Nordstrom (JWN) 24 Aug 232023 Q2 Earnings call transcript

Greetings, and welcome to the Nordstrom Second Quarter 2023 Earnings Conference Call. [Operator Instructions] And as a reminder this conference is being recorded.

At this time, I'll turn the call over to Sara Penner, Manager of Investor Relations for Nordstrom. Thank you.

You may begin.

you us. thank and afternoon, for joining Good

Before be be referring I want viewed that we'll to mention nordstrom.com. to on the Relations we Investor begin, in section slides, which can

safe so may discussion to with include statements, harbor Our please language. forward-looking the refer slide our

and Financial and Participating President Officer, quarter provide business are update who the Pete call and company's performance. Officer; today's Nordstrom, Chief will Brand in Officer; Cathy discuss second Executive Erik Nordstrom, Chief Smith, Chief a

call the turn I'll to Erik. now And over

Thank you, everyone. for Sara, and good Thanks joining afternoon, us today.

retail Smith welcome years Before with roles a call. our I'd navigating country. business proven the environment like of we has some dynamic is experience of begin, our retailers in to new Cathy her She in many CFO, the Cathy expertise results. to prior finance largest delivering with leader deep earnings the

her have team. to thrilled are on the We

You will hear more her today. from

delivered with last in lower our start results the performance. than higher solid share quarter, We second year per I'll QX sales. with despite earnings

As challenging since drive in clear even saw higher profitability this opportunities a of we've year, the environment. to said sales we beginning

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improve to focused working well, customer priorities. performed teams experience while staying the these Our on

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which enter Anniversary In in the XX% addition, that we we're last from pleased a sell-through, and us position had very year better as inventory second half. strong was up inventory a puts

our Rack, brands to July Sales in sequentially Rack and product line also improvements month. deliver top both trends strategic mix helped throughout profitability. sequential the with and at Nordstrom best At our was initiatives the improve improved our quarter,

continue remain in drive higher against confident we profitable near in the for ability against set the uncertainty second we made growth. economic return by ahead, key deliver year progress We're focused we term. in Looking and we remain three on financial half the to to to our XXXX, and this even the delivering to outlook navigate as encouraged priorities long-term profitability our

at and I'll initiatives. priorities: our performance productivity highlight a to wins had within improving quarter Rack, during advance inventory three supply our continuing increasing second few the we Nordstrom chain optimization

we great progress Rack, delivering Nordstrom brands and sales of our our our on on promise great initiatives improve are profitability. made significant prices, both At to and teams offering at

and similarly to strategic Rack. of faster half from respond sell-through our to, second giving our of assortment are second target they results sales the include the each we've in for at at brands know came order customers our higher we In shop quarter, through on brands shift XX%, meet Nordstrom goal. mix planned our we more we inventory As newness seeing our time and to improve customers the turns,

unique returns Rack look great XXXX, stores and made with Nordstrom to and product in with we date the offering are investment that new our the expand exceed Rack's pleased largest the source of Rack we to as of customers are the forward our capital expand short reach also stores stores are eight suite XX our represent footprint. more We a and progress end additional Rack a cost convenient for new of opening by services in to to of stores bringing new with period. the opened markets we year. payback we

improving leaner turns second across continue inventories margin margins Turning year's XXXX. to productivity, priority and inventory the in our was faster with that on sell-through manage par of improved we most resulting of which categories, are QX, quarter with to last our gross of highest

progress work our and our rightsizing there. We continue also made position further our reduce inventory to designer

both levels are second year versus of XX% of the the to us buying the be compared positions responsive the half in down to sell-through inventory X% banners entering during in at the an decrease to are overall good year a Sale sales. Anniversary We well more second year. Stronger position last customers with in what half

will levels margin to up improvements, inventory the compared fourth particularly gross deliver in us set lower Our year. last to quarter

third chain now Turning supply faster through especially to delivery, better our we customers delivered a our experience priority, optimization, anniversary. to during

points as year, a prior SG&A the the supply mitigate sales over of by quarter, For fell fourth lower helping consecutive rate basis chain variable overall deleverage XXX on versus sales. costs to

year time. Compared X% an per X% inflationary about supply we our started, to customer in of XXXX, we're delivered of we chain that We cost supply have over lower at the of first and unit Since early significant delivering benefits operational and lower XXXX. work in current optimization And quarter cost. second this efficiencies. faster backdrop the were quarter began chain since then, against

continue and ahead, initiatives. Looking to we additional improved efficiencies out through productivity management seek flow inventory in

we at will solid are against the we In to three these and year, the focus continue closing, beginning set making of on goals. priorities the progress

at operational do. while a headwinds to We of approach have near-term keep to the continuing everything we are we the taking fortunate are who embraced center customer an disciplined team experienced has manage to more

our confident sharing digital continued to ahead. to in long-term shareholder capabilities quarters will look profitable by strong sheet be cash and better our to in that as and we progress chain sustained a balance positioned have position are We stores, We supply our growth as well drive continuing the in invest value. and forward and

Pete. With that, over I'll turn it to

Erik. Thanks,

from then terms and making and we're quarter sale, improved Most the first performance year-over-year chain. I'll I'll trends. anniversary of Starting cover performance. progress the merchandise inventory discuss in our sequentially with on and supply management categories category the

and was category Active from offerings Customers the offerings Beauty New year, from new Rack, customers Too especially year. MAC, lower dressed drawn but Theory. brands accessories, Nike. up we Beard, to Faced was last selections and and than our relatively and up well performed brands, Vince more category On apparel by Balance last from Women's Within The than strength. and perform improved footwear. Clinique responded both up and average. continued Running, apparel handbags, including well to the Hoka, from including well. driven of looks At and to did contemporary tailored Kids great brands, showed quarter Nordstrom performed Nordstrom Rack, men's sales versus better Men's apparel, Active saw slightly each first banners women's with expanded at slightly average. At sequentially Veronica and

anticipated, year rightsize under margin faster significant demand In across second the this on As we both the progress to continue shift focused order quarter, position are and we'll made in health, remains pressure. designer consumer driving inventory this inventory to improve We and turns banners. reducing our flow during in to category.

solid made progress second quarter, the we on During this.

Now turning to Anniversary.

well half. curated both enter very favorite unique responded earlier full customers they rewards our are we sale Erik engages which brands, inspiration. Sale down event strong up a is puts to and balanced a described, price. before products the loyal brand-new As as marked Anniversary marked our helped Customers with of sell-through from position This highlighted to second the us drive that the and in inventory during assortment, their relevance Erik the and favorable many

We from are see customers brands shop jackets. like Nuna. for pleased and dressed items, boots in gear active wear including looks and sweaters, shopped baby up also They to Fall

responded our which improved to private Nordstrom positively the customers addition, event's to In of assortment important success. are brands,

at supply Anniversary, and did our as our an and in given We customers connected and this a teams welcoming delivery and events complete start convenient and during timely of initiatives experience to continued outstanding of productivity through services. result nordstrom.com delivering the year chain. were Our the a sale better personalized into prepared job product stores

ongoing Anniversary quarter day that fell year, included event this X% year's third the was results. to eight line includes were last trends sales This overall Total year, in one spending. given in compared the in days QX softness last in whereas the lower with customer

put We and a are we enter our the pleased the year. inventory by as position exceeded us strong sell-through plans in Anniversary products, on half second which of favorable the

and create a We are integrated committed physical digital seamless to their customers to our assets journey. own on and serving terms, we've

on nordstrom.com pick store. digital of early our window for accounted over by of all XX% buy sales loyalty during the of our time had either through store these fulfill member sales up were of event or and over highest hour in demand store, We Digital to overall sale. stores the enabled online, our ship of XX% access

our We categories continue second quarter. inventory turn to inventory enhance slightly with our across of flow improving in most the

the are on both banners improving half, by and inventory For health discipline to second productivity. in managing we for will with drive higher continue focused

our reserves trends customer us buy in enables which demand. plans, against and We respond are to maintaining to season

At they great increasing have the point Strategic our we'll mix sell-through. also brands differentiation terms in improve know half. a than of continue prices. significant second because made brand in our to Nordstrom progress at great with of better brands Rack, we we productivity customers They strategic brands other and create penetration, want

benefits the teams optimization supply delivered to our Turning to from initiatives. earlier our chain Erik chain. supply spoke

making Looking productivity, the our We're ramping this up, of more forward, and initiatives. our we're and efficiencies we're expect There's we our ahead, work continuing to progress To confident well year. transportation in priorities. accomplish our in to returns inventory to positioned profitability up RFID operational processing half. additional ability second on improve by for and wrap XXXX each deliver solid

With over that, and discuss call, her now I'd it to to our welcome Cathy I'll our turn financial to results. like to

Pete Thanks,

to forward I those of of experience respect growth I and be the to company, service. I excited and help I'm to and with know don't. have I team. brand of reconnecting the part those success. you of honored legacy profitable drive for you know Nordstrom and am customer look I getting to long-term Nordstrom tremendous already

outlook on XXXX. what expand with will Erik our already of discuss I quarter. remainder our Pete I'll quarter start about and the for have shared second and results then Now our

excluding down year's of adjusted year's second earnings charges When share earnings the share of per $X.XX Trunk earnings related last $X.XX. the reported share $X.XX. last to of was Club, we compared per wind For quarter, to per

EPS the We are increase pleased million despite sales. fewer $XXX year-over-year the with

points the one week compared of gross this in sales of approximately Anniversary basis with timing from They one impact operations. negative merchandise day impact last points into the approximately Net year. from year basis falling sales reflect GMV, Sale the also quarter a XXX the Canadian of shift as well third negative to X% decreased of included value, wind down a XXX as or QX. Net

Excluding of two the would about items, sales year. X% impact these down versus net last been have

impact month improving sequentially During the decreased the each and last timing the improvement trends XX%. sales the quarter sales year, at year-over-year pronounced XX% and when quarter, sales Rack. of decreased shift Anniversary with net sales banner the was Nordstrom improved when each versus most GMV from first excluding

The the on and points, wind shift net Nordstrom negative down negative basis a banner impact a sales of operations basis of points. had Canadian Anniversary approximately included XXX timing impact of XXX

QX impact improving in to Nordstrom basis the orders quarter. to of digital store year-over-year third eliminate XX% of quarter We year's XXXX decision the Rack Rack decreased negative in sequentially first X%, of compared points. this the a sales approximately fulfillment XXX starting had to estimate sales a decrease

sunsetting Digital the This an quarter impact points digital impact an includes Rack in shift. the in negative Anniversary from from timing estimated It last store estimated Club second the basis XXX XXX also basis combined second negative decreased orders Trunk XX% third point of the quarter and XXXX. of fulfillment sales quarter. year in eliminating includes

XX percentage an reflecting decreased sales. a points, year lower basis X% by primarily cost. of profit compared in XX% decreased Ending inventory on offset deleverage as sales, Gross decrease to and net partially occupancy lower buying last sales versus

sale. sell-through strong better year, move we into positioned our the is Anniversary back inventory thanks of to Our the during the as half

quarter, Looking higher benefit lower routines sales. of second inventory while supply disciplines which and helped meeting improvements management initiatives, expenses variable we will demand. driven chain improved from ahead, as a sales year's customer in from and offset continue by flat net was labor efficiency deleverage SG&A to from costs percentage to last

our In normal quarter this a of estate namely second a sale benefited costs of lower of items expected. from year addition, assets our the rate, expenses real and on the than outside in couple previously run carrier gain

consecutive of quarter points in as And momentum this percentage of variable chain as the a marks initiatives. cost We have we basis are pleased over where with sales. our the XXX Erik supply our in improvement fourth mentioned, delivered

EBIT year's X.X%, second and quarter EBIT purposes, up the last charges from related sales XX margin Trunk to basis excluding margin. quarter, points this margin to X.X% for second After comparison last the was of of again, was flat Club for margin lower year's despite year's EBIT quarter. in last adjusted sunsetting

maintain position, and quarter continue balance $X.X the We on to line including available liquidity sheet with full solid financial a available ending in second the $XXX of credit. and billion our revolving million

Turning to outlook guidance. for assumptions discussing by related underlying our I'll the and our of the current year. rest environment start the

particularly second We during consumer changes the interest and season. top and in spending how inflation consumer, will of the be holiday improvement half see sequential continue seen line to it quarter. in second cautious We a saw the discretionary to affect in year, remains higher the rates

it at both have sales early while third However, the decelerated in trends banners. is quarter,

to on inflationary we expect which despite first these we will progress results continued our improve full outlook make are maintain the approach and key better-than-expected priorities, factors, pressures. for cautious cost the profitability in our half. our Considering We to planning year taking help a mitigate

$XXX we of includes our I'll decline This operations, for starting an to the to percentage year, factors outlook rest XXXX. X.X revenue. the the Canadian versus sales wind from revenue X% approximately of delivered outlook XXXX. our that highlight in of to a point shape X% impact expect down negative which approximately with million few continue

first second million the positive XXrd compared year, in the sequential week includes impact quarter. $XXX fourth which sales will we Year-over-year improvement an will percentage in from become more and X.X expect fiscal the XXXX, approximately continue the point in we half top also line comparisons in approximately sales the to add to of It favorable half. expect

to will digital of orders. things the start we third comparisons store benefit the in lap year-over-year the Two quarter. impact eliminating One, Rack of fulfillment

credit positively will Second, sales Sale approximately with Anniversary our by are timing tailwinds business. the card XXX headwinds Offsetting quarter basis points. shift impact to third the respect

credit and we into result card Our connection losses with recognized higher half rising revenue revenues the partner seen the and with our higher and they are first pre-pandemic delinquencies credit lower-than-expected second which in card agreement in now credit were the gradually, year in credit losses. in card said, up have of could from above XX% levels, That half XXXX.

X.X% continue adjusted we versus margin Turning approximately the X.X% to EBIT for EBIT, to full in year of to X.X% expect XXXX.

primarily EBIT assumes compared inventory in Our half gross second in took we forecast focus that on when our adjusted the margin markdowns expansion will margin productivity from driven XXXX. elevated by be the improvements to

will although offset our by time lower from chain trend expect ongoing given We impacted our extent, sales lesser rate partial a sales initiatives, SG&A expense optimization from deleverage outlook to with supply be progresses. as

adjusted EPS full We also for maintain our outlook for year. the

impact. $X.XX remains per related full wind-down tax GAAP Canadian to the the outlook and $X includes charges share which year, earnings Our for

of the adjusted per the for full expect year. charges, these Excluding earnings $X.XX of to share to $X.XX impact we continue

allocation. capital to Shifting

Our same. remain priorities the

in long-term investing growth. the our customers better support is business first serve The to and

of sales. continue of capital We for plan X% to X% expenditures net to

reducing Our target to second priority X.Xx. and rating ratio combination earnings our leverage. improvement a investment-grade remain and a an We is credit below to of debt through continue reduction leverage committed

cash returning is priority third shareholders. to Our

per $X.XX share. Directors dividend Last declared cash week, quarterly of of Board a our

our are capabilities. We Nordstrom the priorities our increasing results productivity pleased solid improving Rack, chain progress with supply and second XXXX and in on quarter our optimizing inventory of

to near-term shareholder We deliver long in over on profitable remain environment uncertain navigate focus term. our continue confident the the value We through driving ability to growth. and

we're for Sara, that, questions. With ready

Cathy. you Thank

one limit to Q&A themselves We'll to move we Before Q&A, we the follow-up. ask started and one now session. the participants get question please with

first comes the with Please question. And from Noah Instructions] Markets. of with [Operator the question your line Zatzkin proceed Capital KeyBanc

Noah. Hi everyone. This is Ashley for on

half? in the with Rack in have be should first full about price quarter, I of follow-up? then the stronger the Just improvement how banners this growth back pace and we guidance a thinking typical And

sorry, catch the didn't half Cathy. repeat you Hi of I'm that? Ashley. I your can quite It's question? back

Yes.

how be improvement the at the about to we relative full the of with the So back thinking year? price, in in banners full half should Rack stronger pace

you. Thank Yes.

Ashley.

off, solid guidance we the good, had full as reiterate So first results a really delivering, second did that - for just the we're pleased year we quarter. we and remind with us, our We're back half. to

through So thinking first improvement through expect the year, the half to we sequential the we've sequential already half. seen improvement of through continue the would that back

benefit the we'll that QX, particularly see XXrd you'll week. - So of

by the And bit comp quarter. of kind So would have in QX that. little then obviously, of QX, we fourth better, then I little between think think in as offset about operations. And going to QX. a and And the a of Canadian it's be loss then the easier bit it

inventory, then Great. color think provide And designer? your you on with some could maybe you efforts current then you the on Okay. additional right-size us And to just mix? are in where

Ashley, is bit. ask Pete a little on then to designer start, I'll Maybe, Cathy. comment this I'll and

we're productivity. continued as It's priorities is know, terrific down Inventory down really we've year, job. the that. our one guys even more X%. this almost on pleased you drive than down and three Units has team So, are done that sales to inventory XX% top of a

pleased the little us maybe them. into meet we can a and in year bit back consumer healthy make to the there. designer, after we're we're the going allows that half then can of that inventory Pete a so, really And position. And sure really demand chase answer on It

abruptly rather really it over you we've designer we've to And as about a ago. calls invested and category, had against growth the On listening Yes. know, time, in designer, been that. changed the year if good you've

liked, some to It than through And sales with ourselves more that. takes inventory found turn other we as fast if it time, trends. categories. on work we given we the so, have doesn't order more as would And have

lot is A that of product product. in continued

inherently it's we more have but same so covered And and as it forward than the do not at aging time, need. perishable, is we

through So design it to the and side. time that, on we're our work working partners it takes vendor with through

so much. Great. Thanks

Sachs. Next is from Goldman Brooke with Roach

during you And Rack some afternoon. on much of provide my thank very I you the taking quarter. Good could question. more performance context the drivers for hoping was the

beginning throughout into you've that ticket of of little the year, better bit How but quarter mentioned did deceleration. period conversion most and and can a expectations? a seen of the traffic you. important performance the school month the you And trends Thank contextualize back of You back-to-school expect drivers to to Rack performed relative trend as each ahead, also you recent look your you holiday the through and season?

we're Hi pleased Yes. of Erik. - really with trend Rack the performance. Brooke, Yes, our it's our

is it's trajectory at great prices. terrific the And prices. our been So you most of We focus to find great upward has the year. as come the Nordstrom customers at this throughout Rack in love they brands foundation a to brands steady great know, really, know reason

our been devoting we've intentional in to so, these And very strategic more brands. inventory of

that as it and been we've that simple, business proportion, our seen I better. paying focus it get has increased is our And know And sounds it but for we've us. off

our to put we're strategy of the So a But to we overarching to position dollars more really and good brands. what reactive feel seeing from we're aggressive more strategic is there customers. that these about those in into inventories be again,

both we've both and question your in that, banners traffic ticket. mainly - business done has strength conversion we've Traffic softer. per in across again, better. at. what And what get our that's been as is What's spend seen seen customer. on So we've To look has we conversion

the we of a the content that's providing. customer we're good experience have So and reflection

I ask if question. just second And Thanks. Great. could one

more result the in credit provide credit seeing what in the you delinquencies. half? you're a a contribution for there on expectation rising prepared headwinds bit detail remarks back spoke Can your of and You into about as

Yes. Hi.

customers. our business. our So customers typically and and first, an are bigger picture, our credit most really are part loyalty of most our program loyal card engaged important They

little consumer that typically do to think which means We customer, be as So, resilient. bit more in credit little going credit well cohort that of we a light. higher in quality have always they're our a

kind of see in rising prepared -- half good through we're around But did in we've card are pre-pandemic seeing in it credit we you mentioned seen of hear that are as delinquencies filings and the What of throughout, remarks, slowly levels. they the us you'll the year, the now the first course the say, at and strength revenues year. a

be those higher for future. That just in credit can - precursor losses the a

we're going closely. be continue to said, there so, we to And we to watch and consumer continue But tends our be bit watch portfolio more so it. we'll do little as a And I resilient, think to mindful the that. and watch

pass Great. I'll on. Thanks so much. it

next the Telsey And is Dana Please proceed. from Telsey Group. with Advisory

Cathy. Good afternoon everyone Hi. welcome and

current to and the stores go up on a When opening have of the any following this the Just year, holiday, typically expected then And financial new the plans moment. you XXXX, ramping seeing store the business, what for currently seeing past? learn Any previous? you the you. up you've from new environment. what credit following crisis how great back versus Thank to or just you're that to in what on versus and Rack parallels for what productivity happened what now? adjustments XXXX, in then you're done may And is happening lastly, then

again. great to you hear you first or Dana, see Hi off,

and maybe Maybe that. and rack appreciate we're finish I'll if credit. bit about how to productivity or with I wants little holiday, Erik on And with that. Pete can start I So I'll up a talk then doing

asked credit, lived made me the financial you a So question, crisis because with to regards smile the homebuilder. when in through you I

very and And was performed first about as tell 'XX to 'XX well. the me team my 'XX, question, in how we to

lot reasons, business a partner. different with now And card a tell may our smile first then different off, than that of the where went we a have little would So is credit as you be that's you, well. I arrangement for

there. We have great partner a

And arrangement. is so little different a it

in We credit very quality our continue a to strong portfolio as have well.

a crisis, losses although business a different arrangement. and in near aren't So different projected for a to financial of were it's credit book anywhere lot the where our they reasons, of be

it. good coming. have we projecting very the are how So, They see because insights, kind you about of we good delinquencies we're and do pretty feel where

to we're I'll engaged feel I'll - with are Maybe And customers, customer our on the it that. over a on and like really part they typically important productivity is really picture, turn that back again, of to We big new and in So set. go they're good then a there. Erik pleased so place Rack Pete holiday. we're of most stores

Yes. store Rack Hi Dana, strong, those return that. the capital, we're the scenery returns and importance new really I'll foremost, ahead out acne encouraged we're we're investment. and of our pleased with performance first very cost and stores, [ph] stores, of great Rack on just of is new our is by And it's of getting well the a

it's the regards whatever some having thing target, obviously biggest our Dan, also of of in so the of helpful. couple out to the holiday, able efficient is we inventory months And Hi to have is With fall. to try here have past, super sales gifting that in anniversary coming plan, focus I powder on changes and from terms the and continue but we're first Pete. clean to think learn it's to we

into more could that kind terms lot a of holiday can us lot and season. of help holiday We of invest back staple the during items those in a replenishment

for that in, the properly we're amount to the to into proper money store making we the we've experience shopping and So, can able new about business I invest invest sure, things that energize activate time. how got feel with able we and the think and we're really of good the

So, we about feel good it.

Thank you.

from Edward next Yruma the with And Sandler. is Please Piper question proceed.

the reconnect. on lower obviously, lower markdowns kind of wondering deleverage markdowns for could Thanks first improved video would unpack afternoon. happen good a we versus sales I all inventory versus gross Hi forward? about just the out shrink. how as question. level bit should And We if discussion think lots then about saw Cathy, of you the a guess [Topanga]. last year? follow-up, going And great to I given little on taking of was and to break impact margin. the

how understand to Thank you remainder trying out shrink of play Just see the the you. for year?

Hi Ed.

you look ask So margin, forward live I'll good little you a and gross stuff. maybe And Erik hear comment bit. all point. to to some On seeing that again impact to then on shrinking at

margin As But topic always about for it's an a retailers. question impact, with has I on starting know to of you deleveraging gross the as quarter, that your with many absolutely does. been sales, think

- continued deleveraging gross work or our and were of occupancy the a sales, lower though, the of of - offset points team, we only occupancy little so on the margin cost. buying down building basis XX bit Overall, and the partially costs, with by

So generally, margin. feel really gross would about good I

about margin, forward, think though, we gross going As for QX.

of But year, we had through inventory - see chain show that to A down. going or gross bought bit deleverage. You're last that see much. in margin into don't remember, continue the EBIT, a and of lot which we up sales to obviously quarter, the marked supply productivity then little going for as quarter back fourth the

that half. not quality see health back year, into the or or to the our of going this going planning inventory not level the to We're same given

good I could environment consumer can what bit about So being Maybe, think, talk about things we shrink. provides. the no the overall, you Erik, focus really on little feel able control, a matter we to

Yes, sure.

And addressed. That it's is our a needs it say from at find unacceptable, within is to said, while of Certainly, the and factor it I'd customers with the employees a Let plans. me highs. loss [Topanga] of store is unacceptable what be disturbing start being us. all we historical Losses just always top to safety is happened concern. our priority. in But and

not shrinkage continuing we exceeded rising what We of planned. have that seen has

in So with it's line year. how we this lead out

involves we we and we're financial to come and down. earnings, that that And loss. local of stores things, that But looking performance, the And make needs just also but our they a address a things enforcement. we've lot to invest do secure, on our partnering can but safe to drag from at first with the done also law all there's can control be, can within jurisdictions, of in, everything

solutions legislation to to on. all the here to the think industry is better the of needs come some mix that I part of

you. Thank

is Please from Next Anderson Blake proceed. Jefferies. with

but with top afternoon. I in to kind And about newness normal close, pretty that Can mix? more just Nordstrom I the newness, the ask to talk about trend think you're of inning throughout then wanted planning for terms we getting start what Good the back to how you did half? now on you broadly that? Rack. on of how Hi. are back And quarter? the for are wanted brands just

Pete. is This Yes.

think pretty back In of you go but Rack in little and say, It a to intentions feels where like of we've our we're where think right year, have out. terms good now. by settles the brands It's original far this this, journey. the we think we how to don't picture a we're are end that hard if of of And particularly made should really progress. think I I I top to And about a getting that from considerable close. this

order, buys We're about our we certainly, our really think, indicated. it to relative talking we on be. the I And where future should sales represents think

question the know. I'm top was terms seventh analogy. about sixth that in bottom fairly innings, So if of And the sorry, in are the don't I second close. of don't of we're Just Rack Maybe the stores? newness in we're the I the what? know, that's

wanted ask to I right. newness? in about guess terms Rack I of more that's Yes,

a lot talk and reasons We Yes. that. Okay. for turns, there's X inventory about really

means One inventory the turns, indicator pretty of margin selling of probably well. faster inventory you're them leading health, through -- is

stability business if the we and too, and But You flow Nordstrom and banner, our the really out particularly even really predictability. don't can in have that flow, And the matters. have Rack markdowns.

And come It what's new lot customers, be Rack, and line what's going and often they us see on to gives the on the there. able to in to of agility respond. like in a particularly

part flow, that agenda turn a the and impacts our So, newness. is big of around

probably I So, the been hearing, a - always from top retailers newness in what of of key drives line. us like think we're terms for lot has are driver a

other think designer is terms That's you you could to cohort? traffic driving -- detail the commentary much maybe wanted income you in helpful. Or I on more on under Any know give And I any is decline. talked how would of any remains provide it then Can you of quarter-to-date about helpful? what ask type pressure. be that

it Yes, try. give Blake, maybe I'll a

Erik the across the obviously selling than We're as better cohorts, are seen cohort conversion softness versus made year. performing, trends see obviously than cohorts higher but higher the and do an last On remained income traffic income soft. we've mentioned, seeing basis, sales traffic, higher income we up with So have price lower.

I when seems as obvious pretty the guess we say that in loud. data see But that it I out well.

news the well. to Nordstrom those income and So we the banner, higher good little are cohort in is have a tend performing

earlier strength. that's coming was quarter in So and driving I we the trend. But though, the In generally a been again, what's we think customers control continue then to keep to our half, the see where banner, we're hopefully by about and focus did for have some softer, in traffic back the things and the can in. great little on think we'll we'll going a assortment

at in you much. to all Can at QX if more. versus Thank if the so to help margins. a terms QX maybe more Thanks a Or think Cathy, in on squeeze little shot us Maybe, welcome. how you. I this you and commentary EPS? could just about And of one want take

I'm happy QX. that about as thinking in Sure, QX well. to to. follow-up happy Yes. versus then always But And Blake, do a

has little earlier. talked through. line got sequential Obviously, which top So a bit improvement, noise still moving of a about I

we'd and off That's improvement. and sequential was bit As you QX continued last then of QX QX the from the easier little about expect also easier comps. a QX then think QX year to coming comp. QX,

line. top first So thing that's the

we XXrd the is fourth thing week in the Second have quarter.

EBIT So quarter. of a productivity subsequently, continued back an going and about half think the moderate of have will to level, little you to on continuing in been It We've start those EPS supply we're On bit. chain profitability the a XXX going forward. the shape as a think little moderate or about quarters quarters of that points in seeing so four the over the you'll year. bit start to see of the basis improvement,

lack in to quarter, of had we But fourth the extent I think markdown see probably the most the to you're last year. significantly is going

help profitability fourth profile will of that into So quarter. the the

Cowen. TD Oliver Please Next Chen is proceed from with

Hi, Cathy. Erik, Pete and

also guidance. women what's And merchandise Thanks lot. at with banners, assumed path growth within those we back terms think And apparel? the resuming customer of issues? women's your in on what as for e-commerce, at terms doing forward younger are in your large well half of about how And main Regarding a thoughts the as there? you're what's the

can Pete one I'll take Hi Cathy Oliver, one then and Erik. on it's and the can start digital the join in merchandising question.

same As seamless store over you It's to of lot us and the get we or by that years you the don't have really us, - at a be. And be get know economically to really - we invested we with that customer hung business we experience sale same on a Nordstrom it profitability the our the roughly up profitability banner. where do splits. channel We've nordstrom.com add wants sale. look to

start with real experience. customer So experience a the we as to focus the got channel on always

Stores our That performed - noise I us, a is that against seeing and digital said, to year, to you're out some others have being this added the us With year. last think and return relatively well. of stores. of in there there's comparisons sales

we store from in year, had there. sunsetting, last that noise Club remember, rack.com some you turned If Trunk those softness, off fulfilled numbers some there's our

physical said, the of being banner. channel for for It in the we lot us. a digital - stores nordstrom.com big Rack think us. for think we That We vehicle are Nordstrom But leveraging that is presents vehicle in growth the growth is longer think assets. banner, the a term, Rack our opportunity

particular we us. want the in bring around customers they continued of in to selection investments that things So making from we breadth that can continue see our selection

having lot through advantage to to which get to we going how able the bit learned us a little lot a pen being broken Relative to with Sale, we levels We've what's be to right for just like the there, of feels it had in a record predict women's spot. to what's that to has make of a is do progress huge good the Anniversary on read and going part. our fall. A apparel, be success able on and and good inventory kind that

looks But it's and piece, been strong. a or I in the the a has for it's business That about But board think women across sweater. us third like up jacket a has so really dressed women's selling men's really been good.

good we've apparel. types the really level great I contemporary positive with with had of on look you feel those categories, if at price we're types solid a a about women's in good and like we think - and particularly that. business, of brands, that trajectory We feel

a that efficiency The and just - more ownership inventory. higher focusing that's and might our our thing And we better. working category is those where We're so a for brands, inventory with strategic we about inventory up disproportionately lot you I'd us other women's the there. another say a it's important Rack, much of place have on make apparel percentage

we the flow can shape. opportunistic we're in respond up good be goes with continue in if the the in So that to that, to and smooth particular, newness Rack,

that's mentioned do You younger We the I customer better younger feels have customer. to need it bit opportunity. mean of like that. we do an to the evergreen with a and plans

style plans be how improvements you I opportunity women's us. our I think price. for while. change customer total could that's programs young the where that we business. accretive flip with that. and that know, But should going to able But accomplish things we're to and be to business that 'XX, are And wish young what appeal that going these like a that's be to and in good I But to trying we own of part label with our little customer, switch both will then a are and I our think a big to see take overnight. as to

how have react faster can Thank well analytics as how and as drive platform AI about we get merchant can intersect your just Okay. within overall? follow-up, that read data you that What your with a test and have and to capabilities thinking you out inventory analytics you. a as zoom bit, do you advanced And more IT. agility the are and organization

AI nothing and analytics learned to guess agile. all - that, Pete. whatever we've merchandising. that that brings success to I This without saying, think talk that COVID that, to in. more the and particularly party able got key data do, we how us need the and a be technology in faster we We I with is of about to for I technology mean but an go to be it mean and retailing. enabler invest relative to is I becomes in raise to things allows all else lot here kind to element that's a tool has we And stuff

our announce to and anything close we're looking here have or don't and that that, efficiency staying we for improve and I So effectiveness we're can ways merchandising. than always declare to other

I team working on add as our some for all retailers, right thing would time has great is, all Maybe companies too, particularly only platform. the on been and data now,

to around a said, to everything way we go, apply of So some expect, it. to you I have putting all there places lot the to just like is now a real customer in the you think probably richness merchant long capabilities organization, are energy experience the everyone the but AI and from starting enhancing would operational

JPMorgan. And our last question line with comes from Boss Matthew the of

Great. Thanks.

penetration you see Rack as for us line with growth? just to think categories? to Rack you reached, Maybe Rack, from what here time the the about positive that the line top at do improvement Erik, see opportunities we return mix the incremental banner to price think target about brand strategic So continued now drive at line multiyear help or to top as

out, We continued overall stores, improvement, comp coming. store One that driver is the mentioned, of see part us. Yes. being growth that banner Rack end for we - the do to increases new And which gets as growth see you see we but we've the having sequential play year. of a that us by we

effectiveness part bit the of it's is simplicity. us brand, a for strategic The But has it blunt power and in a been of instrument.

with equal. varies you it seasons. get they're all As And those brands, not within created strategic

to a position those within and better. invest So move that brands, in quickly of are we're in mix performing strategic that brands

have to sales a - about our and our a there's be strategic of within the to see And So we is have hitting to It where And lot offense go. of just of not we XX% it's inventories in where more we are we brands. opportunities focus we opportunities on number can directionally productive off-price. have to out a want there continue that position inventory. chunk in in

So that see us of and those opportunities sustainable. ahead growth we they're

the you interest today's want Thank joining presentation prepared be you A along We and year will for slide one with replay, our your in remarks, for for on website. to thank call. Nordstrom. available

today's concludes This teleconference.

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