business on June 6, 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, and our Form 10-Q for the fiscal quarter ended May 4, 2024, to be filed with the SEC on or about June 7, 2024. 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
1 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. | |||||
NORDSTROM, INC. CONSOLIDATED STATEMENTS OF EARNINGS (unaudited; amounts in millions, except per share amounts) | |||
Quarter Ended | |||
May 4, 2024 | April 29, 2023 | ||
Net sales | |||
Credit card revenues, net | 114 | 117 | |
Total revenues | 3,335 | 3,181 | |
Cost of sales and related buying and occupancy costs | (2,203) | (2,028) | |
Selling, general and administrative expenses | (1,153) | (1,103) | |
— | (309) | ||
Loss before interest and income taxes | (21) | (259) | |
Interest expense, net | (27) | (28) | |
Loss before income taxes | (48) | (287) | |
Income tax benefit | 9 | 82 | |
Net loss | ( | ( | |
Loss per share: | |||
Basic | ( | ( | |
Diluted | ( | ( | |
Weighted-average shares outstanding: | |||
Basic | 163.2 | 160.8 | |
Diluted | 163.2 | 160.8 | |
Percent of net sales: | |||
Gross profit | 31.6 % | 33.8 % | |
Selling, general and administrative expenses | 35.8 % | 36.0 % | |
Loss before interest and income taxes | (0.6 %) | (8.5 %) | |
NORDSTROM, INC. CONSOLIDATED BALANCE SHEETS (unaudited; amounts in millions) | |||||
May 4, 2024 | February 3, 2024 | April 29, 2023 | |||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | |||||
Accounts receivable, net | 361 | 334 | 279 | ||
Merchandise inventories | 2,095 | 1,888 | 2,237 | ||
Prepaid expenses and other current assets | 334 | 286 | 414 | ||
Total current assets | 3,218 | 3,136 | 3,511 | ||
Land, property and equipment (net of accumulated depreciation of | 3,130 | 3,177 | 3,197 | ||
Operating lease right-of-use assets | 1,373 | 1,359 | 1,393 | ||
Goodwill | 249 | 249 | 249 | ||
Other assets | 506 | 523 | 478 | ||
Total assets | |||||
Liabilities and Shareholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | |||||
Accrued salaries, wages and related benefits | 302 | 244 | 246 | ||
Current portion of operating lease liabilities | 245 | 240 | 249 | ||
Other current liabilities | 1,117 | 1,102 | 1,236 | ||
Current portion of long-term debt | — | 250 | 249 | ||
Total current liabilities | 3,135 | 3,072 | 3,654 | ||
Long-term debt, net | 2,614 | 2,612 | 2,608 | ||
Noncurrent operating lease liabilities | 1,379 | 1,377 | 1,406 | ||
Other liabilities | 512 | 535 | 609 | ||
Commitments and contingencies | |||||
Shareholders' equity: | |||||
Common stock, no par value: 1,000 shares authorized; 163.6, 162.4 | 3,437 | 3,418 | 3,372 | ||
Accumulated deficit | (2,609) | (2,578) | (2,824) | ||
Accumulated other comprehensive gain | 8 | 8 | 3 | ||
Total shareholders' equity | 836 | 848 | 551 | ||
Total liabilities and shareholders' equity | |||||
NORDSTROM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited; amounts in millions) | |||
Quarter Ended | |||
May 4, 2024 | April 29, 2023 | ||
Operating Activities | |||
Net loss | ( | ( | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization expenses | 153 | 144 | |
— | 220 | ||
Right-of-use asset amortization | 46 | 43 | |
Deferred income taxes, net | (5) | (16) | |
Stock-based compensation expense | 18 | 14 | |
Other, net | (8) | (25) | |
Change in operating assets and liabilities: | |||
Merchandise inventories | (147) | (296) | |
Other current and noncurrent assets | (55) | (112) | |
Accounts payable | 165 | 301 | |
Accrued salaries, wages and related benefits | 57 | (39) | |
Lease liabilities | (63) | (67) | |
Other current and noncurrent liabilities | 17 | 54 | |
Net cash provided by operating activities | 139 | 16 | |
Investing Activities | |||
Capital expenditures | (91) | (106) | |
Decrease in cash and cash equivalents resulting from | — | (33) | |
Proceeds from the sale of assets and other, net | 9 | 16 | |
Net cash used in investing activities | (82) | (123) | |
Financing Activities | |||
Principal payments on long-term debt | (250) | — | |
Change in cash book overdrafts | 23 | 29 | |
Cash dividends paid | (31) | (30) | |
Proceeds from issuances under stock compensation plans | 7 | 11 | |
Other, net | (6) | (9) | |
Net cash (used in) provided by financing activities | (257) | 1 | |
Net decrease in cash and cash equivalents | (200) | (106) | |
Cash and cash equivalents at beginning of period | 628 | 687 | |
Cash and cash equivalents at end of period | |||
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 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 loss to adjusted EBIT and adjusted EBITDA and net earnings as a percent of net sales to adjusted EBIT margin:
Quarter Ended | |||
May 4, 2024 | April 29, 2023 | ||
Net loss | ( | ( | |
Income tax benefit | (9) | (82) | |
Interest expense, net | 27 | 28 | |
Loss before interest and income taxes | (21) | (259) | |
— | 309 | ||
Adjusted EBIT | (21) | 50 | |
Depreciation and amortization expenses | 153 | 144 | |
Amortization of developer reimbursements | (15) | (17) | |
Adjusted EBITDA | |||
Net sales | |||
Net loss as a % of net sales | (1.2 %) | (6.7 %) | |
EBIT margin % | (0.6 %) | (8.5 %) | |
Adjusted EBIT margin % | (0.6 %) | 1.6 % | |
The following is a reconciliation of diluted EPS to adjusted EPS:
Quarter Ended | |||
May 4, 2024 | April 29, 2023 | ||
Diluted EPS | ( | ( | |
— | 1.92 | ||
Income tax impact on adjustments1 | — | (0.58) | |
Adjusted EPS | ( | ||
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
Quarter Ended | |||
May 4, 2024 | April 29, 2023 | ||
Net sales: | |||
Nordstrom | |||
Nordstrom Rack | 1,181 | 1,037 | |
Total net sales | |||
Net sales increase (decrease): | |||
Nordstrom | 0.6 % | (11.4 %) | |
Nordstrom Rack | 13.8 % | (11.9 %) | |
Total Company | 5.1 % | (11.6 %) | |
Digital sales as % of total net sales1 | 34 % | 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.
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.
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 | |||
May 4, 2024 | April 29, 2023 | ||
Net earnings | |||
Income tax expense (benefit) | 86 | (8) | |
Interest expense | 138 | 138 | |
Earnings before interest and income tax expense | 523 | 150 | |
Operating lease interest1 | 87 | 85 | |
Non-operating related adjustments2 | 7 | 387 | |
Adjusted net operating profit | 617 | 622 | |
Adjusted estimated income tax expense3 | (151) | (164) | |
Adjusted net operating profit after tax | |||
Average total assets | |||
Average noncurrent deferred property incentives in excess of operating lease right-of-use | (147) | (188) | |
Average non-interest bearing current liabilities | (2,986) | (3,203) | |
Non-operating related adjustments5 | 98 | 122 | |
Adjusted average invested capital | |||
Return on assets | 3.4 % | 0.2 % | |
Adjusted ROIC | 8.2 % | 7.9 % | |
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 included a supply chain asset impairment and related charge for the four quarters ended May 4, 2024, as well as the wind-down of our Canadian operations for the four quarters ended May 4, 2024 and April 29, 2023. 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 May 4, 2024 and April 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. |
5 | Non-operating related adjustments primarily relate to the wind-down of our Canadian operations for the trailing twelve-month periods ended May 4, 2024 and April 29, 2023. |
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.
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:
May 4, 2024 | |
Debt | |
Operating lease liabilities | 1,624 |
Adjusted debt | |
Four Quarters Ended | |
Net earnings | |
Income tax expense | 86 |
Interest expense, net | 104 |
Earnings before interest and income taxes | 489 |
Depreciation and amortization expenses | 594 |
Operating lease cost1 | 282 |
Amortization of developer reimbursements2 | 67 |
Other Revolver covenant adjustments3 | 41 |
Adjusted EBITDAR | |
Debt to Net Earnings | 8.7 |
Adjusted debt to EBITDAR | 2.9 |
1 | Operating lease cost is fixed rent expense, including fixed common area maintenance expense, net of developer reimbursement amortization. |
2 | Amortization of developer reimbursements is a non-cash reduction of operating lease cost and is therefore added back to operating lease cost for purposes of our Revolver covenant calculation. |
3 | Other adjusting items to reconcile net earnings to Adjusted EBITDAR as defined by our Revolver covenant include interest income, certain non-cash charges and other gains and losses where relevant. For the four quarters ended May 4, 2024, other Revolver covenant adjustments primarily included interest income and a supply chain asset impairment and related charge, partially offset by |
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:
Quarter Ended | |||
May 4, 2024 | April 29, 2023 | ||
Net cash provided by operating activities | |||
Capital expenditures | (91) | (106) | |
Change in cash book overdrafts | 23 | 29 | |
Free Cash Flow | ( | ||
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.
FAQ
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