Nordstrom (JWN) 30 May 242025 Q1 Earnings call transcript

Greetings, and welcome to the Nordstrom First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I'll turn the call over to Jamie Duies, Head of Investor Relations for Nordstrom. Thank you.

You may begin.

Good afternoon, and thank you for joining us.

want can that Investor be on I to be Relations begin, nordstrom.com. which slides, viewed I to we'll mention referring section Before in the slide so may call today's who Cathy be Nordstrom, Pete refer and note forward-looking and earnings Smith, update discussion Officer; Erik safe business statements, Executive President; EBIT Any to discuss language. Participating include to are will the that outlook, discussing will a first Nordstrom, with Chief EBIT, in Chief performance. Please our harbor Officer, the please and an provide quarter per on results when our we for adjusted referring them company's share. basis and margin Financial release, the measures our comparable GAAP on most in website. can to our directly is earnings which available found Reconciliations press be QX XXXX

to we special will by the potential of take private. formation that to be evaluate committee to I The As XX the of company may Board announcement Directors of company's want to and acknowledge Nordstrom value exploration and begin, carefully Pete of the be proposal update Nordstrom this interest over it during special a and consider now the enhance received Erik. all today. I'll shareholder avenues any committee evaluate Erik have April turn and best not We will call shareholders. to do of be to it is share proposal speaking to any an that whether may on presented not in topic, and our call

Thank you, good Jamie, and everyone. afternoon,

sales loss share per delivered the For a first of we of $X.X and net billion, quarter, $X.XX.

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to since year, fiscal new a which Racks X us Rack track beginning this stores opened on open places of of new have this XX total the We year.

with as performing to insights are store better stores new improved planning well data fully new Our team a openings. and as our well as we've dedicated

payback well in New excess of period. deliver growth short they be investment a Rack within stores capital continue of as and for their excellent to cost a relatively driver us,

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my the momentum events from improvement first provide focus sustained price year-over-year Thanks, remarks Sale. Starting Erik, in-store everyone. commentary our with the and I'll some our in discuss a performance. quarter, teams good on afternoon, Anniversary QX with few category on In and a performance, regular upcoming our category sales.

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brand Apparel. sell-through Our banner, regular that with driving improvement such women sales, contemporary Veronica relaunch driving casual and most brands The and the brands priced the business the the Beard, brand both our Women's products. focus In as on-trend our in Apparel brand private matter the is first by that private customers Mother our the to top We led Women's strong momentum is Rack, Vince Nordstrom continue positively category. At customers focus driving and our and most Nordstrom banners. focus quarter, for and quarter results, margin popular in our high-quality tops dresses. At the a were on a the our performers. responded particularly in on relaunched on in to to modern, Nordstrom matter to responded deliver offerings, first and most the across more customers brands to have strategy customers

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on year, led that matter are exceptional an our brands focused to providing most sale the by We anniversary customers. this

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then you and by outlook Pete, I'll covering allocation close with us results, first priorities. discuss Thanks, our quarter and for capital thank today. joining all our our begin

our QX mentioned, strength and banners, quarter expectations improvement factors net Erik first year. guidance sales and both strong As outlook growth showed our from last provide of us in in price in exceeded confidence today. reaffirmed an were our These with our reflecting sales Regular business.

below roughly supporting Our expectations. with was Both timing our sales one-half from other gross Relative margin. factors. profitability being than operational more strong the expectations outsized by sell-through QX, half drove margin, volume-related pressure and overshadowed our for gross related, on came expansion our to our

seasonal low in The we timing-related the quarter our end increase grew our of inventory Anniversary a our higher-than-expected were to first Sale. reserves the the impacts ahead of due throughout as off largely at QX,

we our We quarter these first reserves levels quarter in partially expect this plan are being to periods to and accounting, first forecast future reverse cost operating headwind learning as moderate and this in and change. With corresponding elements. better inventory

our Nordy factors primary to our growth and our related loyalty in timing-related The members, sales to revenue the and network our drive deferred first profit in in The chain. margin will better-than-expected theft additional also quarter. external transportation sales Club that inventory resulting in supply impacted periods. Operational due drivers in other were impact future in is our cleanup gross

taken operational the in swift factors factors going our on mitigate that the and forward. first strength underlying have related actions quarter back to The in driving are profitability timing We these business. masked that held we the risks

year-ago sales from banner net in quarter with of Rack sales flat inclusive down discussed sales in percentage down basis our compared same GMV increased year, the represented to impact during Canadian the last period a Nordstrom last consecutive with Moving representing XX% impact the compared improvement. increased decreased sales of increased from includes in year first net the to as were X%. increased QX quarter. previously. sales XX.X% the a points Comparable of first company XX% on quarter. Gross X% operations increasing Comparable fourth was the same X%. sales XXX quarter increased Canadian year, X% as X% total negative the other unfavorable comparable profit and sales first quarter the Digital Digital quarter. first sequential performance. first in sales our flat of ago increased GMV in elements wind which net the net wind sales the the with Nordstrom a quarter Total of of the sales banner operations period quarter. Nordstrom XXX-basis-point of XX-basis-point X%, in of quarter.

partially are before billion improved in taxes QX first in $X.X leverage net points business were $XXX percentage retiring the variable $XXX offset as liquidity, by versus as sales-to-inventory quarter, April. on million Ending We expenses and in the improvements costs. Loss continued in in was costs higher first basis pleased sales the with decreased labor year, in inventory after in management. sales last X% ended with resulting a a and We of our across the health $XX spread. SG&A inventory million higher XX positive interest available first of million and quarter. notes over including cash quarter in

financial Our and solid. balance sheet remain position

the higher to selective. about concern continues rates, Turning to to inflationary be our outlook and consumer macroeconomic The uncertain. continues for be and Even with pressures the environment year. overall interest resilient the economy,

gross as are in we reaffirming our taken I full timing based factors. We actions to from guidance already issues as upon revenue discussed the year strength operational that mitigate delivered QX risks the margin-related well and that the further

full XXrd headwind decline increase revenue of points X%, includes an XXX X% in of approximately a XXXX's guidance a in range the of Our from to the of week which includes results. basis year

We follow continue to quarterly typical to expect revenue cadence. a

have is quarter falling of second the this X the approximately in net reminder, As expected XXX basis days day versus XXXX Sale X to in into a points our sales quarter timing our shift positive year. a with third this year of impact Anniversary

expect in decrease to to increase of total a range sales XXXX. of versus in XX an X% a XXXX continue company weeks also in We X% comparable of

a As year our we sales XXXX comparability. using XXXX for full XXXX a our period to week, XXrd calculate realigned comparable XX-week included

Turning to profitability.

of We expect the range margin a EBIT year to full X.X% X%. in

share for XX% From to the the continue earnings any in expect year to our impact excluding be share full $X.XX an perspective, per we range the effective full to tax to repurchases. of $X.XX, approximately continue results rate We year. of expect

capital allocation. our Turning to

Our the priorities remain same.

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

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

is priority second leverage. reducing Our our

$XXX cash April paid matured we with mentioned, off on in that the hand. As million bond I

Nordstrom to with priority the us have The ready the Our encouraged our momentum Rack. We and to with you year focus Directors And banner make shareholders. topline third Board that at and are with we look questions. your Jamie, of per share. In I our interest this resonating Last a forward returning in that, we is of $X.XX to week, cash growth provides dividend with confidence remain for optimistic. the in in Nordstrom. cash that we'll progress continue We declared are opportunities our priorities are both the driving quarterly topline and thank we customers full year strength. guidance. our closing, for

Instructions] move [Operator Cathy. now We'll you, Thank session. the to Q&A

[Operator Instructions] question of first Sachs. the with Our will Brooke line come from Goldman Roach

trend Erik, trends both banners can sequence the you the to quarter? speak the of to throughout are How the date? you across seeing month by comparable stronger quarter? did momentum you comp quarter And saw sustainability this

were Easter the indication. have May Sure. they but but of throughout some would at Sales -- first with timing are some quarter JWN There bit. our Quarter-to-date aren't for an positive a continue. QX out, the our change month each trends I point level. X quarter. positive during were -- caused second They in that much softened changes the weeks

quarter our the second is driven which at end. Our performance comes during anniversary, really by

start Cathy, on than That's that to this that the sales your you're comp full can you outlook passing from to headwinds the and year really reaffirm color drivers year, the to the for provide led in some timing What cost this seeing And margin helpful. year? strong some then through gross rather year guide given factors you to that margin are outlook? of helping headwind offset full and the

Brooke. Thanks,

a improvement banners in of first So we've first, with confidence reiterate of I'm just our resonating our lot is sequential obviously, line then seeing that confidence see of it strategy and been gives a the across to to us those us gives going top QX, the lot the strength the customer.

regards good a but though, strength seeing quarter great this little see first sales gross was saw the the impact margin or our to loyalty with. With that already noted first, the in continue the saw flow-through, first headwind in of the related. come is quarter, we It we profitability, factors, across you of will or loyalty is that's of our reserve in timing to sales that Club quarter. the we'll A couple strength Nordy a we to rest thing. a start The some bit this we're So basis strength back. just that of

we're inventory disguise. positive just related our this will accounting, us first It a then the year. And frankly, had it of didn't in in the the it was to need kind coming QX. impact We low take basically, planning in you QX in that's move year accounting. And We'll learn. quarter of those back our through build quarter, appreciate for as But timing impact for of this. we it's other come So will cost remainder of the turn. cycle the in quarter reserves that remainder first about Think We'll out of learning, an cost a learnings but into the is as into all forecast. that sequentially the inventory into a timing. a will

factors, confidence gives factors. So timing We've operational about impacts. that us for already ones action. the margin taken gross we around The talked swift the non-timing

a action, of corrective got lot So cause and that of offsetting in a we're year given us. is root to committed quarter, we quick smallest our did front we've on dive deep QX and the that

Markets. question BMO Simeon next from Siegel the of comes Capital Our line with

and what as impact of just I as of my an first part to person. retailer the those you directly I left and long mean your the a a directly legacy list dad, by impacted want in amazing condolences extend

to speak how P&L we Rack also but about guys you Rack? about that. Would to How future Maybe the of the should margins Nordstrom current, at wanted growth impacts just think opportunity the think there? you Nordstrom? extend So I the do versus versus

Yes.

start. I'll Simeon, So

should and off, Erik Pete acknowledge First I condolence. let the

Yes.

condolences. your appreciate I Simeon, think, I

talk those do use a On use banner, typically the to exact Nordstrom impact as might the the and We one chain. between we there's difference same we just, but supply don't not as margin big Rack same technology.

of us any our leverage there's to banners to. We allow and love with and channels that in the poor uniqueness So we business. to X want offerings so much our way strategy a interact customer they of

way so the that individually. And not business, about necessarily we think

line from comes with question Chen Our next TD Oliver of the Cowen.

Oliver Nordstrom to condolences and the for Chen. team. of And is This Katy course, our on deepest family

on inventory first the at Just rack. availability

investment And you You've now around the effort I made then about top a that the lot versus more there of brands in brands. selection, follow-up. How lot the the offering have more a your around to be Is selection one target? feeling made are section? the

Yes. actually Elk He's in Rack a Pete had take opening Grove, that. store California.

do So you Pete? that, to take want

issue brands product had We have be that almost these I selling that of for a There's from requires anything. lot the helped our is in degree Yes. our in [indiscernible], can represented relationship be us. I typically channel have And the a a in bit had much think biggest and mean best that full and top focus more the you not around we to and that stems there focus successful that Rack the provides of has the us of the there us. there challenge getting access to we've little brands out rationalize Rack. the and created with be to price brands

really of it's that's about. more So what

I brands confidence all sure we just think store for that and of the a have you we're XXX and opening, about of up. in and we same line gives what's Rack goods it future. thing opening store can being really new for they and the tell as the the path and for a set what that the been we're we I the certainly customers make of this amazing reaffirms, most as can I talking [indiscernible] that for have discipline And for on think, the And us we've can it new priority it mean of being customers ways level morning creating you different source an I them. thought the like love like versions Rack just the about prices. feels deal great they this all see a at lot important. And show to it's

the incremental of Are through? Is marketing you've to been flowing a that real budget? quick of sort is events around. that you follow-up market budget? how the is reprioritizing that some planning just on Just the marketing And

of Yes. of rather we Erik It's it just necessarily do commenting do the how just empowering approach a our with create small, way all the styling lot level, time. built about I a encouraging be and at we the in that's engagement as And customers. to It's and to but revolves they're is a activities a something business. big talked that just And events. lot lot. consistent in people connection to for we do that -- one-to-one reasons things around particular, in really relationship about that have and us new, push. That some of bit come customers store the efforts and marketing that are helps a stuff not the that might we

yes, top-down marketing really initiative over empowerment wouldn't as spend. of people around look some the action as about the of I at it much to It's our and the So kind more customer. closest

next with ISI. from comes Binetti the line Our Evercore Michael of question

I to Condolences Michael. on to you, to whole a Pete new Nordstrom the of question wanted and Erik contribution and family. stores the at Rack. Cheng the Warren ask and team for It's on

points X stores quarter. the new almost in from You sales got of

big I been think from what step that's up seeing. you've a pretty

going for forward, is looking just up maybe the comments level? Is forward? contribution there? way a reason that fair the step XQ think to on And about So that the

plans. customers' for than stores excitement stores you'll to better according new the to The for new the he's it. of continue, and our the Rack today and that out peak thanks, on perform or share the So strength continue open Warren.

customer on start to to every customers And They bring continue be great there. us and and roughly of new so us for us to investment acquisition source return a new store. great XX,XXX a I'll giving

enthusiasm we there banner continues. I'll the -- our that So for start Rack

seeing With strength that. see you'll coming saw you're QX, off remember this the some quarter, we of strength well. So to regards as

the the X they're So this comp comp building stores are they momentum you're another they're XX XXth in now we're And first in year, in opened right because Rack the and of was yet we've or quarter quarter. What moved been of of benefits still Rack. last year seeing end in their opening months. we the Rack not part We haven't quarters month. now, the stores this when stores cycled for at the so gosh, though,

So or the we you're in back -- the getting a year. stores opened front XX last the XX little year the this end bit XX the end that, of of of

Got the make I understood for in That's it. I first follow-up, want sure my And margin the quarter. headwinds then just really gross helpful. to

the when from So you And in half when from year-over-year say flattish. words, you operational compression? these say mean of you performance half the the first is -- timing, do ex half underlying issues, issues, other

Yes.

expected gross we So XXX about saw XXX margin points year. of pressure basis points what we versus was had there basis last versus

we had talked had which about to moving expected timing we the little accounting. So bit, of a cost with previously

was due operational about due points, XXX half are that there So to was that that of to timing factors. about and year, think basis it of way versus last and about half

JPMorgan. comes from the Our line Casella Carla question next of with

-- wondering your view your the Does credit the income change much us I it's expectations in changed if that your you've the was credit and much into the forecast? your give view, card And card the expect built for more delay a could ruling? year you do year? just you on little for of if in color how how

Carla.

stores off, as little know, higher other be So or you we've first department which our of the other maybe tends retailers. to before, than credit cardholder credit shared quality a

changes, on helps So us that fee so with potential late there. start lesser I'll impact

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guidance. like in monitor was our that contemplated everyone watch continue We it it, else. But to

aggregate, minus -- forward. credit a or than have X% plus In bit shared. it now, So so our It revenue than we'll far, how on the little year, it's Right we continues month's will unfolds. to probably see a be delay what is how move we're which XXXX. but be will about lower it we'll previous see for

the in about one or meaning question How merchandise on factors. XQ, XQ, to on how through be should big of you that reserve think does point basis give we portion as was margin I a done then the accounting And us amount. had that sales, roll through? follow-up like Great. Okay. And related inventory will the cost then roll gross could that a it Like dollar XQ? it the

Yes.

points those first So margin expectations, say, XXX timing. and that quarters. reserves that think I next couple loyalty inventory of basis of versus roughly to saw dimensionalize that to to gross is through was That's reserve. in both about would us. turn get back inventory. up a about of that how be of it, always those, them. try setting our ones half off, But between split relieving in due to the then The sales really The particular the turn. pressure quarter way of we though, would inventory you'll through saw revenue within accounting would and additional quarters you But take will that back will an comes for work inventory quarter be usually. of a The That's in couple we typically -- deferred cost the one then loyalty new that and come

comments then and trended? just And Okay. Great. on margins any underlying merchandise how that

saw it increased. to already We we saw strength good year-over-year and were Pete shared regular price really that sales goes a what Erik have really and that

and is that give rate in fundamentals, the sell-throughs we're price And then good I confidence which regular why optimism seeing optimistic and so, strength across strength strength price is really think, good the sales sales hearing. in some both or so banners we're in the and us you're the

Citi. question the of from comes next Tracy Kogan line Our with

and in expecting environment comment And that just what in is and you're any current of for follow-up the on seeing the hoping been other categories and category of you could improvement. some have of the then the your remainder recent seen year? view what on my if quarters the designer you're weaker you've was I promotional

can designer part. a we and the it you want ] normal and -- to a the seems don't Pete, take do I'll promotional take designer environment Pete pretty the [ much. first shortage changing us Tracy, take anticipate part, question. to It's

Yes. I designer make the last want part part the was got What question last I of that? the of there. part of to the sure

have categories weak? improvements designer any about that was been I recent the you've and quarters categories if other that weaker seen either have some and asking in or design in been just of other the

Yes.

certainly our documented on be have for there though, the and well right commensurate happening demand. with out of that you. position that of part topline. been designer we've to what from competitors the what's more designer is think good got in it's And pretty is the levels I inventory What's the brands us, that challenged the and

so see as you're to go lot us healthier And a forward. we from margins going

a been But XX% to has there mean, in Now put sales sales. over in dropoff about we still we're from in XXXX there. up were where context, that I

inventory there terms of the were So very part as the went normalization, unusual. chase years normalized healthier categories. through where cyclical, be it's last would say, flow-through. be, into of of to really we and it think, these a of robust a in years but than of bit. And couple I Great seen it's what's a couple prepared in improves of our you've again, business. in it's still lot part of I big our in are to somewhat it terms a in business I and but And as of levels this things important what We a our will with mentioned, very ways, year a that more designer want we're happened

Great. that And are have been that there weaker out? any called categories other Erik

really. when the about in Apparel you getting the mean we very us. for a probably categories. it and talk best talk I apparel one think about be a having I some women's thing some lever stands And the biggest Women's big not is consistency of one around that others, you growth us as it. there's good and to heard relative for our I growth that between being and mean is But should best a No, signal difference the us out. that's

place around have worked focus a hard there's in We're brands of you. and a lot and lot at something a think that's best what create healthy pretty we've there, headroom. So of still we

the Guggenheim next Our comes Bob with of line Securities. question Drbul from

minutes the I on This digital [indiscernible] can will our for And couple going team the but to overall? you on We this ] Bob. stand sequential as know months, what's early is acceptance in the the contribution [ of please to forward how the customer seeing marketplace? be significant share sales Rack you initiative? Nordstrom read to trends. Could condolences spend well. improvement Nice a digital

at year. relatively good of a as getting material and Marketplace It's would sure. grow have as When our resonate do a a story really I a just to piece more choice positive to years launch. brands to next for it We feedback bigger it we we've It's see the the X the learn marketplace we're discovery our April, to the for piece, be of and We're big having is which growth business part to have. Yes, is see objectives going add, discover point. customers impact late and bring over items choice XX results. is and in position We had only with don't effect customers a so One on this launch 'XX. to scaling it shoppers. launched is successful seen small customer digital and more really a start. Yes, able that. But good we And that's but from we've from -- second that not that we key e-commerce important, really brands. that them. from

browse made investments choice we're piece in also good made the we've in search the piece. Marketplace. and made part with the lot We improvements and seeing to. discovery that So customer We've of response investments in navigation a

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line question Gordon Chuck next with And the our comes Grom from of Haskett.

you Nordstrom that towards as if ask on kind getting margins. on And margin, to Bulger for what I anything Ryan EBIT get company. long-term high there single-digit is would factors here. would a of the prevent for margin like the Chuck be? you equation This to there double-digit biggest back for wanted ramp structural were just to this Is the that

is Ryan, is seems we margin. so what a of X% next like EBIT were been to before have pass through our XXXX, on reasonable in I would That focused say double-digit working we on. kind probably waypoint, way to we're at get we which we've which our margin, the next target,

we different most say as very, structurally, or I so have. have are And to years ago would than the work do they XX retailers omnichannel the And something. very today that's were businesses

should significantly where which our serve chain supply in have and see capabilities or we some are. need and continue to are continue invested we technology to productivity, like those we've to we customers. to improvements So And

So then before focused in I to where of and that. say of kind go are X%, XXXX kind we going EBIT we towards next of growth of double that were margin on We're driving on north the digit, over we'll I and don't years. focused couple know answer.

And Blake our comes question with of final from Jefferies. line the Anderson

wanted change in I versus start that from really any growth is how customer And seeking newness? to Can So kind be broadly That's talk value last quarters, might off seeing you of how are seeing couple of you then much just or Rack. much accelerated. with customers? about this new growth the you

well purposeful stores. [indiscernible] more buy value Yes. those really we've it's our leaned us customers separate treatment versus more to has talk as as us really associate with on And into in really about, more that to them that hard brands brands open and as essential both -- as been to our newness. Nordstrom brands coveted brand. out the those lot it's allocating particular, It's brands, heard you've for a in

really brand these showcase we lead with more do stores Our and on brands there. first

does super mix having that us. Now is important. the price brands separate of But that

that, we've out mix improve And some better customers. experience to where we having brands on. to we've of improve is see is in executed we sauce, in really difference think where of there's as shopping secret mix been and to it these the that's off-price focused Our depth is a our really brands runway business. continue to on there there And unique and point coveted these space off-price still our and environment to having jump the

Yes, on the we And new would finish new store with the what each seeing Blake customer openings. acquisition. we're more then maybe and of expect I'll

And much have just you all X you full-price over go point [indiscernible] it. quantify few and sales have attribute at much left things, what maybe how how to you or sales. if Got room more to the to? lastly, can would And changed last X quarters? And then could that for price how you full to there that's

clearance is to the particularly new mean think where and as much something. that into detail look health getting the the line tend can as I look Obviously, sell-through a of when we we're is at think levers what Nordstrom selling Without that full we part where the the to we're the at merchandise. The much a shine have in that, tend at margin, it's market the but price we focus is best things on drives and distressed bunch of for to When clearance the we of how I sales. of first banner. flow different price. merchandise really what than we have a straight look I example, at lot our at margin, business, about it. of of when draw Yes. or more That the you not see typically to you margin, you

a in one at first too. approach a right, said the have The they the a we Let's works about on great I get it because value for versus that it put get And value great we brands would point And how they've Erik sell because regular let's recognize. what heard obvious things the an way of through we people reason Rack recognized it. And in price brand something price. philosophically finer Out that's of. create the The brands benchmark know the of is Rack. value of brands. never is that

a that that it's it there had at woman there, really waiting uplifting reaffirming you play see [indiscernible] of even at this, was can So a today it's brands. and the that's with person really opening not value. open, don't inside we we before can that it just get and and I because mean a to why you that, show about just being tell was it's but all a.m. people really -- know talked out, again, there the stores X were us for up in seeing And terrific she

price really So what yes, the brands. it's are, but think Erik's hard those to are, the they linked I point, separate to in they're

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