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SEATTLE, Nov. 26, 2024 /PRNewswire/ -- Nordstrom, Inc. (NYSE: JWN) today reported third quarter net earnings of $46 million, or earnings per diluted share ("EPS") of $0.27, and earnings before interest and taxes ("EBIT") of $83 million. Excluding a charge related to accelerated technology depreciation, the Company reported adjusted EBIT of $97 million and adjusted EPS of $0.33.[1]
For the third quarter ended November 2, 2024, net sales increased 4.6 percent versus the same period in fiscal 2023, and total Company comparable sales increased 4.0 percent. Gross merchandise value ("GMV") increased 5.3 percent. Anniversary Sale timing, with one week shifting from the third quarter to the second quarter, had a negative impact of approximately 100 basis points on net sales compared with 2023. During the quarter, Nordstrom banner net sales increased 1.3 percent and comparable sales increased 4.0 percent. Net sales for Nordstrom Rack increased 10.6 percent and comparable sales increased 3.9 percent.
"The continued sales growth across the company and strong gross margin in the third quarter indicate our team's focus and efforts are working," said Erik Nordstrom, chief executive officer of Nordstrom, Inc. "Our customers have a lot of choices, and our results give us encouragement that we're on the right path. Looking ahead, we'll continue to improve our shopping experience as we strive to maintain the positive momentum we've worked towards all year."
In the third quarter, women's apparel and active had double-digit growth, and shoes, men's apparel and kids were up mid to high single-digits, versus 2023. Growth in women's apparel, shoes and men's apparel accelerated sequentially from the second quarter.
"Our third quarter results demonstrate that our strategic focus on curating a compelling brand assortment is resonating with customers," said Pete Nordstrom, president of Nordstrom, Inc. "Our actions throughout this year have led to this moment, and we feel well-positioned for a successful holiday season and look forward to helping our customers celebrate the moments that matter. I'm grateful to our dedicated team for consistently delivering the high level of service our customers have come to expect from Nordstrom."
As previously announced, the board of directors declared a quarterly cash dividend of $0.19 per share, payable on December 18, 2024, to shareholders of record at the close of business on December 3, 2024.
THIRD QUARTER 2024 SUMMARY
STORES UPDATE
To date in fiscal 2024, the Company has opened 23 stores:
City | Location | Square Footage (000s) | Timing of Opening | |||
Nordstrom Rack | ||||||
Pinole, CA | Pinole Vista Crossing | 23 | March 7, 2024 | |||
Snellville, GA | Presidential Markets | 35 | March 7, 2024 | |||
Kennesaw, GA | Barrett Place | 25 | March 21, 2024 | |||
Macedonia, OH | Macedonia Gateway | 28 | April 11, 2024 | |||
Gilroy, CA | Gilroy Crossing | 25 | April 25, 2024 | |||
Jacksonville Beach, FL | South Beach Regional | 30 | May 2, 2024 | |||
Queen Creek, AZ | Queen Creek Marketplace | 28 | May 16, 2024 | |||
Elk Grove, CA | The Ridge Elk Grove | 25 | May 30, 2024 | |||
Wheaton, IL | Danada Square East | 29 | May 30, 2024 | |||
Oceanside, CA | Pacific Coast Plaza | 32 | June 6, 2024 | |||
Bay Shore, NY | Gardiner Manor Mall | 24 | June 13, 2024 | |||
San Antonio, TX | Bandera Pointe | 24 | September 5, 2024 | |||
Franklin, TN | Cool Springs Market | 24 | September 5, 2024 | |||
San Mateo, CA | Bridgepointe Shopping Center | 36 | September 12, 2024 | |||
San Diego, CA | Clairemont Town Square | 25 | September 19, 2024 | |||
Mooresville, NC | Mooresville Crossing | 28 | September 26, 2024 | |||
Houston, TX | Meyerland Plaza | 34 | September 26, 2024 | |||
Mason, OH | Deerfield Towne Center | 30 | October 3, 2024 | |||
Raleigh, NC | Triangle Town Place | 32 | October 10, 2024 | |||
Fort Myers, FL | Bell Tower | 31 | October 17, 2024 | |||
Noblesville, IN | Hamilton Town Center | 25 | October 17, 2024 | |||
Omaha, NE | Village Pointe | 30 | October 24, 2024 | |||
Tarzana, CA | Village Walk | 25 | November 1, 2024 |
The Company has also announced plans to open the following stores:
City | Location | Square Footage (000s) | Timing of Opening | |||
Nordstrom Rack | ||||||
Davis, CA | The Davis Collection | 25 | Spring 2025 | |||
Matthews, NC | Sycamore Commons | 25 | Spring 2025 | |||
Geneva, IL | Randall Square | 25 | Spring 2025 | |||
Manalapan Township, NJ | Manalapan Commons | 26 | Spring 2025 | |||
Apple Valley, MN | Fischer Marketplace | 30 | Spring 2025 | |||
Houston, TX | Westchase Shopping Center | 30 | Spring 2025 | |||
Morrisville, NC | Park West Village | 25 | Spring 2025 | |||
Coral Springs, FL | Pine Ridge Square | 31 | Fall 2025 | |||
Surprise, AZ | Prasada North | 26 | Fall 2025 | |||
Holbrook, NY | The Shops at SunVet | 27 | Fall 2025 | |||
Hyannis, MA | The Landing at Hyannis | 25 | Fall 2025 | |||
Prosper, TX | The Gates of Prosper | 26 | Fall 2025 | |||
Melbourne, FL | The Avenue Viera | 24 | Fall 2025 | |||
Meridian, ID | The Village at Meridian | 25 | Fall 2025 | |||
Lakeland, FL | Lakeside Village | 30 | Fall 2025 | |||
Sarasota, FL | Sarasota Pavilion | 27 | Spring 2026 |
The Company had the following store counts as of quarter-end:
November 2, 2024 | October 28, 2023 | ||
Nordstrom | |||
Nordstrom | 93 | 93 | |
Nordstrom Local service hubs | 6 | 6 | |
ASOS | Nordstrom | — | 1 | |
Nordstrom Rack | |||
Nordstrom Rack | 280 | 258 | |
Last Chance clearance stores | 2 | 2 | |
Total | 381 | 360 | |
Gross store square footage | 26,874,000 | 26,305,000 |
During the third quarter, the Company closed one Nordstrom Rack store.
FISCAL YEAR 2024 OUTLOOK
The Company updated its financial outlook for fiscal 2024, which reflects the estimated accelerated technology depreciation impacts expected in the fourth quarter of fiscal 2024:
CONFERENCE CALL INFORMATION
The Company's senior management will host a conference call to provide a business update and to discuss third quarter 2024 financial results and fiscal 2024 outlook at 4:45 p.m. EST today. To listen to the live call online and view the speakers' prepared remarks and the conference call slides, visit the Investor Relations section of the Company's corporate website at investor.nordstrom.com. An archived webcast with the speakers' prepared remarks and the conference call slides will be available in the Quarterly Results section for one year. Interested parties may also dial 201-689-8354. A telephone replay will be available beginning approximately three hours after the conclusion of the call by dialing 877-660-6853 or 201-612-7415 and entering Conference ID 13750079, until the close of business on December 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, our Form 10-Q for the fiscal quarter ended August 3, 2024 and our Form 10-Q for the fiscal quarter ended November 2, 2024, to be filed with the SEC on or about December 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, including consideration by a special committee of the board of directors of a proposal 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.
NORDSTROM, INC. | |||||
CONSOLIDATED STATEMENTS OF EARNINGS | |||||
(unaudited; amounts in millions, except per share amounts) | |||||
Quarter Ended | Nine Months Ended | ||||
November 2, 2024 | October 28, 2023 | November 2, 2024 | October 28, 2023 | ||
Net sales | $3,347 | $3,200 | $10,353 | $9,926 | |
Credit card revenues, net | 117 | 120 | 339 | 347 | |
Total revenues | 3,464 | 3,320 | 10,692 | 10,273 | |
Cost of sales and related buying and occupancy costs | (2,156) | (2,080) | (6,760) | (6,488) | |
Selling, general and administrative expenses | (1,225) | (1,163) | (3,680) | (3,466) | |
Canada wind-down costs | — | 25 | — | (284) | |
Earnings before interest and income taxes | 83 | 102 | 252 | 35 | |
Interest expense, net | (26) | (24) | (79) | (78) | |
Earnings (loss) before income taxes | 57 | 78 | 173 | (43) | |
Income tax (expense) benefit | (11) | (11) | (45) | 43 | |
Net earnings | $46 | $67 | $128 | $— | |
Earnings per share: | |||||
Basic | $0.28 | $0.41 | $0.78 | $— | |
Diluted | $0.27 | $0.41 | $0.76 | $— | |
Weighted-average shares outstanding: | |||||
Basic | 164.6 | 162.0 | 164.0 | 161.5 | |
Diluted | 169.8 | 163.6 | 168.1 | 161.5 | |
Percent of net sales: | |||||
Gross profit | 35.6 % | 35.0 % | 34.7 % | 34.6 % | |
Selling, general and administrative expenses | 36.6 % | 36.3 % | 35.5 % | 34.9 % | |
Earnings before interest and income taxes | 2.5 % | 3.2 % | 2.4 % | 0.4 % |
NORDSTROM, INC. | |||
CONSOLIDATED BALANCE SHEETS | |||
(unaudited; amounts in millions) | |||
November 2, 2024 | February 3, 2024 | October 28, 2023 | |
Assets | |||
Current assets: | |||
Cash and cash equivalents | $397 | $628 | $375 |
Accounts receivable, net | 544 | 334 | 322 |
Merchandise inventories | 2,780 | 1,888 | 2,626 |
Prepaid expenses and other current assets | 311 | 286 | 392 |
Total current assets | 4,032 | 3,136 | 3,715 |
Land, property and equipment (net of accumulated depreciation of $8,623, $8,251 and $8,258) | 3,041 | 3,177 | 3,187 |
Operating lease right-of-use assets | 1,438 | 1,359 | 1,402 |
Goodwill | 249 | 249 | 249 |
Other assets | 560 | 523 | 460 |
Total assets | $9,320 | $8,444 | $9,013 |
Liabilities and Shareholders' Equity | |||
Current liabilities: | |||
Accounts payable | $1,863 | $1,236 | $1,890 |
Accrued salaries, wages and related benefits | 355 | 244 | 245 |
Current portion of operating lease liabilities | 246 | 240 | 232 |
Other current liabilities | 1,068 | 1,102 | 1,092 |
Current portion of long-term debt | — | 250 | 250 |
Total current liabilities | 3,532 | 3,072 | 3,709 |
Long-term debt, net | 2,617 | 2,612 | 2,611 |
Noncurrent operating lease liabilities | 1,448 | 1,377 | 1,403 |
Other liabilities | 736 | 535 | 561 |
Commitments and contingencies | |||
Shareholders' equity: | |||
Common stock, no par value: 1,000 shares authorized; 164.9, 162.4 and 162.3 shares issued and outstanding | 3,483 | 3,418 | 3,407 |
Accumulated deficit | (2,504) | (2,578) | (2,681) |
Accumulated other comprehensive gain | 8 | 8 | 3 |
Total shareholders' equity | 987 | 848 | 729 |
Total liabilities and shareholders' equity | $9,320 | $8,444 | $9,013 |
NORDSTROM, INC. | ||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(unaudited; amounts in millions) | ||
Nine Months Ended | ||
November 2, 2024 | October 28, 2023 | |
Operating Activities | ||
Net earnings | $128 | $— |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization expenses | 468 | 430 |
Canada wind-down costs | — | 207 |
Asset impairment | 51 | — |
Right-of-use asset amortization | 140 | 132 |
Deferred income taxes, net | (72) | 2 |
Stock-based compensation expense | 57 | 41 |
Other, net | (14) | (61) |
Change in operating assets and liabilities: | ||
Accounts receivables, net | (220) | (58) |
Merchandise inventories | (747) | (687) |
Prepaid expenses and other assets | (2) | (82) |
Accounts payable | 429 | 509 |
Accrued salaries, wages and related benefits | 111 | (41) |
Other current liabilities | 4 | (90) |
Lease liabilities | (199) | (203) |
Other liabilities | 237 | 8 |
Net cash provided by operating activities | 371 | 107 |
Investing Activities | ||
Capital expenditures | (321) | (375) |
Decrease in cash and cash equivalents resulting from Canada deconsolidation | — | (33) |
Proceeds from the sale of assets and other, net | 27 | 32 |
Net cash used in investing activities | (294) | (376) |
Financing Activities | ||
Principal payments on long-term debt | (250) | — |
Change in cash book overdrafts | 28 | 37 |
Cash dividends paid | (93) | (92) |
Payments for repurchase of common stock | — | (1) |
Proceeds from issuances under stock compensation plans | 19 | 19 |
Other, net | (12) | (6) |
Net cash used in financing activities | (308) | (43) |
Net decrease in cash and cash equivalents | (231) | (312) |
Cash and cash equivalents at beginning of period | 628 | 687 |
Cash and cash equivalents at end of period | $397 | $375 |
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 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 to adjusted EBIT and adjusted EBITDA and net earnings as a percent of net sales to adjusted EBIT margin:
Quarter Ended | Nine Months Ended | ||||
November 2, 2024 | October 28, 2023 | November 2, 2024 | October 28, 2023 | ||
Net earnings | $46 | $67 | $128 | $— | |
Income tax expense (benefit) | 11 | 11 | 45 | (43) | |
Interest expense, net | 26 | 24 | 79 | 78 | |
Earnings before interest and income taxes | 83 | 102 | 252 | 35 | |
Accelerated technology depreciation1 | 14 | — | 14 | — | |
Supply chain asset impairment and other | — | — | 54 | — | |
Canada wind-down costs | — | (25) | — | 284 | |
Adjusted EBIT | 97 | 77 | 320 | 319 | |
Depreciation and amortization expenses | 148 | 145 | 451 | 430 | |
Amortization of developer reimbursements | (14) | (17) | (44) | (52) | |
Adjusted EBITDA | $231 | $205 | $727 | $697 | |
Net sales | $3,347 | $3,200 | $10,353 | $9,926 | |
Net earnings as a % of net sales | 1.4 % | 2.1 % | 1.2 % | — % | |
EBIT margin | 2.5 % | 3.2 % | 2.4 % | 0.4 % | |
Adjusted EBIT margin | 2.9 % | 2.4 % | 3.1 % | 3.2 % |
1 | As a result of a strategic decision, we recognized a charge related to incremental accelerated depreciation for a technology asset, which we will deprecate in the fourth quarter of 2024. The charge is included in our Corporate/Other SG&A expense on the Condensed Consolidated Statement of Earnings and depreciation and amortization expenses on the Condensed Consolidated Statement of Cash Flows. |
The following is a reconciliation of diluted EPS to adjusted EPS:
Quarter Ended | Nine Months Ended | ||||
November 2, 2024 | October 28, 2023 | November 2, 2024 | October 28, 2023 | ||
Diluted EPS | $0.27 | $0.41 | $0.76 | $— | |
Accelerated technology depreciation | 0.08 | — | 0.08 | — | |
Supply chain asset impairment and other | — | — | 0.32 | — | |
Canada wind-down costs | — | (0.15) | — | 1.74 | |
Income tax impact on adjustments1 | (0.02) | (0.01) | (0.10) | (0.58) | |
Adjusted EPS | $0.33 | $0.25 | $1.06 | $1.16 |
1 | The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate for the respective non-GAAP adjustment. |
NORDSTROM, INC.
SUMMARY OF NET SALES
(unaudited; amounts in millions)
Our Nordstrom brand includes Nordstrom.com, Nordstrom U.S. stores and Nordstrom Local. Nordstrom also included Canada operations prior to March 2, 2023, inclusive of Nordstrom.ca, Nordstrom Canadian stores and Nordstrom Rack Canadian stores, and ASOS | Nordstrom prior to December 2023. Our Nordstrom Rack brand includes NordstromRack.com, Nordstrom Rack U.S. stores and Last Chance clearance stores. The following table summarizes net sales for the quarter and nine months ended November 2, 2024, compared with the quarter and nine months ended October 28, 2023:
Quarter Ended | Nine Months Ended | ||||
November 2, 2024 | October 28, 2023 | November 2, 2024 | October 28, 2023 | ||
Net sales: | |||||
Nordstrom | $2,077 | $2,051 | $6,632 | $6,570 | |
Nordstrom Rack | 1,270 | 1,149 | 3,721 | 3,356 | |
Total net sales | $3,347 | $3,200 | $10,353 | $9,926 | |
Net sales increase (decrease): | |||||
Nordstrom | 1.3 % | (9.4 %) | 1.0 % | (10.3 %) | |
Nordstrom Rack | 10.6 % | (1.8 %) | 10.9 % | (5.9 %) | |
Total Company | 4.6 % | (6.8 %) | 4.3 % | (8.9 %) | |
Digital sales as % of total net sales1 | 34 % | 34 % | 35 % | 35 % |
1 | Sales conducted through a digital platform such as our websites or mobile apps. Digital sales may be self-guided by the customer, as in a traditional online order, or facilitated by a salesperson using a virtual styling or selling tool. Digital sales may be delivered to the customer or picked up in our Nordstrom stores, Nordstrom Rack stores or Nordstrom Local service hubs. Digital sales also includes a reserve for estimated returns. |
NORDSTROM, INC.
FISCAL YEAR 2024 FORWARD-LOOKING NON-GAAP MEASURES
(NON-GAAP FINANCIAL MEASURES)
(unaudited)
Our adjusted EBIT as a percent of net sales ("adjusted EBIT margin") and adjusted EPS outlook for fiscal year 2024 excludes the impacts from certain items that we do not consider representative of our core operating performance. These items include charges primarily related to a supply chain asset impairment in the second quarter of 2024 and accelerated technology depreciation to be recognized in the second half of fiscal 2024.
The following is a reconciliation of expected net earnings as a percent of net sales to expected adjusted EBIT margin included within our Fiscal Year 2024 Outlook:
52 Weeks Ending February 1, 2025 | |||
Low | High | ||
Expected net earnings as a % of net sales | 1.7 % | 2.0 % | |
Income tax expense | 0.6 % | 0.7 % | |
Interest expense, net | 0.7 % | 0.7 % | |
Expected EBIT as a % of net sales | 3.0 % | 3.4 % | |
Supply chain asset impairment and other | 0.4 % | 0.4 % | |
Accelerated technology depreciation | 0.2 % | 0.2 % | |
Expected adjusted EBIT margin | 3.6 % | 4.0 % |
The following is a reconciliation of expected diluted EPS to expected adjusted EPS included within our Fiscal Year 2024 Outlook:
52 Weeks Ending February 1, 2025 | |||
Low | High | ||
Expected diluted EPS | $1.40 | $1.70 | |
Supply chain asset impairment and other | 0.32 | 0.32 | |
Accelerated technology depreciation | 0.15 | 0.15 | |
Income tax impact on adjustments | (0.12) | (0.12) | |
Expected adjusted EPS | $1.75 | $2.05 |
NORDSTROM, INC.
ADJUSTED RETURN ON INVESTED CAPITAL ("ADJUSTED ROIC")
(NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts in millions)
We believe that Adjusted ROIC is a useful financial measure for investors in evaluating the efficiency and effectiveness of the capital we have invested in our business to generate returns over time. Our Adjusted ROIC calculation excludes certain items that we do not consider representative of our core operating performance.
Adjusted ROIC is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, return on assets, net earnings, total assets or other GAAP financial measures. Our method of calculating a non-GAAP financial measure may differ from other companies' methods and therefore may not be comparable to those used by other companies. The financial measure calculated under GAAP which is most directly comparable to Adjusted ROIC is return on assets. The following shows the components to reconcile the return on assets calculation to Adjusted ROIC:
Four Quarters Ended | ||
November 2, 2024 | October 28, 2023 | |
Net earnings | $263 | $119 |
Income tax expense (benefit) | 99 | (2) |
Interest expense | 137 | 136 |
Earnings before interest and income tax expense | 499 | 253 |
Operating lease interest1 | 90 | 86 |
Non-operating related adjustments2 | 99 | 284 |
Adjusted net operating profit | 688 | 623 |
Adjusted estimated income tax expense3 | (187) | (144) |
Adjusted net operating profit after tax | $501 | $479 |
Average total assets | $8,779 | $8,956 |
Average noncurrent deferred property incentives in excess of operating lease right-of-use (ROU) assets4 | (128) | (167) |
Average non-interest bearing current liabilities | (2,992) | (3,134) |
Non-operating related adjustments2 | 44 | 294 |
Adjusted average invested capital | $5,703 | $5,949 |
Return on assets | 3.0 % | 1.3 % |
Adjusted ROIC | 8.8 % | 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 accelerated technology depreciation for the four quarters ended November 2, 2024 and the wind-down of our Canadian operations for the four quarters ended October 28, 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 November 2, 2024 and October 28, 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:
November 2, 2024 | |
Debt | $2,617 |
Operating lease liabilities | 1,694 |
Adjusted debt | $4,311 |
Four Quarters Ended | |
Net earnings | $263 |
Income tax expense | 99 |
Interest expense, net | 105 |
Earnings before interest and income taxes | 467 |
Depreciation and amortization expenses | 607 |
Operating lease cost1 | 292 |
Amortization of developer reimbursements2 | 62 |
Other Revolver covenant adjustments3 | 138 |
Adjusted EBITDAR | $1,566 |
Debt to Net Earnings | 10.0 |
Adjusted debt to EBITDAR | 2.8 |
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 November 2, 2024, other Revolver covenant adjustments primarily included supply chain impairment charges, interest income and accelerated technology depreciation. See the Adjusted EBIT and Adjusted EBITDA section, as well as our 2023 Annual Report, for detailed information on certain non-operating related adjustments. |
NORDSTROM, INC.
FREE CASH FLOW (NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts in millions)
Free Cash Flow is one of our key liquidity measures and, when used in conjunction with GAAP measures, we believe it provides investors with a meaningful analysis of our ability to generate cash from our business.
Free Cash Flow is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, operating cash flows or other financial measures prepared in accordance with GAAP. Our method of calculating a non-GAAP financial measure may differ from other companies' methods and therefore may not be comparable to those used by other companies. The financial measure calculated under GAAP which is most directly comparable to Free Cash Flow is net cash provided by operating activities. The following is a reconciliation of net cash provided by operating activities to Free Cash Flow:
Nine Months Ended | ||
November 2, 2024 | October 28, 2023 | |
Net cash provided by operating activities | $371 | $107 |
Capital expenditures | (321) | (375) |
Change in cash book overdrafts | 28 | 37 |
Free Cash Flow | $78 | ($231) |
INVESTOR CONTACT: | James Duies | |
Nordstrom, Inc. | ||
InvRelations@Nordstrom.com | ||
MEDIA CONTACT: | Stephanie Corzett | |
Nordstrom, Inc. | ||
NordstromPR@Nordstrom.com |
[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 is a non-GAAP financial measure. 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.
[4]Adjusted EPS is a non-GAAP financial measure. 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.
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SOURCE Nordstrom, Inc.