Nordstrom Reports Second Quarter 2024 Earnings
Nordstrom (NYSE: JWN) reported solid second quarter 2024 earnings, with net earnings of $122 million and EPS of $0.72. Adjusted EPS was $0.96, excluding a charge related to supply chain asset impairment. Net sales increased 3.4% compared to the same period in 2023, with total Company comparable sales up 1.9%. The Nordstrom banner saw a 0.9% increase in net sales and comparable sales, while Nordstrom Rack's net sales rose 8.8% with comparable sales up 4.1%. Digital sales grew 6.2%. The company updated its fiscal 2024 outlook, projecting revenue growth between -1.0% to 1.0% and comparable sales growth of 0% to 2.0%. Nordstrom also declared a quarterly cash dividend of $0.19 per share.
Nordstrom (NYSE: JWN) ha riportato risultati solidi per il secondo trimestre del 2024, con un utile netto di $122 milioni e EPS di $0,72. L'EPS rettificato è stato di $0,96, escludendo una spesa relativa all'impairment degli asset della catena di fornitura. Le vendite nette sono aumentate del 3,4% rispetto allo stesso periodo del 2023, con le vendite comparative totali dell'azienda in crescita dell'1,9%. Il marchio Nordstrom ha registrato un aumento dello 0,9% nelle vendite nette e nelle vendite comparative, mentre le vendite nette di Nordstrom Rack sono aumentate dell'8,8% con le vendite comparative in crescita del 4,1%. Le vendite digitali sono cresciute del 6,2%. L'azienda ha aggiornato le previsioni per l'anno fiscale 2024, prevedendo una crescita dei ricavi compresa tra -1,0% e 1,0% e una crescita delle vendite comparative dello 0% al 2,0%. Nordstrom ha anche dichiarato un dividendo in contante trimestrale di $0,19 per azione.
Nordstrom (NYSE: JWN) reportó resultados sólidos para el segundo trimestre de 2024, con ganancias netas de $122 millones y EPS de $0.72. El EPS ajustado fue de $0.96, excluyendo un cargo relacionado con la disminución de activos de la cadena de suministro. Las ventas netas aumentaron un 3.4% en comparación con el mismo período de 2023, con las ventas comparables totales de la compañía en aumento del 1.9%. La marca Nordstrom vio un aumento del 0.9% en ventas netas y ventas comparables, mientras que las ventas netas de Nordstrom Rack crecieron un 8.8% con un aumento de ventas comparables del 4.1%. Las ventas digitales crecieron un 6.2%. La compañía actualizó su pronóstico fiscal para 2024, proyectando un crecimiento de ingresos entre -1.0% y 1.0% y un crecimiento de ventas comparables del 0% al 2.0%. Nordstrom también declaró un dividendo en efectivo trimestral de $0.19 por acción.
노드스트롬 (NYSE: JWN)은 2024년 2분기에 대한 견고한 실적을 발표했습니다, 순이익은 1억 2200만 달러, 주당순이익(EPS)은 0.72달러입니다. 공급망 자산 손상과 관련된 비용을 제외한 조정 주당순이익은 0.96달러였습니다. 순매출은 3.4% 증가했습니다 2023년 같은 기간과 비교해, 회사 전체의 같은 매장 매출은 1.9% 상승했습니다. 노드스트롬 브랜드는 순매출 및 같은 매장 매출에서 0.9% 증가를 보였고, 노드스트롬 랙의 순매출은 8.8% 늘어났습니다, 같은 매장 매출도 4.1% 증가했습니다. 디지털 판매는 6.2% 성장했습니다. 회사는 2024 회계 연도 전망을 업데이트하여 수익 성장이 -1.0%에서 1.0% 사이, 같은 매장 매출 성장은 0%에서 2.0% 사이로 예상했습니다. 노드스트롬은 또한 주당 0.19달러의 분기 현금 배당금을 선언했습니다.
Nordstrom (NYSE: JWN) a annoncé des résultats solides pour le deuxième trimestre de 2024, avec un bénéfice net de 122 millions de dollars et un BPA de 0,72 $. Le BPA ajusté était de 0,96 $, hors une charge liée à la dépréciation des actifs de la chaîne d'approvisionnement. Le chiffre d'affaires net a augmenté de 3,4% par rapport à la même période en 2023, les ventes comparables totales de l'entreprise ayant progressé de 1,9 %. La marque Nordstrom a enregistré une augmentation de 0,9 % de son chiffre d'affaires net et de ses ventes comparables, tandis que le chiffre d'affaires net de Nordstrom Rack a augmenté de 8,8%, avec des ventes comparables en hausse de 4,1 %. Les ventes numériques ont crû de 6,2 %. L'entreprise a mis à jour ses prévisions pour l'exercice 2024, prévoyant une croissance des revenus comprise entre -1,0 % et 1,0 % et une croissance des ventes comparables de 0 % à 2,0 %. Nordstrom a également déclaré un dividende en espèces trimestriel de 0,19 $ par action.
Nordstrom (NYSE: JWN) meldete starke Ergebnisse für das zweite Quartal 2024, mit einem Nettogewinn von 122 Millionen US-Dollar und EPS von 0,72 US-Dollar. Das angepasste EPS betrug 0,96 US-Dollar, wobei eine Belastung aufgrund der Wertminderung von Vermögenswerten in der Lieferkette ausgeschlossen wurde. Der Nettoumsatz stieg um 3,4% im Vergleich zum gleichen Zeitraum 2023, mit einem Anstieg der vergleichbaren Gesamtverkäufe des Unternehmens um 1,9%. Die Nordstrom-Marke verzeichnete einen Anstieg der Nettoumsätze und vergleichbaren Verkäufe um 0,9%, während die Nettoumsätze von Nordstrom Rack um 8,8% stiegen und die vergleichbaren Verkäufe um 4,1% zulegten. Der digitale Umsatz wuchs um 6,2%. Das Unternehmen aktualisierte seine Prognose für das Geschäftsjahr 2024 und erwartet ein Umsatzwachstum von -1,0% bis 1,0% sowie ein Wachstum der vergleichbaren Verkäufe von 0% bis 2,0%. Nordstrom gab außerdem eine vierteljährliche Bardividende von 0,19 US-Dollar pro Aktie bekannt.
- Net sales increased 3.4% year-over-year
- Nordstrom Rack's net sales rose 8.8% with comparable sales up 4.1%
- Digital sales grew 6.2% compared to the same period in 2023
- Gross profit margin improved by 155 basis points to 36.6%
- Company ended the quarter with $1.5 billion in available liquidity
- EBIT decreased slightly to $190 million from $192 million in the same period last year
- Income tax expense increased to 25.7% of pretax earnings, up from 17.2% in Q2 2023
- Ending inventory increased 8.3% compared to a 3.4% increase in sales
- SG&A expenses as a percentage of net sales increased 160 basis points to 34.4%
Insights
Nordstrom's Q2 results show modest improvement, with net sales up 3.4% and comparable sales increasing 1.9%. The EPS of $0.72 ($0.96 adjusted) indicates profitability, but margins remain tight. The Nordstrom Rack segment's 8.8% sales growth is a bright spot, outperforming the core Nordstrom banner. Digital sales growth of 6.2% is encouraging, showing the company's omnichannel strategy is gaining traction.
The gross profit margin improvement of 155 basis points to 36.6% is significant, reflecting better inventory management and full-price selling. However, the 8.3% inventory increase outpacing sales growth warrants monitoring. The updated fiscal 2024 outlook, projecting flat to 2% comparable sales growth and an adjusted EBIT margin of 3.6% to 4.0%, suggests cautious optimism amidst a challenging retail environment.
Nordstrom's performance this quarter reflects broader trends in the retail sector. The company's focus on active, women's apparel, beauty and kids' categories aligns with current consumer preferences. The success of the Anniversary Sale, particularly in beauty and active categories, underscores the importance of experiential retail and strategic promotions in driving customer engagement.
The expansion of Nordstrom Rack stores is a smart move, capitalizing on the off-price segment's resilience. However, the planned opening of 21 new Rack locations by Fall 2025 is aggressive and could pressure margins if not executed carefully. The company's emphasis on digital sales growth (now 37% of total sales) is important for long-term competitiveness, but balancing this with brick-and-mortar operations will be key to maintaining profitability.
- Sales positive across both banners and digital during second quarter
- Reports EPS of
$0.72 $0.96 - Updates fiscal 2024 outlook
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
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 - EBIT was
$190 million $192 million $244 million - Interest expense, net, of
$26 million $26 million - Income tax expense was
$42 million $29 million - The Company ended the second quarter with
$1.5 billion $679 million
STORES UPDATE
To date in fiscal 2024, the Company has opened eleven 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 | ||||
Pacific Coast Plaza | 32 | June 6, 2024 | ||||
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 | ||||||
Bandera Pointe | 25 | September 5, 2024 | ||||
Cool Springs Market | 24 | September 5, 2024 | ||||
Bridgepointe Shopping Center | 36 | September 12, 2024 | ||||
Clairemont Town Square | 26 | September 19, 2024 | ||||
Mooresville Crossing | 28 | September 26, 2024 | ||||
Meyerland Plaza | 34 | September 26, 2024 | ||||
Deerfield Towne Center | 30 | October 3, 2024 | ||||
Bell Tower | 31 | October 10, 2024 | ||||
Triangle Town Place | 32 | October 10, 2024 | ||||
Hamilton Town Center | 25 | October 17, 2024 | ||||
Village Pointe | 30 | October 24, 2024 | ||||
Village Walk | 25 | November 1, 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 | ||||
Westchase Shopping Center | 30 | Spring 2025 | ||||
Park West Village | 25 | Spring 2025 | ||||
Pine Ridge Square | 31 | Fall 2025 | ||||
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 $1.70 - Adjusted EPS of
$1.75 $2.05
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 | |||||
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) | |
— | — | — | (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) | ( | ||||
Earnings (loss) per share: | |||||
Basic | ( | ||||
Diluted | ( | ||||
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 | |||
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 | 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 | |||
Liabilities and Shareholders' Equity | |||
Current liabilities: | |||
Accounts payable | |||
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 | 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 | |||
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) | ( | |
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | ||
Depreciation and amortization expenses | 305 | 285 |
— | 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 | — | (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 | ||
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) | ( | ||||
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 | — | |
— | — | — | 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 | |||||
Net sales | |||||
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 | ( | ||||
Supply chain asset impairment and other | 0.32 | — | 0.32 | — | |
— | — | — | 1.91 | ||
Income tax impact on adjustments1 | (0.08) | — | (0.08) | (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 | Six Months Ended | ||||
August 3, 2024 | July 29, 2023 | August 3, 2024 | July 29, 2023 | ||
Net sales: | |||||
Nordstrom | |||||
Nordstrom Rack | 1,271 | 1,171 | 2,452 | 2,208 | |
Total net sales | |||||
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 sales1 | 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 | |||
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 | |||
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 | ||
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 | ||
Average total assets | ||
Average noncurrent deferred property incentives in excess of operating | (137) | (177) |
Average non-interest bearing current liabilities | (2,949) | (3,149) |
Non-operating related adjustments2 | 143 | 184 |
Adjusted average invested capital | ||
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 | |
Operating lease liabilities | 1,617 |
Adjusted debt | |
Four Quarters Ended | |
Net earnings | |
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 | |
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 |
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 | ||
Capital expenditures | (204) | (225) |
Change in cash book overdrafts | 30 | 18 |
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.
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