NORDSTROM, INC. Nordstrom Reports Fourth Quarter 2023 Earnings
- Revenue and earnings in line with fiscal 2023 outlook
- Sales in both banners improve sequentially, Nordstrom Rack posts double-digit growth during quarter
- Company provides fiscal 2024 outlook
SEATTLE - March 5, 2024 - Nordstrom, Inc. (NYSE: JWN) today reported fourth quarter net earnings of $134 million, or $0.82 per diluted share ("EPS"), for the 14-week quarter ended February 3, 2024. Excluding a supply chain asset impairment and related charge, the Company reported adjusted EPS of $0.96.1
For the 53-week fiscal year ended February 3, 2024, net earnings were $134 million and diluted EPS was $0.82, with earnings before interest and taxes ("EBIT") of $251 million, or 1.8 percent of sales. Excluding charges related to the wind- down of Canadian operations reported in the first and third quarters and a supply chain asset impairment charge in the fourth quarter, adjusted EBIT was $567 million, or 4.0 percent of sales, and adjusted EPS was $2.12 for fiscal 2023.1
For the fourth quarter, total Company net sales increased 2.2 percent versus the same period in fiscal 2022, inclusive of approximately $190 million related to the 53rd week, and gross merchandise value ("GMV") increased 2.0 percent. Nordstrom banner net sales decreased 3.0 percent and GMV decreased 3.4 percent compared with the fourth quarter of 2022. Net sales for Nordstrom Rack increased 14.6 percent.
"We delivered on our 2023 guidance and are confident in our expectations for continued sales improvement and sustained profitability in 2024," said Erik Nordstrom, chief executive officer of Nordstrom, Inc. "We're laser-focused on efforts we know will drive growth and profitability across the business over the next few years, including new Rack store openings, Nordstrom digital growth and increasing comp store sales. We have a strong team dedicated to building on our heritage of service, and we look forward to helping our customers feel good and look their best in the year ahead."
In the fourth quarter, active, beauty and women's apparel had the strongest growth versus 2022. For fiscal 2023, active and beauty had the strongest growth versus 2022.
"In 2023, we continued to make progress against the priorities we identified at the outset of the year to improve the customer experience and drive better financial results. Across both banners, we improved our merchandise assortment by effectively managing our inventory levels and investing in the products and brands we know our customers respond to," said Pete Nordstrom, president of Nordstrom, Inc. "This year, we'll build on that progress in merchandising and other green shoots across our business as we focus our efforts on our refreshed 2024 priorities."
As previously announced on February 28, 2024, the board of directors declared a quarterly cash dividend of $0.19 per share to be paid to shareholders of record at the close of business on March 12, 2024, payable on March 27, 2024.
FOURTH QUARTER 2023 SUMMARY
- Total Company net sales in the fourth quarter increased 2.2 percent, inclusive of 460 basis points related to the 53rd week, compared with the same period in fiscal 2022. The wind-down of Canadian operations had a negative impact on total Company fourth quarter net sales of 250 basis points. GMV increased 2.0 percent in the fourth quarter and decreased 6.1 percent in fiscal 2023 when compared with the same periods in 2022. Full-year revenue for fiscal 2023, including retail sales and credit card revenues, decreased 5.4 percent.
- Nordstrom banner net sales in the fourth quarter decreased 3.0 percent, inclusive of 410 basis points related to the 53rd week, compared with the same period in fiscal 2022, improving sequentially from the third quarter. The wind- down of Canadian operations had a negative impact on Nordstrom banner fourth quarter net sales of 355 basis points. GMV decreased 3.4 percent in the fourth quarter and decreased 8.5 percent in fiscal 2023 when compared with the same periods in 2022.
- Nordstrom Rack banner net sales in the fourth quarter increased 14.6 percent, inclusive of 580 basis points related to the 53rd week, compared with the same period in fiscal 2022, improving sequentially from the third quarter.
- Digital sales in the fourth quarter decreased 1.7 percent compared with the same period in fiscal 2022. Digital sales represented 38 percent of total sales during the quarter and 36 percent of sales for the fiscal year.
1Adjusted 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.
- Gross profit, as a percentage of net sales, of 34.4 percent increased 125 basis points compared with the same period in fiscal 2022 due to lower markdowns, lower buying and occupancy costs and leverage on higher sales.
- Ending inventory decreased 2.7 percent compared with the same period in fiscal 2022, versus a 2.2 percent increase in sales.
- Selling, general and administrative ("SG&A") expenses, as a percentage of net sales, of 32.4 percent increased 85 basis points compared with the same period in fiscal 2022, primarily due to higher labor costs and a supply chain asset impairment charge, partially offset by improvements in variable costs from supply chain efficiencies and leverage on higher sales. Excluding the $32 million supply chain asset impairment and related charge, adjusted SG&A expenses, as a percentage of net sales, were 31.6 percent.
- EBIT was $215 million in the fourth quarter of 2023, compared with $187 million during the same period in fiscal 2022. Adjusted EBIT of $247 million for the fourth quarter of 2023 excluded a supply chain asset impairment charge. EBIT was $251 million for fiscal 2023, and adjusted EBIT of $567 million excluded charges related to the wind-down of Canadian operations reported in the first and third quarters and a supply chain asset impairment charge in the fourth quarter. EBIT margin and adjusted EBIT margin for the quarter were 5.0 percent and 5.7 percent of sales, respectively. EBIT margin and adjusted EBIT margin for the fiscal year were 1.8 percent and 4.0 percent, respectively.2
- Interest expense, net, of $26 million decreased from $27 million during the same period in fiscal 2022.
- Income tax expense during the fourth quarter was $55 million, or 29.1 percent of pretax earnings, compared with $41 million, or 25.2 percent of pretax earnings, in the same period of fiscal 2022. The increase was primarily due to unfavorable provision-to-return adjustments recorded in the fourth quarter of 2023, compared with the same quarter in fiscal 2022. The full-year income tax rate was 8.6 percent. Excluding a 1,640 basis point combined favorable impact from the one-time Canada charges and the supply chain asset impairment charge, the full-year income tax rate would be 25.0 percent.
- The Company ended the year with $1.4 billion in available liquidity, including $628 million in cash.
2Adjusted EBIT and adjusted EBIT margin 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.
STORES UPDATE
During fiscal 2023, the Company opened or relocated 20 stores:
City | Location | Square Footage | Timing of Opening | |
(000s) | ||||
Nordstrom Rack | ||||
Los Angeles, CA
Clovis, CA
Delray Beach, FL
Chattanooga, TN
Las Vegas, NV
Birmingham, AL
Wichita, KS
San Clemente, CA
Aurora, CO
Olympia, WA
San Antonio, TX
Union Gap, WA
Salem, OR
Visalia, CA
Denton, TX
Overland Park, KS
Allen, TX
San Luis Obispo, CA
Sacramento, CA
Anaheim Hills, CA
NOHO West
Clovis Crossing
Delray Place
The Terrace at Hamilton Place
Best in the West
The Summit (relocation from River Ridge) Bradley Fair
San Clemente Plaza
Southlands
Cooper Point Marketplace
Northwoods
Valley Mall
Willamette Town Center
Sequoia Mall
Denton Crossing
Overland Crossing
The Village at Allen
SLO Promenade
The Promenade at Sacramento Gateway Anaheim Hills Festival
26
31
26
24
31
27
28
32
29
32
35
28
25
29
25
27
29
24
26
24
April 13, 2023
April 13, 2023
May 11, 2023
May 18, 2023
May 18, 2023
May 25, 2023
May 25, 2023
May 25, 2023
August 17, 2023
September 7, 2023
September 7, 2023
September 14, 2023
September 21, 2023
October 5, 2023
October 5, 2023
October 12, 2023
October 19, 2023
October 26, 2023
October 26, 2023
November 9, 2023
The Company has also announced plans to open the following stores:
City | Location | Square Footage | Timing of | |
(000s) | Opening | |||
Nordstrom Rack | ||||
Pinole, CA | Pinole Vista Crossing | 23 | Spring 2024 | |
Kennesaw, GA | Barrett Place | 25 | Spring 2024 | |
Elk Grove, CA | The Ridge Elk Grove | 25 | Spring 2024 | |
Gilroy, CA | Gilroy Crossing | 25 | Spring 2024 | |
Oceanside, CA | Pacific Coast Plaza | 31 | Spring 2024 | |
Wheaton, IL | Danada Square East | 29 | Spring 2024 | |
Snellville, GA | Presidential Markets | 35 | Spring 2024 | |
Macedonia, OH | Macedonia Gateway | 28 | Spring 2024 | |
Jacksonville Beach, FL | South Beach Regional | 30 | Spring 2024 | |
Queen Creek, AZ | Queen Creek Marketplace | 28 | Spring 2024 | |
Bay Shore, NY | Gardiner Manor Mall | 24 | Spring 2024 | |
San Mateo, CA | Bridgepointe Shopping Center | 36 | Fall 2024 | |
San Diego, CA | Clairemont Town Square | 26 | Fall 2024 | |
Mason, OH | Deerfield Towne Center | 30 | Fall 2024 | |
San Antonio, TX | Bandera Pointe | 25 | Fall 2024 | |
Mooresville, NC | Mooresville Crossing | 28 | Fall 2024 | |
Franklin, TN | Cool Springs Market | 24 | Fall 2024 | |
Noblesville, IN | Hamilton Town Center | 25 | Fall 2024 | |
Omaha, NE | Village Pointe | 30 | Fall 2024 | |
Houston, TX | Meyerland Plaza | 34 | Fall 2024 | |
Fort Myers, FL | Bell Tower | 31 | Fall 2024 | |
Raleigh, NC | Triangle Town Place | 32 | Fall 2024 | |
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 | |
The Company had the following store counts as of quarter-end:
February 3, 2024 | January 28, 2023 | ||||
Nordstrom | |||||
Nordstrom - U.S. | 93 | 94 | |||
Nordstrom - Canada | - | 6 | |||
Nordstrom Local service hubs | 6 | 7 | |||
ASOS | Nordstrom | - | 1 | |||
Nordstrom Rack | |||||
Nordstrom Rack - U.S. | 258 | 241 | |||
Nordstrom Rack - Canada | - | 7 | |||
Last Chance clearance stores | 2 | 2 | |||
Total | 359 | 358 | |||
Gross store square footage | 26,259,000 | 27,571,000 |
During the fourth quarter, the Company closed one ASOS | Nordstrom store and one Nordstrom Rack store.
FISCAL YEAR 2024 OUTLOOK
The Company expects fiscal 2024 to be a year of continued momentum in its growth and profitability drivers, including opening new Rack stores, growing Nordstrom banner digital sales and driving comparable store sales across both banners. As such, the Company is providing the following financial outlook for fiscal 2024:
- Revenue range, including retail sales and credit card revenues, of 2.0 percent decline to 1.0 percent growth versus the 53-week fiscal 2023, which includes an approximately 135 basis point unfavorable impact from the 53rd week
- Comparable sales range of 1.0 percent decline to 2.0 percent growth versus 52 weeks in fiscal 20233
- EBIT margin of 3.5 to 4.0 percent of sales
- Income tax rate of approximately 27 percent
- EPS of $1.65 to $2.05, excluding the impact of share repurchase activity, if any
The 53rd week in fiscal 2023 creates a timing shift in the 4-5-4 calendar for fiscal 2024 that is expected to impact comparisons to the prior year.
CONFERENCE CALL INFORMATION
The Company's senior management will host a conference call to provide a business update and to discuss fourth quarter 2023 financial results and fiscal year 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 13744568, until the close of business on March 12, 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 Nordstromand Rackapps and websites. Through it all, we remain committed to leaving the world better than we found it.
Certain statements in this press release contain or may suggest "forward-looking" information (as defined in the Private Securities Litigation Reform Act of 1995) that involves risks and uncertainties that could cause results to be materially different from expectations. The words "will," "may," "designed to," "outlook," "believes," "should," "targets," "anticipates," "assumptions," "plans," "expects" or "expectations," "intends," "estimates," "forecasts," "guidance" and similar expressions identify certain of these forward-looking statements. The Company also may provide forward-looking statements in oral statements or other written materials released to the public. All statements contained or incorporated in this press release or in any other public statements that address such future events or expectations are forward-looking statements. Important factors that could cause actual results to differ materially from these forward- looking statements are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended January 28, 2023, its Form 10-Qs for the fiscal quarters ended April 29, 2023, July 29, 2023 and October 28, 2023, and our Form 10-K for the fiscal year ended February 3, 2024, to be filed with the SEC on or about March 15, 2024. In addition, forward-looking statements contained in this release may be impacted by the actual outcome of events or occurrences related to the wind-down of business operations in Canada. These forward- looking statements are not guarantees of future performance and speak only as of the date made, and, except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances. In addition, the actual timing, price, manner and amounts of future share repurchases, if any, will be subject to the discretion of our board of directors, contractual commitments, market and economic conditions and applicable Securities and Exchange Commission rules.
3Comparable sales are calculated as GMV, excluding the impact of estimated adjustments for future customer returns and breakage from gift cards and Nordy Club points and Notes, for our digital platform and stores that have been open for over 13 full months and not closed during the period. The 53rd week is not included in comparable sales calculations.
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited; amounts in millions, except per share amounts)
Quarter Ended | Year Ended | ||||
February 3, 2024 | January 28, 2023 | February 3, 2024 | January 28, 2023 | ||
Net sales | $4,293 | $4,200 | $14,219 | $15,092 | |
Credit card revenues, net | 127 | 119 | 474 | 438 | |
Total revenues | 4,420 | 4,319 | 14,693 | 15,530 | |
Cost of sales and related buying and occupancy | |||||
costs | (2,815) | (2,807) | (9,303) | (10,019) | |
Selling, general and administrative expenses | (1,390) | (1,325) | (4,855) | (5,046) | |
Canada wind-down costs | - | - | (284) | - | |
Earnings before interest and income taxes | 215 | 187 | 251 | 465 | |
Interest expense, net | (26) | (27) | (104) | (128) | |
Earnings before income taxes | 189 | 160 | 147 | 337 | |
Income tax expense | (55) | (41) | (13) | (92) | |
Net earnings | $134 | $119 | $134 | $245 | |
Earnings per share: | |||||
Basic | $0.83 | $0.75 | $0.83 | $1.53 | |
Diluted | $0.82 | $0.74 | $0.82 | $1.51 | |
Weighted-average shares outstanding: | |||||
Basic | 162.5 | 160.1 | 161.8 | 160.1 | |
Diluted | 164.6 | 161.6 | 163.4 | 162.1 | |
Percent of net sales: | |||||
Gross profit | 34.4% | 33.2% | 34.6% | 33.6% | |
Selling, general and administrative expenses | 32.4% | 31.5% | 34.2% | 33.4% | |
Earnings before interest and income taxes | 5.0% | 4.5% | 1.8% | 3.1% |
NORDSTROM, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited; amounts in millions)
February 3, 2024 | January 28, 2023 | |
Assets | ||
Current assets: | ||
Cash and cash equivalents | $628 | $687 |
Accounts receivable, net | 334 | 265 |
Merchandise inventories | 1,888 | 1,941 |
Prepaid expenses and other current assets | 286 | 316 |
Total current assets | 3,136 | 3,209 |
Land, property and equipment (net of accumulated depreciation of $8,251 and $8,289) | 3,177 | 3,351 |
Operating lease right-of-use assets | 1,359 | 1,470 |
Goodwill | 249 | 249 |
Other assets | 523 | 466 |
Total assets | $8,444 | $8,745 |
Liabilities and Shareholders' Equity | ||
Current liabilities: | ||
Accounts payable | $1,236 | $1,238 |
Accrued salaries, wages and related benefits | 244 | 291 |
Current portion of operating lease liabilities | 240 | 258 |
Other current liabilities | 1,102 | 1,203 |
Current portion of long-term debt | 250 | - |
Total current liabilities | 3,072 | 2,990 |
Long-term debt, net | 2,612 | 2,856 |
Non-current operating lease liabilities | 1,377 | 1,526 |
Other liabilities | 535 | 634 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock, no par value: 1,000 shares authorized; 162.4 and 160.1 shares issued and | ||
outstanding | 3,418 | 3,353 |
Accumulated deficit | (2,578) | (2,588) |
Accumulated other comprehensive gain (loss) | 8 | (26) |
Total shareholders' equity | 848 | 739 |
Total liabilities and shareholders' equity | $8,444 | $8,745 |
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; amounts in millions)
Year Ended | ||
February 3, 2024 | January 28, 2023 | |
Operating Activities | ||
Net earnings | $134 | $245 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization expenses | 586 | 604 |
Canada wind-down costs | 207 | - |
Asset impairment | 30 | 80 |
Right-of-use asset amortization | 184 | 185 |
Deferred income taxes, net | (60) | (83) |
Stock-based compensation expense | 52 | 59 |
Other, net | (71) | (46) |
Change in operating assets and liabilities: | ||
Merchandise inventories | (61) | 265 |
Other current and noncurrent assets | (39) | (1) |
Accounts payable | 40 | (190) |
Accrued salaries, wages and related benefits | (42) | (94) |
Lease liabilities | (272) | (269) |
Other current and noncurrent liabilities | (67) | 191 |
Net cash provided by operating activities | 621 | 946 |
Investing Activities | ||
Capital expenditures | (569) | (473) |
Decrease in cash and cash equivalents resulting from Canada deconsolidation | (33) | - |
Proceeds from the sale of assets and other, net | 31 | 80 |
Net cash used in investing activities | (571) | (393) |
Financing Activities | ||
Proceeds from revolving line of credit | - | 100 |
Payments on revolving line of credit | - | (100) |
Change in cash book overdrafts | 2 | (14) |
Cash dividends paid | (123) | (119) |
Payments for repurchase of common stock | (1) | (62) |
Proceeds from issuances under stock compensation plans | 20 | 29 |
Other, net | (7) | (20) |
Net cash used in financing activities | (109) | (186) |
Effect of exchange rate changes on cash and cash equivalents | - | (2) |
Net (decrease) increase in cash and cash equivalents | (59) | 365 |
Cash and cash equivalents at beginning of year | 687 | 322 |
Cash and cash equivalents at end of year | $628 | $687 |
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 | Year Ended | ||||
February 3, 2024 | January 28, 2023 | February 3, 2024 | January 28, 2023 | ||
Net earnings | $134 | $119 | $134 | $245 | |
Income tax expense | 55 | 41 | 13 | 92 | |
Interest expense, net | 26 | 27 | 104 | 128 | |
Earnings before interest and income taxes | 215 | 187 | 251 | 465 | |
Supply chain asset impairment and related charges | 32 | - | 32 | 70 | |
Canada wind-down costs | - | - | 284 | - | |
Trunk Club wind-down costs | - | - | - | 18 | |
Gain on sale of interest in a corporate office building | - | - | - | (51) | |
Adjusted EBIT | 247 | 187 | 567 | 502 | |
Depreciation and amortization expenses | 156 | 151 | 586 | 604 | |
Amortization of developer reimbursements | (17) | (17) | (69) | (72) | |
Adjusted EBITDA | $386 | $321 | $1,084 | $1,034 | |
Net sales | $4,293 | $4,200 | $14,219 | $15,092 | |
Net earnings as a % of net sales | 3.1% | 2.8% | 0.9% | 1.6% | |
EBIT margin % | 5.0% | 4.5% | 1.8% | 3.1% | |
Adjusted EBIT margin % | 5.7% | 4.5% | 4.0% | 3.3% |
The following is a reconciliation of diluted EPS to adjusted EPS:
Quarter Ended | Year Ended | ||||
February 3, 2024 | January 28, 2023 | February 3, 2024 | January 28, 2023 | ||
Diluted EPS | $0.82 | $0.74 | $0.82 | $1.51 | |
Supply chain asset impairment and related | 0.19 | - | 0.19 | 0.44 | |
charges | |||||
Canada wind-down costs | - | - | 1.74 | - | |
Trunk Club wind-down costs | - | - | - | 0.11 | |
Gain on sale of interest in a corporate office | - | - | - | (0.31) | |
building | |||||
Income tax impact on adjustments1 | (0.05) | - | (0.63) | (0.06) | |
Adjusted EPS | $0.96 | $0.74 | $2.12 | $1.69 | |
1 The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate for the respective non-GAAP adjustment.
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Nordstrom Inc. published this content on 05 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 March 2024 11:52:05 UTC.
