- Company reports loss of $1.27
per share, adjusted earnings of $0.07
per share1
- Results reflect progress on Company's key priorities of
Nordstrom Rack improvement, inventory productivity and supply chain
optimization
- Reaffirms fiscal 2023 revenue and adjusted earnings
outlook
SEATTLE, May 31, 2023
/PRNewswire/ -- Nordstrom, Inc. (NYSE: JWN) today reported a first
quarter net loss of $205 million and
loss per diluted share of $1.27.
Excluding charges related to the wind-down of Canadian operations,
the Company reported adjusted earnings per diluted share ("EPS") of
$0.07.1
For the first quarter ended April 29, 2023, net sales
decreased 11.6 percent versus the same period in fiscal 2022,
including a 175 basis point negative impact from the wind-down
of Canadian operations, and gross merchandise value ("GMV")
decreased 11.9 percent. Nordstrom banner net sales decreased 11.4
percent and GMV decreased 11.8 percent. Net sales for Nordstrom
Rack decreased 11.9 percent.
The Company's first quarter results reflected progress on its
key priorities. Nordstrom Rack sales trends improved late in
the quarter, with the strongest performance in April, primarily
driven by increased penetration of strategic brands in its
merchandise mix. Gross profit margin expanded by 110 basis points
over last year, reflecting the Company's focus on increasing
inventory productivity. In addition, the Company continued to
deliver efficiencies through its supply chain initiatives, which
contributed over 100 basis points of improvement in variable
costs within selling, general and administrative ("SG&A")
expenses, helping to mitigate the impact of deleverage on lower
sales.
"We are pleased with the progress we're making against the key
priorities we laid out for 2023 as we continue to enhance our
overall customer experience, improve Nordstrom Rack performance,
increase inventory productivity and optimize our supply chain
operations," said Erik Nordstrom,
chief executive officer of Nordstrom, Inc. "We're encouraged by our
momentum, especially given the uncertain macroeconomic environment.
We remain focused on executing with agility and delivering
long-term value to our shareholders."
"Our focus on these key priorities allows us to better serve our
customers through great brands at great prices at the Rack and more
product newness and better flow across our banners, while also
positioning us for more profitable growth," said Pete Nordstrom, president and chief brand
officer of Nordstrom, Inc. "We're grateful to our team for their
hard work and focus, and we're excited to serve our customers with
new and fresh selections from the best brands at our upcoming
Anniversary Sale."
Most categories in the U.S. were down in the first quarter
versus 2022, which benefited from strong pent-up demand for a
return to occasions after the pandemic. Active was the strongest
category, while beauty and men's apparel performed above
average.
As previously announced, on May 17, 2023 the board of
directors declared a quarterly cash dividend of $0.19 per share, payable on June 14, 2023,
to shareholders of record at the close of business on May 30,
2023.
FIRST QUARTER 2023 SUMMARY
- Total Company net sales decreased 11.6 percent and GMV
decreased 11.9 percent compared with the same period in fiscal
2022. The wind-down of Canadian operations had a negative impact on
total Company net sales of 175 basis points. The first quarter of
2023 included one month of sales from Canadian operations, compared
with a full quarter of sales from Canadian operations in the first
quarter of 2022.
- For the Nordstrom banner, net sales decreased 11.4 percent and
GMV decreased 11.8 percent compared with the same period in fiscal
2022. The wind-down of Canadian operations had a negative impact on
Nordstrom banner net sales of 270 basis points.
- For the Nordstrom Rack banner, net sales decreased 11.9 percent
compared with the same period in fiscal 2022. Eliminating store
fulfillment for Nordstrom Rack digital orders during the third
quarter of fiscal 2022 negatively impacted first quarter Rack
banner sales by approximately 600 basis points.
- Digital sales decreased 17.4 percent compared with the same
period in fiscal 2022. Collectively, eliminating store fulfillment
for Nordstrom Rack digital orders during the third quarter of
fiscal 2022 and sunsetting Trunk Club earlier in fiscal 2022
negatively impacted first quarter digital sales by approximately
800 basis points. Digital sales represented 36 percent of total
sales during the quarter.
- Gross profit, as a percentage of net sales, of 33.8 percent
increased 110 basis points compared with the same period in fiscal
2022, reflecting the Company's focus on increasing inventory
productivity.
- Ending inventory decreased 7.8 percent compared with the same
period in fiscal 2022, versus an 11.6 percent decrease in
sales.
- SG&A expenses, as a percentage of net sales, of 36.0
percent increased 240 basis points compared with the same period in
fiscal 2022. Excluding 120 basis points from a gain on the sale of
the Company's interest in a corporate office building and an
impairment charge related to costs associated with the wind-down of
Trunk Club in the first quarter of fiscal 2022, SG&A expenses
increased 120 basis points primarily due to deleverage from lower
sales, partially offset by improvements in variable costs from
supply chain efficiency initiatives.
- During the first quarter, the Company recorded $309 million of estimated pre-tax charges related
to the wind-down of Canadian operations, consistent with its
previously estimated range of $300
million to $350 million. The
Company's first quarter 2023 results include Canadian operations
through March 2, 2023, when it
discontinued support for Nordstrom
Canada.2 The Company is early in the wind-down
process and actual results may vary from estimates.
- Loss before interest and tax was $259
million in the first quarter of 2023, compared with earnings
before interest and tax ("EBIT") of $73
million during the same period in fiscal 2022. Adjusted EBIT
of $50 million in the first quarter
of 2023 excluded one-time charges of $309
million related to the wind-down of Canadian operations.
Adjusted EBIT of $32 million in the
first quarter of 2022 excluded a $51
million gain on the sale of the Company's interest in a
corporate office building and a $10
million impairment charge related to costs associated with
the wind-down of Trunk Club.3
- Interest expense, net, of $28
million decreased from $35
million during the same period in fiscal 2022 due to higher
interest income.
- Income tax benefit was $82
million, or 28.6 percent of pretax loss, compared with
income tax expense of $18 million, or
46.8 percent of pretax earnings, in the same period in fiscal 2022.
Excluding the approximately 22 percentage point impact of the
wind-down of Canadian operations, income tax expense in the first
quarter of 2023 was 50.7 percent of pretax earnings. Income tax
expense in the first quarters of 2023 and 2022, respectively, each
included discrete tax expense, primarily related to stock-based
compensation, which increased the quarterly effective tax rates by
29.4 percentage points and 19.3 percentage points,
respectively.
- The Company ended the first quarter with $1.4 billion in available liquidity, including
$581 million in cash and the full
$800 million available on its
revolving line of credit.
STORES UPDATE
During and subsequent to the first quarter of 2023, the Company
opened or relocated eight stores:
City
|
|
Location
|
|
Square
Footage
(000s)
|
|
Timing of
Opening
|
Nordstrom
Rack
|
|
|
|
|
|
|
Los Angeles,
CA
|
|
NOHO West
|
|
26
|
|
April 13,
2023
|
Clovis, CA
|
|
Clovis
Crossing
|
|
31
|
|
April 13,
2023
|
Delray Beach,
FL
|
|
Delray Place
|
|
26
|
|
May 11, 2023
|
Chattanooga,
TN
|
|
The Terrace at Hamilton
Place
|
|
24
|
|
May 18, 2023
|
Las Vegas,
NV
|
|
Best in the
West
|
|
31
|
|
May 18, 2023
|
Birmingham,
AL
|
|
The Summit (relocation
from River Ridge)
|
|
27
|
|
May 25, 2023
|
Wichita, KS
|
|
Bradley Fair
|
|
28
|
|
May 25, 2023
|
San Clemente,
CA
|
|
San Clemente
Plaza
|
|
32
|
|
May 25, 2023
|
The Company has also announced plans to open the following
stores:
City
|
|
Location
|
|
Square
Footage
(000s)
|
|
Timing of
Opening
|
Nordstrom
Rack
|
|
|
|
|
|
|
Union Gap,
WA
|
|
Valley Mall
|
|
28
|
|
Fall 2023
|
Olympia, WA
|
|
Cooper Point
Marketplace
|
|
32
|
|
Fall 2023
|
Salem, OR
|
|
Willamette Town
Center
|
|
25
|
|
Fall 2023
|
Anaheim Hills,
CA
|
|
Anaheim Hills
Festival
|
|
24
|
|
Fall 2023
|
Overland Park,
KS
|
|
Overland
Crossing
|
|
27
|
|
Fall 2023
|
San Luis Obispo,
CA
|
|
SLO
Promenade
|
|
24
|
|
Fall 2023
|
Allen, TX
|
|
The Village at
Allen
|
|
29
|
|
Fall 2023
|
Visalia, CA
|
|
Sequoia Mall
|
|
29
|
|
Fall 2023
|
Pinole, CA
|
|
Pinole Vista
Crossing
|
|
23
|
|
Fall 2023
|
Denton, TX
|
|
Denton
Crossing
|
|
25
|
|
Fall 2023
|
Aurora, CO
|
|
Southlands
|
|
30
|
|
Fall 2023
|
Natomas, CA
|
|
The Promenade at
Sacramento Gateway
|
|
26
|
|
Fall 2023
|
San Antonio,
TX
|
|
Northwoods
|
|
35
|
|
Fall 2023
|
Kennesaw,
GA
|
|
Barrett
Place
|
|
25
|
|
Spring 2024
|
Elk Grove,
CA
|
|
The Ridge Elk
Grove
|
|
25
|
|
Spring 2024
|
Gilroy, CA
|
|
Gilroy
Crossing
|
|
25
|
|
Spring 2024
|
Oceanside,
CA
|
|
Pacific Coast
Plaza
|
|
31
|
|
Spring 2024
|
Wheaton, IL
|
|
Danada Square
East
|
|
29
|
|
Spring 2024
|
Snellville,
GA
|
|
Presidential
Markets
|
|
35
|
|
Spring 2024
|
Macedonia,
OH
|
|
Macedonia
Gateway
|
|
28
|
|
Spring 2024
|
Jacksonville Beach,
FL
|
|
South Beach
Regional
|
|
30
|
|
Spring 2024
|
San Mateo,
CA
|
|
Bridgepointe Shopping
Center
|
|
36
|
|
Fall 2024
|
Davis, CA
|
|
The Davis
Collection
|
|
25
|
|
Spring 2025
|
The Company had the following store counts as of
quarter-end:
|
April 29,
2023
|
|
April 30,
2022
|
Nordstrom
|
|
|
|
Nordstrom
– U.S.
|
94
|
|
94
|
Nordstrom
– Canada
|
—
|
|
6
|
Nordstrom Local
service hubs
|
7
|
|
7
|
ASOS |
Nordstrom
|
1
|
|
—
|
Nordstrom
Rack
|
|
|
|
Nordstrom Rack
– U.S.
|
243
|
|
240
|
Nordstrom Rack
– Canada
|
—
|
|
7
|
Last Chance clearance
stores
|
2
|
|
2
|
Total
|
347
|
|
356
|
|
Gross store square
footage
|
26,259,000
|
|
27,555,000
|
As of the first quarter of 2023, the Company removed the six
Nordstrom stores and seven Nordstrom Rack stores in Canada from the table above as operations are
being wound down.
FISCAL YEAR 2023 OUTLOOK
The Company reaffirmed its revenue and adjusted financial
outlook for fiscal 2023, which includes a 53rd week and now
reflects the estimated charges from the wind-down of Canadian
operations and related tax impacts recorded in the first
quarter:
- Revenue decline, including retail sales and credit card
revenues, of 4.0 to 6.0 percent versus fiscal 2022, including an
approximately 250 basis point negative impact from the wind-down of
Canadian operations and an approximately 130 basis point positive
impact from the 53rd week
- EBIT margin (including the negative impact of charges related
to the wind-down of Canadian operations) of 1.5 to 2.0 percent of
sales
- Adjusted EBIT margin (excluding charges related to the
wind-down of Canadian operations) of 3.7 to 4.2 percent of
sales4
- Income tax rate of approximately 6 percent, including an
approximately 2,100 basis point favorable impact primarily from the
one-time Canada charges
- EPS (including the negative impact of charges related to the
wind-down of Canadian operations) of $0.60 to $1.00,
excluding the impact of share repurchase activity, if any
- Adjusted EPS (excluding charges related to the wind-down of
Canadian operations) of $1.80 to
$2.20, excluding the impact of share
repurchase activity, if any4
CONFERENCE CALL INFORMATION
The Company's senior management will host a conference call to
provide a business update and to discuss first quarter 2023
financial results and fiscal 2023 outlook at 4:45 p.m. EDT today. To listen to the live call
online and view the speakers' prepared remarks and the conference
call slides, visit the Investor Relations section of the Company's
corporate website at investor.nordstrom.com. An archived webcast
with the speakers' prepared remarks and the conference call slides
will be available in the Quarterly Results section for one year.
Interested parties may also dial 201-689-8354. A telephone replay
will be available beginning approximately three hours after the
conclusion of the call by dialing 877-660-6853 or 201-612-7415 and
entering Conference ID 13738446, until the close of business on
June 7, 2023.
ABOUT NORDSTROM
At Nordstrom, Inc. (NYSE: JWN), we exist to help our customers
feel good and look their best. Since starting as a shoe store in
1901, how to best serve customers has been at the center of every
decision we make. This heritage of service is the foundation we're
building on as we provide convenience and true connection for our
customers. Our digital-first platform enables us to serve customers
when, where and how they want to shop – whether that's in-store at
more than 350 Nordstrom, Nordstrom Local and Nordstrom Rack
locations or digitally through our Nordstrom and Rack apps and
websites. Through it all, we remain committed to leaving the world
better than we found it.
Certain statements in this press release contain or may
suggest "forward-looking" information (as defined in the Private
Securities Litigation Reform Act of 1995) that involves risks and
uncertainties that could cause results to be materially different
from expectations. The words "will," "may," "designed to,"
"outlook," "believes," "should," "targets," "anticipates,"
"assumptions," "plans," "expects" or "expectations," "intends,"
"estimates," "forecasts," "guidance" and similar expressions
identify certain of these forward-looking statements. The Company
also may provide forward-looking statements in oral statements or
other written materials released to the public. All statements
contained or incorporated in this press release or in any other
public statements that address such future events or expectations
are forward-looking statements. Important factors that could cause
actual results to differ materially from these forward-looking
statements are detailed in the Company's Annual Report on Form 10-K
for the fiscal year ended January 28, 2023, and our Form 10-Q
for the fiscal quarter ended April 29, 2023, to
be filed with the SEC on or about June 7, 2023. In
addition, forward-looking statements contained in this release may
be impacted by the actual outcome of events or occurrences related
to the wind-down of business operations in Canada. These forward-looking statements are
not guarantees of future performance and speak only as of the date
made, and, except as required by law, the Company undertakes no
obligation to update or revise any forward-looking statements to
reflect subsequent events, new information or future circumstances.
In addition, the actual timing, price, manner and amounts of future
share repurchases, if any, will be subject to the discretion of our
board of directors, contractual commitments, market and economic
conditions and applicable Securities and Exchange Commission
rules.
_______________________________
|
1
|
Adjusted EPS is a
non-GAAP financial measure. Refer to the "Adjusted EBIT, Adjusted
EBITDA, Adjusted EBIT Margin and Adjusted EPS" section of this
release for additional information as well as reconciliations
between the Company's GAAP and non-GAAP financial
results.
|
2
|
Nordstrom Canada is
comprised of Nordstrom Canada Retail, Inc., Nordstrom Canada
Holdings, LLC and Nordstrom Canada Holdings II, LLC.
|
3
|
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.
|
4
|
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
|
|
April 29,
2023
|
|
April 30,
2022
|
Net sales
|
$3,064
|
|
$3,467
|
Credit card revenues,
net
|
117
|
|
102
|
Total
revenues
|
3,181
|
|
3,569
|
Cost of sales and
related buying and occupancy costs
|
(2,028)
|
|
(2,331)
|
Selling, general and
administrative expenses
|
(1,103)
|
|
(1,165)
|
Canada wind-down
costs
|
(309)
|
|
—
|
(Loss) earnings before
interest and income taxes
|
(259)
|
|
73
|
Interest expense,
net
|
(28)
|
|
(35)
|
(Loss) earnings before
income taxes
|
(287)
|
|
38
|
Income tax benefit
(expense)
|
82
|
|
(18)
|
Net (loss)
earnings
|
($205)
|
|
$20
|
|
|
|
|
(Loss) earnings per
share:
|
|
|
|
Basic
|
($1.27)
|
|
$0.13
|
Diluted
|
($1.27)
|
|
$0.13
|
|
|
|
|
Weighted-average shares
outstanding:
|
|
|
|
Basic
|
160.8
|
|
160.1
|
Diluted
|
160.8
|
|
162.9
|
|
|
|
|
Percent of net
sales:
|
|
|
|
Gross profit
|
33.8 %
|
|
32.8 %
|
Selling, general and
administrative expenses
|
36.0 %
|
|
33.6 %
|
(Loss) earnings before
interest and income taxes
|
(8.5 %)
|
|
2.1 %
|
NORDSTROM,
INC. CONSOLIDATED BALANCE SHEETS (unaudited;
amounts in millions)
|
|
|
April 29,
2023
|
|
January 28,
2023
|
|
April 30,
2022
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$581
|
|
$687
|
|
$484
|
Accounts receivable,
net
|
279
|
|
265
|
|
297
|
Merchandise
inventories
|
2,237
|
|
1,941
|
|
2,426
|
Prepaid expenses and
other current assets
|
414
|
|
316
|
|
332
|
Total current
assets
|
3,511
|
|
3,209
|
|
3,539
|
|
|
|
|
|
|
Land, property and
equipment (net of accumulated depreciation of
$8,133, $8,289 and $7,834)
|
3,197
|
|
3,351
|
|
3,505
|
Operating lease
right-of-use assets
|
1,393
|
|
1,470
|
|
1,497
|
Goodwill
|
249
|
|
249
|
|
249
|
Other assets
|
478
|
|
466
|
|
384
|
Total
assets
|
$8,828
|
|
$8,745
|
|
$9,174
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
1,674
|
|
1,238
|
|
1,898
|
Accrued salaries,
wages and related benefits
|
246
|
|
291
|
|
241
|
Current portion of
operating lease liabilities
|
249
|
|
258
|
|
250
|
Other current
liabilities
|
1,236
|
|
1,203
|
|
1,198
|
Current portion of
long-term debt
|
249
|
|
—
|
|
—
|
Total current
liabilities
|
3,654
|
|
2,990
|
|
3,587
|
|
|
|
|
|
|
Long-term debt,
net
|
2,608
|
|
2,856
|
|
2,854
|
Non-current operating
lease liabilities
|
1,406
|
|
1,526
|
|
1,566
|
Other
liabilities
|
609
|
|
634
|
|
578
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Common stock, no par
value: 1,000 shares authorized; 161.4,
160.1 and 160.5 shares issued and
outstanding
|
3,372
|
|
3,353
|
|
3,301
|
Accumulated
deficit
|
(2,824)
|
|
(2,588)
|
|
(2,662)
|
Accumulated other
comprehensive gain (loss)
|
3
|
|
(26)
|
|
(50)
|
Total shareholders'
equity
|
551
|
|
739
|
|
589
|
Total liabilities
and shareholders' equity
|
$8,828
|
|
$8,745
|
|
$9,174
|
NORDSTROM,
INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited; amounts in millions)
|
|
|
Quarter
Ended
|
|
April 29,
2023
|
|
April 30,
2022
|
Operating
Activities
|
|
|
|
Net (loss)
earnings
|
($205)
|
|
$20
|
Adjustments to
reconcile net (loss) earnings to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expenses
|
144
|
|
152
|
Canada wind-down
costs
|
220
|
|
—
|
Right-of-use asset
amortization
|
43
|
|
47
|
Deferred income taxes,
net
|
(16)
|
|
(13)
|
Stock-based
compensation expense
|
14
|
|
19
|
Other, net
|
(25)
|
|
(45)
|
Change in operating
assets and liabilities:
|
|
|
|
Merchandise
inventories
|
(296)
|
|
(19)
|
Other current and
noncurrent assets
|
(112)
|
|
(42)
|
Accounts
payable
|
301
|
|
233
|
Accrued salaries,
wages and related benefits
|
(39)
|
|
(143)
|
Lease
liabilities
|
(67)
|
|
(65)
|
Other current and
noncurrent liabilities
|
54
|
|
43
|
Net cash provided by
operating activities
|
16
|
|
187
|
|
|
|
|
Investing
Activities
|
|
|
|
Capital
expenditures
|
(106)
|
|
(96)
|
Decrease in cash and
cash equivalents resulting from Canada deconsolidation
|
(33)
|
|
—
|
Proceeds from the sale
of assets and other, net
|
16
|
|
85
|
Net cash used in
investing activities
|
(123)
|
|
(11)
|
|
|
|
|
Financing
Activities
|
|
|
|
Change in cash book
overdrafts
|
29
|
|
16
|
Cash dividends
paid
|
(30)
|
|
(30)
|
Proceeds from
issuances under stock compensation plans
|
11
|
|
8
|
Other, net
|
(9)
|
|
(8)
|
Net cash provided by
(used in) financing activities
|
1
|
|
(14)
|
|
|
|
|
Net (decrease) increase
in cash and cash equivalents
|
(106)
|
|
162
|
Cash and cash
equivalents at beginning of period
|
687
|
|
322
|
Cash and cash
equivalents at end of period
|
$581
|
|
$484
|
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. 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) earnings to
adjusted EBIT and adjusted EBITDA and net earnings as a percent of
net sales to adjusted EBIT margin:
|
Quarter
Ended
|
|
April 29,
2023
|
|
April 30,
2022
|
Net (loss)
earnings
|
($205)
|
|
$20
|
Income tax (benefit)
expense
|
(82)
|
|
18
|
Interest expense,
net
|
28
|
|
35
|
(Loss) earnings before
interest and income taxes
|
(259)
|
|
73
|
Canada wind-down
costs
|
309
|
|
—
|
Trunk Club wind-down
costs
|
—
|
|
10
|
Gain on sale of
interest in a corporate office building
|
—
|
|
(51)
|
Adjusted
EBIT
|
50
|
|
32
|
Depreciation and
amortization expenses
|
144
|
|
152
|
Amortization of
developer reimbursements
|
(17)
|
|
(18)
|
Adjusted
EBITDA
|
$177
|
|
$166
|
|
|
|
|
Net
sales
|
$3,064
|
|
$3,467
|
Net (loss) earnings
as a % of net sales
|
(6.7 %)
|
|
0.6 %
|
EBIT margin
%
|
(8.5 %)
|
|
2.1 %
|
Adjusted EBIT margin
%
|
1.6 %
|
|
0.9 %
|
The following is a reconciliation of diluted EPS to adjusted
EPS:
|
Quarter
Ended
|
|
April 29,
2023
|
|
April 30,
2022
|
Diluted
EPS
|
($1.27)
|
|
$0.13
|
Canada wind-down
costs
|
1.92
|
|
—
|
Trunk Club wind-down
costs
|
—
|
|
0.06
|
Gain on sale of
interest in a corporate office building
|
—
|
|
(0.32)
|
Income tax impact on
adjustments1
|
(0.58)
|
|
0.07
|
Adjusted
EPS
|
$0.07
|
|
($0.06)
|
|
|
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; dollars in millions)
Our Nordstrom brand includes Nordstrom.com, Nordstrom U.S.
stores, Nordstrom Local and ASOS | Nordstrom. Nordstrom also
included Canada operations prior to March
2023, inclusive of Nordstrom.ca, Nordstrom Canadian stores
and Nordstrom Rack Canadian stores; and TrunkClub.com prior to
October 2022. Our Nordstrom Rack
brand includes NordstromRack.com, Nordstrom Rack U.S. stores and
Last Chance clearance stores. The following table summarizes net
sales for the first quarter of 2023, compared with the first
quarter of 2022:
|
Quarter
Ended
|
|
April 29,
2023
|
|
April 30,
2022
|
Net
sales:
|
|
|
|
Nordstrom
|
$2,027
|
|
$2,289
|
Nordstrom
Rack
|
1,037
|
|
1,178
|
Total net
sales
|
$3,064
|
|
$3,467
|
|
|
|
|
Net sales (decrease)
increase:
|
|
|
|
Nordstrom
|
(11.4 %)
|
|
23.5 %
|
Nordstrom
Rack
|
(11.9 %)
|
|
10.3 %
|
Total
Company
|
(11.6 %)
|
|
18.7 %
|
|
|
|
|
Digital sales as %
of total net sales1
|
36 %
|
|
39 %
|
|
|
1
|
Sales conducted through
a digital platform such as our websites or mobile apps. Digital
sales may be self-guided by the customer, as in a traditional
online order, or facilitated by a salesperson using a virtual
styling or selling tool. Digital sales may be delivered to the
customer or picked up in our Nordstrom stores, Nordstrom Rack
stores or Nordstrom Local service hubs. Digital sales also includes
a reserve for estimated returns.
|
NORDSTROM, INC.
FISCAL YEAR 2023
FORWARD-LOOKING NON-GAAP MEASURES
(NON-GAAP FINANCIAL
MEASURES)
(unaudited)
Our adjusted EBIT as a percent of net sales ("adjusted EBIT
margin") and adjusted EPS outlook for fiscal year 2023
excludes the impacts from certain items that we do not consider
representative of our core operating performance. These items
include charges from the wind-down of Canadian operations
recognized in the first quarter of 2023.
The following is a reconciliation of expected net earnings as a
percent of net sales to expected adjusted EBIT margin included
within our Fiscal Year 2023 Outlook:
|
53 Weeks Ending
February 3, 2024
|
|
Low
|
|
High
|
Expected net
earnings as a % of net sales
|
0.7 %
|
|
1.1 %
|
Income tax
expense
|
— %
|
|
0.1 %
|
Interest expense,
net
|
0.8 %
|
|
0.8 %
|
Expected EBIT as a % of
net sales
|
1.5 %
|
|
2.0 %
|
|
|
|
|
Canada wind-down
costs
|
2.2 %
|
|
2.2 %
|
Expected adjusted
EBIT margin
|
3.7 %
|
|
4.2 %
|
The following is a reconciliation of expected diluted EPS to
expected adjusted EPS included within our Fiscal Year 2023
Outlook:
|
53 Weeks Ending
February 3, 2024
|
|
Low
|
|
High
|
Expected diluted
EPS
|
$0.60
|
|
$1.00
|
Canada wind-down
costs
|
1.89
|
|
1.89
|
Income tax impact on
adjustments
|
(0.69)
|
|
(0.69)
|
Expected adjusted
EPS
|
$1.80
|
|
$2.20
|
NORDSTROM, INC.
ADJUSTED RETURN ON
INVESTED CAPITAL ("ADJUSTED ROIC")
(NON-GAAP FINANCIAL
MEASURE)
(unaudited; dollars in millions)
We believe that Adjusted ROIC is a useful financial measure for
investors in evaluating the efficiency and effectiveness of the
capital we have invested in our business to generate returns over
time. In addition, we have incorporated it in our executive
incentive measures and we believe it is an important indicator of
shareholders' return over the long term.
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
|
|
April 29,
2023
|
|
April 30,
2022
|
Net
earnings
|
$20
|
|
$364
|
Income tax (benefit)
expense
|
(8)
|
|
142
|
Interest
expense
|
138
|
|
145
|
Earnings before
interest and income tax expense
|
150
|
|
651
|
|
|
|
|
Operating lease
interest1
|
85
|
|
86
|
Adjusted net operating
profit
|
235
|
|
737
|
|
|
|
|
Estimated income tax
benefit (expense)2
|
166
|
|
(206)
|
Adjusted net
operating profit after tax
|
$401
|
|
$531
|
|
|
|
|
Average total
assets
|
$9,061
|
|
$9,228
|
Average non-current
deferred property incentives in excess of operating lease
right-of-use
(ROU) assets3
|
(188)
|
|
(223)
|
Average non-interest
bearing current liabilities
|
(3,203)
|
|
(3,347)
|
Average invested
capital
|
$5,670
|
|
$5,658
|
|
|
|
|
Return on
assets
|
0.2 %
|
|
3.9 %
|
Adjusted
ROIC4
|
7.1 %
|
|
9.4 %
|
|
|
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
|
Estimated income tax
benefit (expense) is calculated by multiplying the adjusted net
operating profit by the effective tax rate for the trailing
twelve-month periods ended April 29, 2023 and April 30, 2022. The
effective tax rate is calculated by dividing income tax by earnings
before income taxes for the same trailing twelve-month
periods.
|
3
|
For leases with
property incentives that exceed the ROU assets, we reclassify the
amount from assets to other current liabilities and other
liabilities on the Condensed Consolidated Balance Sheets. The
current and non-current amounts are used to reduce average total
assets above, as this better reflects how we manage our
business.
|
4
|
Results for the four
quarters ended April 29, 2023 included the $309 impact of the
Canada wind-down in the first quarter of 2023, which negatively
impacted return on assets by approximately 240 basis points and had
an immaterial impact on Adjusted ROIC.
|
NORDSTROM, INC.
ADJUSTED DEBT TO
EBITDAR (NON-GAAP FINANCIAL MEASURE)
(unaudited; dollars in
millions)
Adjusted debt to earnings before interest, income taxes,
depreciation, amortization and rent ("EBITDAR") is one of our key
financial metrics and we believe that our debt levels are best
analyzed using this measure, as it provides a reflection of our
creditworthiness which could impact our credit ratings and
borrowing costs. This metric is calculated in accordance with the
updates in our Revolver covenant and is a key component in
assessing whether our revolving credit facility is secured or
unsecured, as well as our ability to make dividend payments and
share repurchases. Our goal is to manage debt levels to achieve and
maintain investment-grade credit ratings while operating with an
efficient capital structure.
Adjusted debt to EBITDAR is not a measure of financial
performance under GAAP and should be considered in addition to, and
not as a substitute for, debt to net earnings, net earnings, debt
or other GAAP financial measures. Our method of calculating a
non-GAAP financial measure may differ from other companies' methods
and therefore may not be comparable to those used by other
companies. The financial measure calculated under GAAP which
is most directly comparable to Adjusted debt to EBITDAR is debt to
net earnings. The following shows the components to reconcile the
debt to net earnings calculation to Adjusted debt to EBITDAR:
|
April 29,
2023
|
Debt
|
$2,857
|
Operating lease
liabilities
|
1,655
|
Adjusted
debt
|
$4,512
|
|
|
|
Four Quarters
Ended
April 29, 2023
|
Net
earnings
|
$20
|
Income tax
benefit
|
(8)
|
Interest expense,
net
|
121
|
Earnings before
interest and income taxes
|
133
|
|
|
Depreciation and
amortization expenses
|
597
|
Operating lease
cost1
|
275
|
Amortization of
developer reimbursements2
|
71
|
Other Revolver covenant
adjustments3
|
418
|
Adjusted
EBITDAR
|
$1,494
|
|
|
Debt to Net
Earnings
|
141.4
|
Adjusted debt to
EBITDAR
|
3.0
|
|
|
1
|
Operating lease cost is
fixed rent expense, including fixed common area maintenance
expense, net of developer reimbursement amortization.
|
2
|
Amortization of
developer reimbursements is a non-cash reduction of operating lease
cost and is therefore added back to operating lease cost for
purposes of our Revolver covenant calculation.
|
3
|
Other adjusting items
to reconcile net earnings to Adjusted EBITDAR as defined by our
Revolver covenant include interest income, certain non-cash charges
and other gains and losses where relevant. For the four quarters
ended April 29, 2023, other Revolver covenant adjustments primarily
included costs associated with the wind-down of our Canadian
operations, a supply chain technology and related asset impairment
and the wind-down of Trunk Club.
|
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
|
|
April 29,
2023
|
|
April 30,
2022
|
Net cash provided by
operating activities
|
$16
|
|
$187
|
Capital
expenditures
|
(106)
|
|
(96)
|
Change in cash book
overdrafts
|
29
|
|
16
|
Free Cash
Flow
|
($61)
|
|
$107
|
INVESTOR
CONTACT:
|
|
Sara Penner
|
|
|
Nordstrom,
Inc.
|
|
|
InvRelations@Nordstrom.com
|
|
|
|
MEDIA
CONTACT:
|
|
Stephanie
Corzett
|
|
|
Nordstrom,
Inc.
|
|
|
NordstromPR@Nordstrom.com
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/nordstrom-reports-first-quarter-2023-earnings-301839010.html
SOURCE Nordstrom, Inc.