Nordstrom, Inc. and subsidiaries3

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements regarding matters that are not historical facts, and are based on our management’s beliefs and assumptions and on information currently available to our management. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. In some cases, forward-looking statements can be identified by terms such as “may,” “will,” “should,” “could,” “goal,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” “pursue,” “going forward” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, our anticipated financial outlook for the fiscal year ending February 1, 2025, trends in our operations and the following:

Strategic and Operational

•successful execution of our customer strategy to provide customers superior service, products and experiences, online, through our fulfillment capabilities and in stores,

•timely and effective implementation and execution of our evolving business model, including:

◦winning at our market strategy by providing a differentiated and seamless experience, which consists of the integration of our digital and physical assets, development of new supply chain capabilities and timely delivery of products,

◦broadening the reach of Nordstrom Rack, including delivering great brands at great prices and leveraging our digital and physical assets,

◦enhancing our platforms and processes to deliver core capabilities to drive customer, employee and partner experiences both digitally and in stores,

•our ability to effectively manage our merchandise strategy, including our ability to offer compelling assortments and optimize our inventory to ensure we have the right product mix and quantity in each of our channels and locations, allowing us to get closer to our customers,

•our ability to effectively allocate and scale our marketing strategies and resources, as well as realize the expected benefits of Nordstrom Media Network, The Nordy Club, advertising and promotional campaigns,

•our ability to respond to the evolving retail environment, including new fashion trends, environmental considerations and our customers’ changing expectations of service and experience in stores and online, and our development and outcome of new market strategies and customer offerings,

•our ability to mitigate the effects of disruptions in the global supply chain, including factory closures, transportation challenges or stoppages of certain imports, and rising prices of raw materials and freight expenses,

•our ability to control costs through effective inventory management and supply chain processes and systems,

•our ability to acquire, develop and retain qualified and diverse talent by providing appropriate training, compelling work environments and competitive compensation and benefits, especially in areas with increased market compensation, all in the context of any labor shortage and competition for talent,

•our ability to realize expected benefits, anticipate and respond to potential risks and appropriately manage costs associated with our credit card revenue sharing program,

•potential goodwill impairment charges, future impairment charges and fluctuations in the fair values of reporting units or of assets in the event projected financial results are not achieved within expected time frames or if our strategic direction changes,

Data, Cybersecurity and Information Technology

•successful execution of our information technology strategy, including engagement with third-party service providers,

•the impact of any system or network failures, cybersecurity and/or security breaches, including any security breach of our systems or those of a third-party provider that results in the theft, transfer or unauthorized disclosure of customer, employee or Company information, or that results in the interruption of business processes or causes financial loss, and our compliance with information security and privacy laws and regulations, as well as third-party contractual obligations in the event of such an incident,

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Reputation and Relationships

•our ability to maintain our reputation and relationships with our customers, employees, vendors and third-party partners and landlords,

•our ability to act responsibly and with transparency with respect to our environmental, social and governance practices and initiatives, meet any communicated targets, goals or milestones and adapt to evolving reporting requirements,

•our ability to market our brand and distribute our products through a variety of third-party publisher or platform channels, as well as access mobile operating system and website identifiers for personalized delivery of targeted advertising,

•the impact of a concentration of stock ownership on our shareholders’ ability to influence corporate matters,

Investment and Capital

•efficient and proper allocation of our capital resources,

•our ability to properly balance our investments in technology, Supply Chain Network facilities and existing and new store locations, including the expansion of our market strategy,

•our ability to maintain or expand our presence, including timely completion of construction associated with Supply Chain Network facilities and new, relocated and remodeled stores, as well as any potential store closures, all of which may be impacted by third parties, consumer demand and other natural or man-made disruptions, and government responses to any such disruptions,

•market fluctuations, increases in operating costs, exit costs and overall liabilities and losses associated with owning and leasing real estate,

•compliance with debt and operating covenants, availability and cost of credit, changes in our credit rating and changes in interest rates,

•the actual timing, price, manner and amounts of future share repurchases, dividend payments or share issuances, if any, subject to the discretion of our Board of Directors, contractual commitments, market and economic conditions and applicable SEC rules,

Economic and External

•the length and severity of epidemics or pandemics, or other catastrophic events, and the related impact on customer behavior, store and online operations and supply chain functions, as well as our future consolidated financial position, results of operations and cash flows,

•the impact of the seasonal nature of our business and cyclical customer spending,

•the impact of economic and market conditions, including inflation and measures to control inflation, and resulting changes to customer purchasing behavior, unemployment and bankruptcy rates and the resulting impact on consumer spending and credit patterns,

•the impact of economic, environmental or political conditions,

•the impact of changing traffic patterns at shopping centers and malls,

•financial insecurity or potential insolvency experienced by our vendors, suppliers, developers, landlords, competitors or customers,

•weather conditions, natural disasters, climate change, national security concerns, global conflicts, civil unrest, other market and supply chain disruptions, the effects of tariffs, or the prospects of such events, and the resulting impact any of these events may have on consumer spending patterns or information technology systems and communications,

Legal and Regulatory

•our, and the third parties we do business with, compliance with applicable domestic and international laws, regulations and ethical standards, minimum wage, employment and tax, information security and privacy, consumer credit and environmental regulations and the outcome of any claims, litigation and regulatory investigations and resolution of such matters,

•the impact of changes in laws relating to consumer credit, the current regulatory environment, the financial system and tax reforms,

•the impact of changes in accounting rules and regulations, changes in our interpretation of the rules or regulations, or changes in underlying assumptions, estimates or judgments,

•the outcome of events or occurrences related to the wind-down of business operations in Canada.

These and other factors, including those factors we discuss in Part I, Item 1A. Risk Factors, could affect our financial results and cause our actual results to differ materially from any forward-looking information we may provide. Given these risks, uncertainties and other factors, undue reliance should not be placed on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing, and these estimates and assumptions may prove to be incorrect. This Annual Report on Form 10-K should be read completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify our forward-looking statements by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Nordstrom, Inc. and subsidiaries5

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All references to “we,” “us,” “our,” or the “Company” mean Nordstrom, Inc. and its subsidiaries. On March 2, 2023, Nordstrom Canada commenced a wind-down of its business operations (see Note 2: Canada Wind-down in Item 8) and as of this date, Nordstrom Canada was deconsolidated from Nordstrom, Inc.’s financial statements. Nordstrom Canada results prior to March 2, 2023 are included in the Company’s Consolidated Financial Statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the filing date of this Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. In addition, forward-looking statements may be impacted by the actual outcome of events or occurrences related to the wind-down of business operations in Canada.

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DEFINITIONS OF COMMONLY USED TERMS


Term			Definition
2019 Plan			2019 Equity Incentive Plan
2023 Annual Report			Annual Report on Form 10-K filed on March 19, 2024
Adjusted EPS			Adjusted earnings (loss) per diluted share (a non-GAAP financial measure)
Adjusted ROIC			Adjusted return on invested capital (a non-GAAP financial measure)

ASU			Accounting Standards Update
CARES Act			Coronavirus Aid, Relief and Economic Security Act
CCAA			Companies’ Creditors Arrangement Act
CISO			Chief Information Security Officer
CTIO			Chief Technology and Information Officer
Digital sales			Sales conducted through a digital platform such as our websites or mobile apps. Digital sales may be self-guided by the customer, as in a traditional online order, or facilitated by a salesperson using a virtual styling or selling tool. Digital sales may be delivered to the customer or picked up in our Nordstrom stores, Nordstrom Rack stores or Nordstrom Local service hubs. Digital sales also includes a reserve for estimated returns.
EBIT			Earnings (loss) before interest and income taxes
EBIT margin			Earnings (loss) before interest and income taxes as a percent of net sales
EBITDA			Earnings (loss) before interest, income taxes, depreciation and amortization
EBITDAR			Earnings (loss) before interest, income taxes, depreciation, amortization and rent, as defined by our Revolver covenant
EPS			Earnings (loss) per share
ESPP			Employee Stock Purchase Plan
Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
Fiscal year 2024			52 fiscal weeks ending February 1, 2025
Fiscal year 2023			53 fiscal weeks ending February 3, 2024
Fiscal year 2022			52 fiscal weeks ending January 28, 2023
Fiscal year 2021			52 fiscal weeks ending January 29, 2022


GAAP			U.S. generally accepted accounting principles

GMV			Gross merchandise value
Gross profit			Net sales less cost of sales and related buying and occupancy costs
Leverage Ratio			The sum of our funded debt and operating lease liabilities divided by the preceding twelve months of Adjusted EBITDAR as defined by our Revolver covenant


Term			Definition
MD&A			Management’s Discussion and Analysis of Financial Condition and Results of Operations
NAV			Net asset value
NMN			Nordstrom Media Network, where we use our first-party data and marketing infrastructure to drive cooperative marketing with vendors across both offsite and onsite marketing platforms
Nordstrom			Nordstrom.com, Nordstrom U.S. stores and Nordstrom Local. Nordstrom also included Canada operations prior to March 2, 2023, inclusive of Nordstrom.ca, Nordstrom Canadian stores and Nordstrom Rack Canadian stores, ASOS \| Nordstrom prior to December 2023 and TrunkClub.com prior to October 2022.
Nordstrom Canada			Nordstrom Canada Retail, Inc., Nordstrom Canada Holdings, LLC and Nordstrom Canada Holdings II, LLC
Nordstrom Local			Nordstrom Local service hubs, which offer order pickups, returns, alterations and other services
Nordstrom Rack			NordstromRack.com, Nordstrom Rack U.S. stores and Last Chance clearance stores
The Nordy Club			Our customer loyalty program
NYSE			New York Stock Exchange
Operating Lease Cost			Fixed rent expense, including fixed common area maintenance expense, net of developer reimbursement amortization
PCAOB			Public Company Accounting Oversight Board (United States)
Property incentives			Developer and vendor reimbursements
PSU			Performance share unit
Revolver			Senior revolving credit facility
Rights Plan			Our limited-duration Shareholder Rights Agreement adopted by the Board of Directors
ROU asset			Operating lease right-of-use asset
RSU			Restricted stock unit
SEC			Securities and Exchange Commission
SERP			Unfunded defined benefit Supplemental Executive Retirement Plan
Secured Notes			8.750% senior secured notes that were originally due May 2025
SG&A			Selling, general and administrative
Supply Chain Network			Fulfillment centers that primarily process and ship orders to our customers, distribution centers that primarily process and ship merchandise to our stores and other facilities and omni-channel centers that both fulfill customer orders and ship merchandise to our stores
TD			Toronto-Dominion Bank, N.A.

Nordstrom, Inc. and subsidiaries7

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PART I

Item 1. Business.

DESCRIPTION OF BUSINESS

~~Founded~~Overview

The Company was founded in 1901 as a retail shoe business in Seattle, ~~Nordstrom later incorporated~~Washington, under the guiding principle that success would come by offering customers the very best service, selection, quality and value. We aspire to be the best fashion retailer in ~~Washington state in 1946 and went on to become one~~a digitally connected world by leveraging the strength of the ~~leading fashion retailers based in the U.S. We provide customers with a differentiated~~Nordstrom and seamless customer experience through our robust ecommerce platform and high-quality store portfolio in top North American markets. As of March 19, 2018, we operate 363 U.S. stores located in 40 states as well as six Nordstrom full-line stores in Canada. The west coast of the U.S. is the area in which we have the largest presence. We have two reportable segments, which include ~~Retail~~ ~~and~~ ~~Credit~~.

~~As of March 19, 2018, the~~ ~~Retail~~ ~~segment includes:~~

~~117 Nordstrom-branded full-line stores in the U.S., including Nordstrom Local~~

~~six Canada full-line stores~~

~~full-price Nordstrom.com website and mobile application~~

~~235 off-price~~ Nordstrom Rack ~~stores~~

~~off-price Nordstromrack.com/HauteLook website~~banners, our digital and ~~mobile application~~

~~seven Trunk Club clubhouses~~physical properties, and ~~TrunkClub.com website~~

~~two “Last Chance” clearance stores~~

~~two Jeffrey boutiques~~

~~Through these multiple retail channels, we strive to deliver the best customer experience possible.~~our interconnected business model. We offer an extensive selection of high-quality brand-name and ~~private label~~private-label merchandise ~~focused~~for women, men, young adults and children, with a focus on apparel, shoes, ~~cosmetics~~beauty, accessories and ~~accessories.~~home goods. No matter how customers choose to shop, we are committed to delivering superior service, products and experiences — including alterations, order pickup, dining and styling — to make shopping fun, personalized and convenient. We have one reportable segment, which aggregates our two operating segments, Nordstrom and Nordstrom Rack.

~~Our integrated~~Nordstrom is a leading destination for a breadth of products across brands, styles and prices complemented by unmatched services and experiences. As of February 3, 2024, Nordstrom ~~full-line stores~~includes the following physical and digital ~~store allow us~~properties:

•93 Nordstrom stores in the U.S.

•Nordstrom.com website and mobile application

•six Nordstrom Locals

On March 2, 2023, Nordstrom Canada commenced a wind-down of its business operations. See Note 2: Canada Wind-down in Item 8 for more information.

Nordstrom Rack is a premier off-price destination with an industry-leading off-price digital presence, offering great brands at great prices. As of February 3, 2024, Nordstrom Rack includes the following physical and digital properties:

•258 Nordstrom Rack stores in the U.S.

•NordstromRack.com website and mobile application

•two Last Chance clearance stores

Nordstrom Rack purchases merchandise from many of the same vendors carried at Nordstrom and also serves as an outlet for clearance merchandise from the Nordstrom banner. We continue to ~~provide~~expand our offerings of the most coveted brands we carry to ensure we have an assortment that customers want. Our goal is for customers to shop and discover amazing deals through both a selection of merchandise and limited-time flash sale events. We continue to expand Nordstrom Rack’s physical footprint — we opened 19 new Nordstrom Rack stores across the U.S. in 2023 and intend on opening 22 more new stores in 2024. Nordstrom Rack stores serve as our primary source of new customers.

As a business, one of our key advantages lies in our ability to leverage an integrated network of physical and digital assets across both Nordstrom and Nordstrom Rack banners. This creates flexibility and convenience for our customers, no matter how they choose to shop — online or in stores. We are well positioned to support our customers with a ~~seamless~~scalable platform that has been built to support continued growth.

Our omni-channel platform positions us closer to the customer and allows us to drive customer engagement through better service and greater access to product. In addition, our fleet of stores helps us engage with customers by offering unique events and services such as personal styling, order pickup, returns and alterations at convenient locations. Our interconnected model is proving that it works — the average customer who shops across both banners, in both stores and online, spends over twelve times more than a customer shopping ~~experience. In-store~~a single channel or banner.

Products

In order to offer merchandise that our customers want, we purchase from a wide variety of high-quality domestic and foreign suppliers. Additionally, we utilize unowned inventory models beyond traditional wholesale arrangements that provide a broader assortment in new and existing categories. We also have arrangements with agents and contract manufacturers to produce our private-brand merchandise.

Nordstrom Rack invests in pack and hold inventory, which involves the strategic purchase of merchandise from some of our top brands in advance of the upcoming selling seasons or to minimize inventory gaps from supply chain disruptions, allowing us to buy larger quantities of relevant items when available, then hold a portion to deploy in periods with high demand, tight supply, facilitate new store openings or system constraints. This inventory is typically held for six months on average.

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Return Policy

We have a fair and reasonable approach to returns, handling them on a case-by-case basis with the ultimate objective of customer satisfaction. Almost all merchandise can be returned by mail or at any store location. Our goal is to take care of our customers, which includes making returns and exchanges easy, whether in stores or online. At our Nordstrom banner, where we offer free shipping on purchases and returns, we have no formal policy on how long we accept returns for purchases made. We generally accept returns of apparel, footwear, accessories and home products with the original price tag and sales receipt up to 30 days from the date of purchase at Nordstrom Rack stores and up to 40 days from the date of order at NordstromRack.com.

Loyalty Program

The Nordy Club is our customer loyalty program that incorporates a traditional point and benefit system, while providing customers exclusive access to products and events, enhanced services, personalized experiences and more convenient ways to shop. Customers accumulate points based on their level of spending and type of participation. Upon reaching certain point thresholds, customers receive Nordstrom Notes, which can be redeemed for goods or services across Nordstrom and Nordstrom Rack. The Nordy Club benefits vary based on the level of customer spend, and include bonus points days and shopping and fashion events.

We offer customers access to a variety of payment products and services, including a selection of Nordstrom-branded Visa® credit cards, as well as a Nordstrom-branded private-label credit card for Nordstrom purchases. When customers use a Nordstrom-branded credit or debit card, they also participate in The Nordy Club and receive additional benefits, which can vary depending on the level of spend, including early access to the Anniversary Sale, enhanced alterations and stylist benefits and incremental accumulation of points toward Nordstrom Notes.

Although the primary purpose of offering our credit cards is to foster greater customer loyalty and drive more sales, we also receive credit card revenue through our program agreement with TD. Under that agreement, which was amended in the fourth quarter of 2022 and runs through September 2026, TD is the exclusive issuer of Nordstrom-branded consumer credit cards and we perform account servicing functions for those cards. Credit card revenues, net include our portion of the ongoing credit card revenue, net of credit losses, pursuant to our program agreement with TD.

Supply Chain Network

We are continually expanding and enhancing our Supply Chain Network facilities and inventory management systems to support our omni-channel capabilities and provide greater access to merchandise selection and faster delivery. As of February 3, 2024, our Supply Chain Network consists of:

•three fulfillment centers that primarily process and ship orders to our customers

•six distribution centers that primarily process and ship merchandise to our stores and other facilities

•one omni-channel center that both fulfills customer orders and ships merchandise to our stores

In addition, our existing fleet of Nordstrom and Nordstrom Rack stores enables pickup and returns of online orders and facilitates a broader assortment to our digital customers. We select locations and customize inventory allocations to enable merchandise to flow more efficiently and quickly to our customers. Nordstrom online purchases are primarily shipped to our customers from our fulfillment centers but may also be shipped from our Nordstrom stores, distribution centers or omni-channel center. Nordstrom in-store purchases are primarily fulfilled from that store’s inventory, but when inventory is unavailable at that store, it may also be shipped to our customers from our fulfillment centers, ~~in Cedar Rapids, Iowa and Elizabethtown, Pennsylvania (“East Coast”),~~distribution centers, omni-channel center or from other Nordstrom ~~full-line~~ stores. ~~Online~~Nordstrom Rack online purchases are ~~primarily~~ shipped to our customers from our ~~Cedar Rapids and East Coast~~ fulfillment centers ~~but may also be~~and distribution centers. Both Nordstrom and Nordstrom Rack selectively use vendor dropship to supplement online offerings, which are then shipped directly from the vendor to the end customer.

Our first large-scale omni-channel center in Riverside, California, which supports our Nordstrom ~~full-line stores.~~customers in the West Coast region, opened in 2020. We plan to add Nordstrom Rack inventory and fulfillment to this facility in the future. Our smaller Local omni-channel hub in Torrance, California ceased operations in the third quarter of 2022 as we scaled our Riverside location to support demand in that region. Subsequent to year end, on March 5, 2024, we announced the decision to relocate our San Bernardino fulfillment center operations to our West Coast omni-channel center.

EMPLOYEES

We believe that creating a best-in-class customer experience begins with creating an environment that celebrates and supports all our employees. As we strive to attract and retain the best talent in the industry, we are committed to cultivating a workplace culture where our employees feel included, supported and confident bringing their full selves to work.

Nordstrom, Inc. and subsidiaries9

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As of February 3, 2024, we employed approximately 54,000 employees. Approximately 75% of employees support our stores and approximately 10% support our Supply Chain Network. Due to the seasonal nature of our business, the number of temporary employees may vary and peak during our Anniversary Sale and holiday seasons. In connection with these peak shopping seasons, our employee count may increase by approximately 7% to meet the needs of the business. Currently, our employees have not chosen to be represented by a union.

Diversity, Equity, Inclusion and Belonging

Our commitment to fostering a diverse, equitable and inclusive environment is key to our mission of helping our customers feel good and look their best. We believe in cultivating equity throughout the retail industry and aim to use our resources, influence and platform to foster greater representation of diversity from all our communities. Over the past several years, we have amplified our efforts in this area and set workplace and marketplace ambitions to achieve by the end of 2025. To lead and drive this work, we have operationalized diversity, equity, inclusion and belonging through consistent reviews with Erik B. Nordstrom, our Chief Executive Officer, and Lisa Price, our Chief Human Resources Officer. In addition, our diversity, equity, inclusion and belonging team serves as a center of excellence within the human resources organization and collaborates with leaders across the business to develop and embed equitable and inclusive strategies. Progress toward our diversity, equity, inclusion and belonging ambitions is tracked and reviewed regularly by our executive team and the Board of Directors.

As part of these ongoing efforts, we have several internal initiatives to facilitate a sense of belonging and connection among our teams. One way we do this is through our employee-led, company-sponsored Employee Resource Groups, which represent a variety of seen and unseen identities. In 2023, eight groups served and were led by our employees, providing company-wide programming to advance understanding and celebrate voices from across our organization.

We continue to partner with organizations that invest in equitable pathways for fashion, design and retail talent. In 2023, we supported a product management coursework and mentorship program at Morehouse College, National Retail Federation’s Student Program and Harlem’s Fashion Row and their nonprofit ICON360 with their inaugural Historically Black Colleges and Universities professor summit.

Employee Safety and Well-being

The health and safety of our customers, employees and communities is a responsibility we take very seriously. We continue to offer a variety of mental, emotional and physical wellness resources to support our employees, including digital mental health support and free counseling services through our Employee Assistance Programs.

We seek to listen to and learn from employees across our organization through our open-door policy, conducting regular listening sessions and utilizing our annual Voice of the Employee survey. We regularly review survey results against industry benchmarks to hold ourselves accountable as we continue to improve and evolve our workplace environment.

We remain committed to creating a culture where employees feel they can bring their whole selves to work and achieve their career goals through ongoing growth and development opportunities and fair and transparent performance management and promotion processes.

Total Rewards

To support our goals to retain and attract talented employees, we review our benefits and compensation approach annually.

•Benefits: We offer a range of benefits to all employees upon meeting eligibility requirements, including health care, wellness programs, financial and retirement plans and time away. In addition, we increased our focus on well-being through a multi-year strategy to bring our people new resources and tools to support total well-being, including mental health support.

•Compensation: We are committed to providing our employees with a great place to grow meaningful careers. We regularly review our pay in the markets in which we operate to ensure we are competitive, and we make updates accordingly throughout the year.

To ensure we offer a rewards package that aligns with the wants and needs of our employees, we routinely ask employees for their feedback in surveys throughout the year. We use the feedback to improve the overall experience of our employees.

CORPORATE SOCIAL RESPONSIBILITY

We believe we have a responsibility to support the communities where we operate and to support the health, safety and human rights of everyone in our value chain.

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Our Corporate Social Responsibility strategy focuses on environmental sustainability, human rights and corporate philanthropy. In 2023, we made meaningful progress in these areas. Specific highlights include:

•Environmental Sustainability: Through our beauty packaging take back and recycling program BEAUTYCYCLE, we hit an important milestone of taking back more than 50 tons of beauty packaging waste, bringing us more than halfway to our goal of taking back 100 tons by 2025. We also established science-based targets to reduce our greenhouse gas emissions for scope 1 (direct emissions from sources we own or control), scope 2 (indirect emissions from purchased electricity, heat and cooling) and scope 3 (indirect emissions associated with products we sell).

•Human Rights: We are committed to creating safe and fair workplaces for the people who make our products and we conduct due diligence to help support human rights and responsible sourcing. Our Human Rights and Responsible Sourcing program is based on international standards, upholding our Partner Code of Conduct and using third-party assessments to engage our suppliers on relevant policies and programs. We strengthened our policies and programs during the year and assess them cyclically.

•Gender Equity: Promoting gender equity is part of our commitment to human rights. We aim to drive positive change by producing more of our products in factories where women have resources to learn, grow and lead. By the end of 2025, we expect 90% or more of our Nordstrom Made product volume to be produced in facilities that invest in gender equity programs, and we are actively expanding production in factories that made this commitment. We are more than halfway to that goal.

•Charitable Giving: In our 13th year partnering with Shoes That Fit, we raised more than $1.2 million and donated more than 50,000 pairs of shoes to kids in our local communities. We continued our partnerships with Operation Warm and Big Brothers Big Sisters, and together with our customers, we raised enough funds to provide over 25,000 new coats to kids in need this holiday season. On Giving Tuesday alone, our employees allocated over $1 million to the causes they care about and volunteered over 2,500 hours.

Read more about our corporate social responsibility efforts at NordstromCares.com. The information contained or referred to on ~~their terms, blurring the lines between the digital~~our website is not deemed to be incorporated by reference into this Annual Report unless otherwise expressly noted.

TRADEMARKS

Our most notable trademarks include Nordstrom, Nordstrom Rack, Zella, Z by Zella, BP., Open Edit, Chelsea28, Caslon, Halogen, Tucker + Tate, Treasure & Bond, 14th & Union, Leith, Abound, Harper Canyon and ~~in-store experience. Our customers can pick up online orders in our Nordstrom full-line stores if inventory is available at one~~Melrose & Market. Each of our ~~locations, or reserve clothes online to try~~trademarks is renewable indefinitely, provided it is still used in store in many of our locations. Nordstrom Local is a test retail concept that is focused on services, providing customers convenient access to personal stylists, alterations, online orders and more. We also leveragecommerce at the expertise of our salespeople to enable customers to receive personalized product recommendations on their mobile phones through our digital Style Board selling tool. These capabilities allow us to better serve customers across various channels and improve sales.

Nordstrom Rack stores purchase merchandise primarily from the same vendors carried in Nordstrom full-line stores and also serve as outlets for clearance merchandise from our Nordstrom stores and other retail channels. Nordstromrack.com/HauteLook offers a consistent selection of off-price merchandise, as well as limited-time sale events on fashion and lifestyle brands and are integrated with a single customer log-in, shared shopping cart and streamlined checkout process. Nordstromrack.com combines the technology expertise of HauteLook with the merchant expertise of Nordstrom Rack. Online purchases are primarily shipped to our customers from our San Bernardino, California and East Coast fulfillment centers. Furthermore, we can accommodate returns from these sites by mail or at any Nordstrom Rack location.

~~Through our~~ ~~Credit~~ segment, our customers can access a variety of payment products and services, including a selection of Nordstrom-branded Visa® credit cards in the U.S. and Canada, as well as a Nordstrom-branded private label credit card and a debit card for Nordstrom purchases. When customers use a Nordstrom-branded credit or debit card, they also participate in our loyalty program that provides benefits based on their level of spending. Although the primary purposes of our Credit segment are to foster greater customer loyalty and drive more sales, we also receive credit card revenue through our program agreement with TD Bank, N.A. (“TD”) (see Note 2: Credit Card Receivable Transaction in Item 8).

We invested early in our omni-channel capabilities, integrating our operations, merchandising and technology across our stores and online, in both our Nordstrom full-price and Nordstrom Rack off-price businesses. Today, we have more than 60 combinations in which merchandise is ordered, fulfilled and delivered. Though this has enabled us to serve customers in multiple ways, we are focused on providing a seamless experience for our customer across stores and online. As a resulttime of the evolution of our operations, our reportable segments have become progressively more integrated such that we will change our reportable segments to one reportable segment to align with how management will view the results of our operations in the first quarter of 2018. For more information about our business and our reportable segments, see Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 15: Segment Reporting in Item 8.

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~~FISCAL YEAR~~

We operate on a 52/53-week fiscal year ending on the Saturday closest to January 31st. References to 2017 relate to the 53-week fiscal year ended February 3, 2018. References to any other years included within this document are based on a 52-week fiscal year.

~~RETURN POLICY~~

We have a fair and reasonable approach to returns, handling them on a case-by-case basis with the ultimate objective of making our customers happy. We have no formal return policy on how long we accept returns at our Nordstrom full-line stores or online at Nordstrom.com. Our goal is to take care of our customers, which includes making returns and exchanges easy, whether in stores or online, where we offer free shipping on purchases and returns. Our Nordstrom Rack stores generally accept returns up to 90 days from the date of purchase with the original price tag and sales receipt and accept returns of Nordstromrack.com/HauteLook merchandise. Nordstromrack.com/HauteLook generally accepts returns of apparel, footwear, accessories and HauteLook home products within 90 ~~days from the date of shipment. Beginning in 2018, our off-price channels accept returns 45 days from the date of purchase or shipment.~~renewal.

SEASONALITY

Our business, like that of other retailers, is subject to seasonal ~~fluctuations. Due to our Anniversary Sale~~fluctuations and cyclical trends in ~~July and the holidays in the fourth quarter, our~~consumer spending. Our sales are typically higher in our second quarter, which usually includes most of our Anniversary Sale, and in the fourth quarter due to the holidays. One week of our Anniversary Sale shifted from the second ~~and fourth quarters than~~quarter in 2022 to the ~~first and~~ third ~~quarters~~quarter in 2023.

Results for any one quarter are not indicative of the results that may be achieved for a full fiscal year. ~~Consistent~~We plan our merchandise purchases and receipts to coincide with ~~the timing in~~ ~~2016~~,expected sales trends. For instance, our ~~2017~~ ~~Anniversary Sale began in the third week of July~~merchandise purchases and ~~extended one week into the third quarter.~~

~~NORDSTROM REWARDS~~

Our Nordstrom Rewards™ loyalty program, which rewards customers based on their level of spending, is one area that enables us to directly engage and strengthen relationships with customers while driving incremental sales and trips. Upon reaching certain point thresholds, customers receive Nordstrom Notes® (“Notes”), which can be redeemed for goods or services. In May 2016, we expanded the program to any customer interested in participating, when historically this program was offered only to Nordstrom cardholders. Notes can be earned and redeemed at Nordstrom full-line stores, Nordstrom.com, Nordstrom Rack and Nordstromrack.com/HauteLook. Nordstrom cardholders can also earn rewards at Trunk Club. Customers who participate in our Nordstrom Rewards loyalty program through our credit and debit cards receive additional benefits including reimbursements for alterations, Personal Triple Points days, shopping and fashion events and early accessreceipts increase prior to the Anniversary ~~Sale.~~Sale and in the fall as we prepare for the holiday shopping season (typically from November through December). Consistent with our seasonal fluctuations, our working capital requirements have historically increased during the months leading up to the Anniversary Sale and the holidays as we purchase inventory in anticipation of increased sales.

COMPETITIVE CONDITIONS

We operate in a highly competitive business environment. We regularly compete with other international, national, regional and local retailers, including internet-based businesses, omni-channel department stores, online marketplaces, brands selling direct to consumers online and in-stores, specialty stores, off-price stores and boutiques, ~~that~~which may carry similar lines of merchandise. Our specific competitors vary from market to market. We believe the keys to competing in our industry are what will always matter most to our customers: providing ~~great customer~~compelling product and outstanding service, both digitally and ~~customer experiences~~ in stores, ~~and online.~~backed by people who care. This includes serving customers on their terms by providing a seamless digital and physical experience, offering compelling, curated and quality products across a range of price points, and ~~value, fashion newness, quality of products, selection, convenience, technology, product fulfillment, personalization~~strategically partnering with relevant and ~~appealing, relevant store environments~~limited distribution brands, all in top ~~locations.~~

~~INVENTORY~~

We plan our merchandise purchases and receipts to coincide with expected sales trends. For instance, our merchandise purchases and receipts increase prior to our Anniversary Sale, which has historically extended over the last two weeks of July. We also purchase and receive a larger amount of merchandise in the fall as we prepare for the holiday shopping season (from late November through December). At Nordstrom Rack, we invest in pack and hold inventory, which involves the strategic purchase of merchandise from some of our full-line stores’ top brands in advance of the upcoming selling seasons, to take advantage of favorable buying opportunities. This inventory is typically held for six months on average and has been an important component of Nordstrom Rack’s inventory strategy.

In order to offer merchandise that our customers want, we purchase from a wide variety of high-quality domestic and foreign suppliers. We also have arrangements with agents and contract manufacturers to produce our private label merchandise. We expect our suppliers to meet our “Nordstrom Partnership Guidelines,” which address our corporate social responsibility standards for matters such as legal and regulatory compliance, labor, health and safety and the environment. This is available on our website at Nordstrom.com.

~~EMPLOYEES~~

During 2017, we employed approximately 72,500 employees on a full- or part-time basis. Due to the seasonal nature of our business, employment increased to approximately 75,000 employees in July 2017 and 76,000 in December 2017. All of our employees are non-union. We believe our relationship with our employees is good.

~~TRADEMARKS~~

We have 193 trademarks, each of which is the subject of one or more trademark registrations and/or trademark applications. Our most notable trademarks include Nordstrom, Nordstrom Rack, HauteLook and Trunk Club. Our most notable brand trademarks include Halogen, BP., Nordstrom, Zella, Caslon, Tucker+Tate and 14th & Union. Each of our trademarks is renewable indefinitely, provided that it is still used in commerce at the time of the renewal.

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~~CAUTIONARY STATEMENT~~

Certain statements in this Annual Report on Form 10-K contain or may suggest “forward-looking” information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties including, but not limited to, our anticipated financial outlook for the fiscal year ending February 2, 2019, our anticipated annual total and comparable sales rates, our anticipated new store openings in existing, new and international markets, our anticipated Return on Invested Capital and trends in our operations. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties. Our actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to:

~~Strategic and Operational~~

~~successful execution of our customer strategy to provide a differentiated and seamless experience across all Nordstrom channels,~~

timely and effective implementation of our plans to evolve our business model, including development of applications for electronic devices, improvement of customer-facing technology, timely delivery of products purchased digitally, enhancement of inventory management systems, greater and more fluid inventory availability between our digital channels and retail store locations, and greater consistency in marketing and pricing strategies, as well as our ability to manage the costs associated with this evolving business model,

our ability to evolve our business model as necessary to respond to the business and retail environment, as well as fashion trends and consumer preferences, including changing expectations of service and experience in stores and online,

~~our ability to properly balance our investments in existing and new store locations, especially our investments in our Nordstrom Men’s Store NYC and Nordstrom NYC,~~

~~successful execution of our information technology strategy,~~

~~our ability to effectively utilize data in strategic planning and decision making,~~

timely completion of construction associated with newly planned stores, relocations and remodels, all of which may be impacted by the financial health of third parties and consumer traffic to the locations,

~~efficient and proper allocation of our capital resources,~~

~~effective inventory management processes and systems, fulfillment and supply chain processes and systems, disruptions in our supply chain and our ability to control costs,~~

the impact of any systems or network failures, cybersecurity and/or security breaches, including any security breach of our systems or those of a third-party provider that results in the theft, transfer or unauthorized disclosure of customer, employee or Company information or compliance with information security and privacy laws and regulations in the event of such an incident,

the effect of the publicly announced exploration by members of the Nordstrom family of a possible “going private transaction” on our relationships with our customers, employees, suppliers and partners, on our operating results and on our business generally,

~~our ability to safeguard our reputation and maintain our vendor relationships,~~

our ability to maintain relationships with and motivate our employees and to effectively attract, develop and retain our future leaders, which could be impacted by the uncertainty about the possibility of a “going private transaction”,

~~our ability to realize the expected benefits, respond to potential risks and appropriately manage costs associated with our program agreement with TD,~~

~~the effectiveness of planned advertising, marketing and promotional campaigns in the highly competitive and promotional retail industry,~~

~~market fluctuations, increases in operating costs, exit costs and overall liabilities and losses associated with owning and leasing real estate,~~

potential goodwill impairment charges, future impairment charges and fluctuations in the fair values of reporting units or of assets in the event projected financial results are not achieved within expected time frames,

~~compliance with debt and operating covenants, availability and cost of credit, changes in our credit rating and changes in interest rates,~~

~~the timing, price, manner and amounts of future share repurchases by the Company, if any, or any share issuances by the Company,~~

~~Economic and External~~

~~the impact of the seasonal nature of our business and cyclical customer spending,~~

~~the impact of economic and market conditions and the resultant impact on consumer spending and credit patterns,~~

~~the impact of economic, environmental or political conditions in the U.S. and countries where our third-party vendors operate,~~

weather conditions, natural disasters, health hazards, national security or other market and supply chain disruptions, or the prospects of these events and the resulting impact on consumer spending patterns or information technology systems and communications,

~~Legal and Regulatory~~

our compliance with applicable domestic and international laws, regulations and ethical standards, including those related to employment and tax, and the outcome of claims and litigation and resolution of such matters,

~~the impact of the current regulatory environment and financial system, health care, and tax reforms,~~

~~the impact of changes in accounting rules and regulations, changes in our interpretation of the rules or regulations, or changes in underlying assumptions, estimates or judgments.~~

These and other factors, including those factors described in Item 1A: Risk Factors, could affect our financial results and cause actual results to differ materially from any forward-looking information we may provide. We undertake no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances, except as may be required by law.

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~~SEC FILINGS~~AVAILABLE INFORMATION

We file annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (“SEC”). All the materials we file with the SEC are publicly available at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, theSEC. The SEC maintains a website at ~~www.sec.gov~~SEC.gov that contains reports, proxy and information statements, and other information regarding issuers that file ~~electronically~~ with the SEC.

~~WEBSITE ACCESS~~

Our website ~~address is Nordstrom.com.~~addresses are Nordstrom.com and NordstromRack.com. Our annual and quarterly reports on Form 10-K and Form 10-Q, ~~(including related filings in eXtensible Business Reporting Language (“XBRL”) format),~~ current reports on Form 8-K, proxy statements, our executives’ statements of changes in beneficial ownership of securities on Form 4 and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”)~~ are available for free on or through our website as soon as reasonably practicable after we electronically file the report with or furnish it to the SEC. Interested parties may also access a webcast of quarterly earnings conference calls and other financial events through our ~~website.~~

~~CORPORATE GOVERNANCE~~website at investor.nordstrom.com.

We have a long-standing commitment to upholding a high level of ethical standards. In addition, ~~as the listing standards of the New York Stock Exchange (“NYSE”) and the rules of the SEC require,~~ we have adopted Codes of Business Conduct and Ethics for our employees, officers and directors ~~(“Codes of Ethics”)~~ and Corporate Governance ~~Guidelines.~~Guidelines, which comply with the listing standards of the NYSE and SEC requirements. Our Codes of Business Conduct and Ethics, Corporate Governance Guidelines and Committee Charters for the following Board of Director Committees are available through our website:

•Audit and Finance

•Compensation, People and Culture

•Corporate Governance and Nominating ~~Finance and~~

•Technology ~~Committees are posted on our website.~~

Any amendments to these documents, or waivers of the requirements they contain, will also be available on our website.

For printed versions of these items or any other inquiries, please contact:



Nordstrom Investor Relations
1617 Sixth Avenue ~~Suite 500~~
Seattle, Washington 98101
~~(206) 303-3200~~
~~invrelations@nordstrom.com~~InvRelations@Nordstrom.com

Item 1A. Risk Factors.

Our business faces many risks. We believe the risks described below outline the items of most concern to us. In evaluating our Company, you should carefully consider the following factors, in addition to the other information in this 2023 Annual Report. Before you buy our common stock or invest in our debt, you should know that making such an investment involves risks including, but not limited to, the risks described below. Any one of the following risks could harm our business, financial condition, results of operations or reputation, each of which could cause our stock price to decline or a default on our debt payments, and you may lose all or a part of your investment. Additional risks, trends and uncertainties not presently known to us or that we currently believe are immaterial may also harm our business, financial condition, results of operations or reputation.

~~RISKS DUE TO~~ STRATEGIC AND OPERATIONAL ~~FACTORS~~RISKS

~~Our inability~~If we are unable to successfully execute our customer strategy, orgrow our ~~plans to~~customer base or evolve our business model, it could negatively impact our business and future profitability and growth.

~~The retail environment~~We believe our omni-channel market strategy is ~~rapidly evolving with customer shopping preferences continuing~~a powerful enabler for the business which allows us to ~~shift~~better serve customers and provide greater access to product by leveraging all of our assets of people, product and place at the market level. As our business evolves, we must continue to scale our market strategy and focus on better serving our customers through winning in our most important markets, broadening the reach of Nordstrom Rack and increasing our digital ~~channels. Computers and mobile electronic devices allow customers to browse and transact anywhere and anytime.~~velocity. Our ~~customer~~market strategy focuses on ~~providing~~our customers by seeking to provide a differentiated and seamless experience ~~across~~in a digital world by bringing all of our assets together in each market to serve customers when, where and how they want to shop. We aim to balance our assortment, increase the breadth of selection and continue to leverage our digital and physical assets to increase selection and improve profitability in our Nordstrom ~~channels, whether in store or in the digital environment.~~Rack banner. We are ~~enhancing~~working to expand our ~~customer shopping experience in~~inventory flexibility through unowned inventory models, including dropship, concession, marketplace and other strategies. Additionally, we are working to scale our ~~stores~~NMN, which allows our brand partners to directly connect with our customers through on- and ~~online, including mobile~~off-site media campaigns to drive traffic, sales and ~~social channels, by pursuing a heightened focus on digital technology to fuel our growth.~~engagement.

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Our ~~growth strategies in this area span the development of~~customer focus requires us to build new supply chain capabilities and enhance existing ones, develop applications for electronic devices, ~~improvement of~~improve customer-facing technology, deliver purchased products timely, ~~delivery of products purchased digitally, enhancement of~~enhance inventory management systems and allow greater and more fluid inventory availability between digital and retail locations ~~and greater consistency in marketing and pricing strategies.~~through our market strategy. In addition, these strategies will require further expansion of and reliance on data science and ~~analytics across all our channels.~~analytics. This business model has a ~~high~~highly variable cost structure ~~driven by fulfillment and marketing costs~~ and will continue to require ~~investment~~investments in cross-channel operations and supporting technologies. There are also inherent risks associated with the investment in new technologies, such as generative artificial intelligence, and such operational and supporting technologies can be subject to failure, disruption or unavailability and increased vulnerability to cyberattacks and other cyber incidents.

~~With the accelerated pace of change in the retail environment, we may not be able to meet our customers’ changing expectations of how they shop in stores or through digital channels.~~ If we do not successfully implement our customer strategy, including thoroughly understanding and ~~expand~~delivering on our customers’ needs and wants, effectively integrating our digital operations and stores and scaling our market strategy, strengthening our brand awareness, expanding our supply chain initiatives ~~or do not seamlessly integrate or maintain them properly,~~and efficiently getting product to our customers, we may fall short of our ~~customer’s~~customers’ expectations, ~~impacting~~which would impact our brand, reputation, profitability and growth. ~~In addition,~~Also, if customers shift tobetween shopping at our store and digital channels, or between our Nordstrom and Nordstrom Rack banners, at a different pace than we anticipate, we may need to quickly modify ~~our~~ initiatives and ~~investments, which may adversely impact~~investments. If we do not have or devote the resources necessary to execute upon these strategies, our ~~profitability and harm our competitive position. We also may not gather accurate and relevant data or effectively utilize that data, which may impact our strategic planning and decision making.~~

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business could be negatively impacted.

Our business could suffer if we do not appropriately assess and react to competitive market forces and changes in customer behavior.

The retail environment is rapidly evolving. Customer shopping preferences continue to shift, including increasing expectations for faster delivery of product. In addition, the retail environment is under significant pressure from non-traditional retailers, including online marketplaces and rental and recommerce companies. We regularly compete with other international, national, regional and local retailers, including internet-based businesses, omni-channel department stores, online marketplaces, brands selling direct to consumers online and in-stores, specialty stores, off-price stores and boutiques, ~~that~~which may carry similar lines of merchandise. Digital channels continue to facilitate comparison shopping, intensifying competition in the retail ~~market.~~market, and marketing digitally is controlled by a few key platforms. If we fail to adequately anticipate ~~and~~or respond to customer behavior and expectations, or changing market dynamics, we may lose market share or our ability to remain competitive, causing our sales and profitability to ~~suffer. If we do not properly allocate our capital between~~suffer, and may potentially impact the ~~store and digital environment or between the full-price and off-price channels, or adjust the effectiveness and efficiency~~valuation of our ~~stores~~goodwill and result in a non-cash impairment charge. If the efficiency and allocation of loyalty marketing, advertising and promotional campaigns that attract customers through various programs and media, including digital media and print, is unsuccessful in influencing consumer behavior in our digital channels and stores, or if our ~~overall sales~~competitors are more effective with their programs than we are, our growth and profitability could suffer. We also may not gather accurate and relevant data or effectively utilize that data, which may impact our strategic planning, marketing and loyalty programs and our overall decision making.

Our customer relationships and sales may be negatively impacted if we do not anticipate and respond to consumer preferences and fashion trends or manage inventory levels appropriately.

Our ability to predict or respond to constantly changing fashion trends, demographics, consumer preferences and spending patterns significantly impacts our sales and operating results. We must effectively manage our merchandise mix to curate an assortment that offers newness and greater selection at various price points. Some merchandise may take several months from the time we place a purchase order to the time it is received, and our ability to accelerate or modify that timeline or purchase order contents may be limited. If we do not identify and respond to emerging trends in consumer spending and preferences quickly enough, identify the right partners that align with our customer strategy, broaden or expand our category offering fast enough or in the right areas or develop, evolve and retain our team’s talent, mindset and technical skills to support changing operating models, we may harm our ability to retain our existing customers or attract new customers. We also store a certain level of pack-and-hold inventory to deploy in periods with high demand, tight supply or system constraints. As a result, we are vulnerable to shifts in consumer demand and misjudgments in the assortment and timing of merchandise purchases which may impact our ability to sell through this inventory in future periods. Ensuring we optimize our inventory and improve the planning and management of inventory through use of data and analytics is critical to serving the customer, driving growth and maximizing profitability. If we purchase too much inventory, we may be forced to sell our merchandise at lower average margins by taking significant markdowns, which could harm our business. Conversely, if we fail to purchase enough merchandise, or inventory does not arrive fast enough or as expected, we may lose opportunities for additional sales and potentially harm relationships with our customers.

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Any inability to mitigate global labor and merchandise pricing pressures or disruptions may negatively impact our profitability.

Our profitability depends in ~~existing~~part on our ability to anticipate and ~~new store locations,~~react to operating volatility, including the cost and availability of labor and merchandise. Increases in product and/or delivery costs, including changes in the price of raw materials to us and our ~~Nordstrom Men’s Store NYC~~vendors that are directly or indirectly related to the production and ~~Nordstrom NYC, may outpace our expected returns.~~

~~The locations~~distribution of our ~~existing stores~~products or increases in energy, labor or fuel and ~~planned store openings~~transportation costs, may translate to higher sales prices, which may then impact customer demand. In the near term, we are ~~assessed based upon desirability, demographics,~~focused on improving our internal network and ~~retail environment. This involves certain risks, including properly balancing~~processes by diversifying our ~~capital investments between new stores, relocations, remodels, technology~~carrier capacity, gaining better end-to-end visibility of inventory and ~~digital channels, assessing the suitability of locations, especially~~increasing velocity and throughput in ~~new domestic~~our Supply Chain Network. If we are unable to respond effectively to ongoing pricing pressures or labor shortages, or offset such costs, there could be a material adverse impact on our business and ~~international~~financial results.

Our employees are key to supporting our business and operations effectively, and increased labor costs put pressure on our operating expenses. When wage rates or benefit levels increase in particular markets, increasing our wages or benefits has negatively impacted and ~~constructing, furnishing and supplying a store in a timely and cost-effective manner. In particular, we plan~~may continue to ~~open~~negatively impact our ~~Nordstrom Men’s Store NYC in Spring 2018 and our Nordstrom NYC store in 2019.~~

~~Sales at our stores may not meet projections, particularly in light of the changing trends between digital and brick-and-mortar shopping channels, which~~earnings. Conversely, failing to offer competitive wages or benefits could adversely affect our ~~return~~ability to attract or retain sufficient or quality employees, causing increased turnover and our customer service to suffer. Excessive turnover may result in higher costs associated with finding, hiring and training new employees.

Any impediment to our inventory optimization may impact our ability to drive growth and meet customer demand, affecting future results and profitability. Shortages in certain materials and increasing pricing pressures in the highly competitive retail environment have contributed, and may in the future continue to contribute, to fluctuations in the quality, availability and price of our merchandise. The availability of raw materials or inventory to the U.S. may hinder our ability to meet customer demand. Our vendors and other suppliers may experience similar fluctuations or restrictions, which may subject us to the effects of their price increases. Additionally, if we do not gather complete, accurate and timely competitive pricing data, or adequately utilize this data to implement an effective pricing strategy, our ability to successfully compete could be negatively impacted, causing our sales, profitability and results of operations to suffer.

Improvements to our processes and systems for Supply Chain Network, inventory, buying, vendor payment and accounting could adversely affect our business if not successfully executed.

Our business depends on ~~investment. As we enter into new domestic~~accuracy throughout our product flow process. We are making investments to streamline and ~~international markets,~~standardize our Supply Chain Network, inventory, buying, vendor payments and accounting capabilities through changes in technology, such as ~~Manhattan~~the utilization of generative artificial intelligence-enabled methodologies and ~~Canada,~~processes. If we encounter challenges associated with change management, inventory integrity and implementation of associated information technology or adoption of new processes, features or capabilities, our ~~efforts will require additional management attention~~ability to continue to successfully execute or evolve our strategy with changes in the retail environment could be adversely affected. Or, if we are unable to maintain accurate, reliable and ~~resources~~effective inventory tracking systems, such as our use of RFID technology, which are critical to our integrated omni-channel business strategy, it may adversely impact our sales and profitability and may ~~distract~~result in canceled orders and increased costs relative to our current expectations.

If we do not effectively attract, retain, train and develop talent and future leaders, our business may suffer.

We rely on the experience of our senior management, who have specific knowledge relating to us ~~from executing~~and our ~~core operations.~~industry that is difficult to replace, to execute our business strategies and objectives. We have succession plans in place and our Board of Directors reviews these succession plans. If our succession plans do not adequately cover significant and unanticipated turnover, the loss of the services of any of these individuals, or any resulting negative perceptions or reactions, could damage our reputation and our business.

Additionally, our success depends on the talents and abilities of our workforce in all areas of our business, especially personnel that can adapt to complexities and grow their skillset across the changing environment. Our ability to successfully execute our customer strategy depends on attracting, developing and retaining qualified talent with diverse sets of skills, especially functional and technology specialists that directly support our strategies. We have a large workforce, and our ability to meet our labor needs is subject to various external factors such as regional minimum wage and benefits requirements, market pressures, prevailing wage rates, benefit mix, unemployment levels, changing demographics, economic conditions and a dynamic regulatory environment.

We have experienced, and may continue to experience, increased employee attrition due to an intense competition for talent, a competitive wage environment and labor shortages. In the Seattle metropolitan area, where our corporate headquarters are located, we regularly compete for talent with many larger technology-focused companies, which may increase market compensation, especially for certain employee groups. If we are unable to sustain employee satisfaction or offer competitive compensation and benefits, appropriate training and development or a compelling work environment, our culture may be adversely affected, our reputation may be damaged and we may incur costs related to turnover.

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Our program agreement with TD, or changes to that agreement, could adversely impact our business.

The program agreement with TD was consummated on terms that allow us to maintain customer-facing activities, while TD facilitates issuance of Nordstrom-branded payment methods and provides payment processing services. If we fail to meet certain service levels, TD has the right to assume certain individual servicing functions including managing accounts and collection activities. If we do not successfully respond to potential risks and appropriately manage potential costs associated with the program agreement with TD or if these transactions negatively impact the customer service associated with our cards, resulting in harm to our business reputation and competitive position, our operations, cash flows and earnings could be adversely affected. If, upon expiration of our current program agreement in 2026, a new contract has less favorable terms, our results could be negatively impacted. If TD became unwilling or unable to provide these services or if there are changes to the risk management policies implemented under our program agreement with TD, our results may be negatively impacted. If we are unable to ensure the successful management of servicing related to Nordstrom-branded credit cards, it may heighten the risk of credit losses.

DATA, CYBERSECURITY AND INFORMATION TECHNOLOGY RISKS

Even if we take appropriate measures to safeguard our information, ~~security~~network and ~~privacy~~ environment from security breaches or unauthorized disclosures, our customers, employees and ~~our~~ business could still be exposed to risk.

~~Nordstrom, our subsidiaries~~We and ~~in some instances,~~ our third-party ~~vendors~~providers access, collect, store and transmit ~~customers’ personal~~sensitive and confidential Company, customer and employee data and information, including consumer preferences and credit card information, all of which are subject to demanding and continuously evolving privacy and security laws and regulations. A number of jurisdictions where we do business have enacted or are considering new privacy and data protection laws which impact our responsibilities with respect to this data, including California, Colorado, Connecticut, Utah and Virginia. In addition, advances in artificial intelligence technologies, which attackers may use, increase vulnerability to cyberattacks, cyber incidents or privacy incidents.

We have taken measures to help prevent a breach of our networks and environments and comply with cybersecurity and privacy requirements by implementing safeguards and procedures designed to protect the security, confidentiality and integrity of such information. In addition, we have strengthened our ~~operations involve~~contracts to require, where possible, our third-party providers to implement administrative, physical and technical safeguards and procedures aligned to industry best practices.

Despite the ~~collection, storage and transmission of employee information and our financial and strategic data. Security breaches of this information may be the result of~~fact that we have implemented measures to prevent intentional or inadvertent ~~activities by~~information security breaches and requested our ~~employees or by third parties with whom~~third-party providers to do the same, these measures cannot completely eliminate cybersecurity risk. Like many companies, we, as well as several of our vendors, have ~~business relationships that may result~~suffered breaches of our cybersecurity in the ~~unauthorized release of customer or employee personal or confidential information.~~

~~Any measures we implement to prevent a security or cybersecurity threat may not be completely effective~~past and ~~may have~~are at risk for such breaches in the potential to harm relations with our customers and employees or decrease activity on our websites by making them more difficult to use. In addition, the regulatory environment surrounding information security, cybersecurity and privacy is increasingly demanding, with new and constantly changing requirements.

future. Security breaches and cyber incidents, ~~and their remediation,~~ whether at ~~Nordstrom,~~our Company, our third-party suppliers and service providers or other retailers, could expose us to ~~a risk~~loss, unauthorized release or disclosure of ~~loss~~customer, employee or ~~misappropriation of this~~Company confidential information, litigation, investigation, regulatory enforcement action, penalties and fines, orders to stop any alleged noncompliant activity, information technology system failures or network disruptions, increased cyber-protection and remediation costs, financial losses, potential liability, ~~reputation damage and~~or loss of customers’, employees’ or third-party providers’ trust and business, any of which could adversely impact our reputation, competitiveness and financial performance. ~~Any such breaches~~Concerns about our data management practices, including the collection, use, retention, security or ~~incidents~~disclosure of personal information or other privacy-related matters, even if unfounded, could subject usthe Company to ~~financial losses, investigation, notification~~regulatory inquiries and ~~remediation costs, which may not be covered by~~damage our insurance policies. If there is additional information that is later discovered related to such security breach or incident, there could be further loss of shareholders’ and customers’ trust and business based upon their reactions to this additional information. Additionally, we could be subject to external credit card fraud. To the extent that any incident results in the loss, damage or misappropriation of information, we may be materiallyreputation, adversely ~~affected by claims from~~affecting our ~~customers, financial institutions, regulators, payment card networks and other third parties.~~operating results.

Our business may be impacted by information technology system failures or network disruptions.

Our ability to transact with customers and operate our business depends on the efficient operation of various internal and third-party information technology systems, including cloud computing, data centers, hardware, software and applications, to manage certain aspects of our ~~computer~~Company, including online and ~~communications~~store transactions, logistics and communication, inventory and reporting systems. We seek to build resilient and secure systems, select reputable system vendors and implement procedures intended to enable us to protect our systems when we modify them. We test our systems to address vulnerabilities and train our employees regarding practices to protect the safety of our technology systems.

There are risks associated with developing, modifying or replacing information technology systems, including accurately capturing and maintaining data, realizing the expected benefit of the change and managing the potential disruption of the operation of the systems as the changes are implemented. Potential issues associated with implementing technology initiatives and the time and resources required to optimize the benefits of new elements of our systems and infrastructure could reduce the efficiency of our operations in the short term.

If we encounter an interruption or deterioration in critical systems or processes or experience the loss of critical data, which may result from security or cybersecurity threats or attacks, natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins ~~security or cybersecurity threats or attacks~~ or third-party or other disruptions, our business could be ~~harmed.~~harmed both in the short-term and over a longer period. Depending on the severity of the failure, our disaster recovery plans may be inadequate or ineffective. These events could also damage our reputation, result in increased costs or loss of sales and ~~be expensive~~require significant time and expense to remedy.

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~~Improvements to our merchandise buying and fulfillment processes and systems could adversely affect our business if not successfully executed.~~

We are making investments to improve our merchandise planning, procurement, allocation and fulfillment capabilities through changes in personnel, processes, location logistics and technology over a period of several years. If we encounter challenges associated with change management, the ability to hire and retain key personnel involved in these efforts, implementation of associated information technology or adoption of new processes, our ability to continue to successfully execute our strategy or evolve our strategy with changes in the retail environment could be adversely affected. As a result, we may not derive the expected benefits to our sales and profitability, or we may incur increased costs relative to our current expectations.

The possibility of a “going private transaction” by the Nordstrom family could negatively impact our operating results, business and relationships with our customers, employees, suppliers and partners.

In June 2017, members of the Nordstrom family formed a group (the “Group”) to explore the possibility of pursuing a “going private transaction” involving the acquisition by the Group of 100% of our outstanding shares of common stock (a “Going Private Transaction”). The Board of Directors also formed a special committee (the “Special Committee”) comprised of independent directors to act on the Company’s behalf in connection with such exploration by the Group and any possible transaction. In October 2017, the Group informed the Special Committee that the Group has suspended active exploration of a Going Private Transaction for the balance of the year. The Group also informed the Special Committee that it intends to continue its efforts to explore the possibility of making a going private proposal after the conclusion of the holiday season. In March 2018, the Group delivered an indicative proposal to the Special Committee regarding a Going Private Transaction. The Special Committee determined that the price proposed is inadequate. No assurances can be given regarding the terms and details of any such transaction, that any proposal made by the Group, if any, will be accepted by the Special Committee, that definitive documentation relating to a transaction will be executed, or that a transaction will be consummated in accordance with that documentation, if at all. We do not plan to disclose developments or provide updates on the progress or status of any potential Going Private Transaction until the Special Committee deems further disclosure is appropriate or required. Speculation regarding any developments related to the review of a Going Private Transaction and perceived uncertainties related to our future could cause our stock price to fluctuate significantly.

The possibility of a Going Private Transaction or any other alternative may expose us and our operations to a number of risks and uncertainties, including the potential failure to retain, attract or strengthen our relationships with key personnel, current and potential customers, suppliers, and partners, which may cause them to terminate, or not to renew or enter into, arrangements with us; the potential incurrence of expenses associated with the retention of legal, financial and other advisors regardless of whether any transaction is consummated; distractions and disruptions in our business; and exposure to potential litigation in connection with this process and effecting any transaction, any of which could adversely affect our business, financial condition and results of operations as well as the market price of our common stock.REPUTATION AND RELATIONSHIP RISKS

Our customer, employee, vendor, third-party partner, landlord and ~~vendor~~other stakeholder relationships could be negatively affected if we fail to maintain our corporate culture and reputation.

We have a well-recognized culture and reputation that consumers may associate with a high level of integrity, customer service and quality merchandise, and it is one of the reasons customers shop with us and employees choose us as a place of employment. Any significant damage to our reputation, including damages arising from noncompliant business, data privacy, information security, diversity, environmental or social responsibility practices, news about our Company or factors outside our control or on social media, could diminish customer trust, weaken our vendor relationships, reduce employee morale and productivity and lead to difficulties in recruiting and retaining qualified employees. Additionally, management may not accurately assess the impact of significant legislative changes, including those that relate to data privacy and security, employment matters, labor issues, environmental compliance and health care, impacting our relationship with our customers or our workforce and adversely affecting our sales and operations.

There is also increased focus from both internal and external stakeholders on corporate social responsibility and sustainability matters. If we do not, ~~effectively design~~or are perceived not to, act responsibly with respect to our practices and ~~implement~~initiatives, meet any communicated targets, goals or milestones or lack transparency with our ~~strategic~~initiatives, our reputation could be damaged. We may also incur additional costs as we invest in new ways to operate to better support our communities and our customers or to report our outcomes and results.

In addition, the long-term reputational impact from winding down business ~~planning processes~~operations in Canada, including the impact to ~~attract, retain, train~~our customers, employees, vendors and ~~develop talent~~third-party partners and ~~future leaders,~~landlords, is unknown, and we may need to take actions that could increase our expenses and adversely affect the results of our operations.

Our business depends on third parties for the production, supply and delivery of goods and/or services, and a disruption could result in lost sales or increased costs.

Supply Chain

Timely receipt of quality merchandise from third parties is critical to our business, as the majority of the goods we sell are produced by vendors in factories overseas. Our process to identify qualified vendors and access quality products in an efficient manner on acceptable terms and cost can be complex. Vendors and factors may ~~suffer.~~

Wealso be subject to credit capacity limits that restrict shipments. In addition, we rely on a limited number of carriers to deliver our product to customers. Ongoing disruptions in the ~~experience~~global supply chain, including factory closures, transportation challenges, rising freight expenses, violations of law or global standards with respect to human rights, quality and safety by any of our ~~senior management, who have specific knowledge relating~~importers, manufacturers or distributors, or parties upstream within their respective supply chains, could result in delays in shipments and receipt of goods. These third parties may experience supply chain or port disruptions, stoppages of certain imports or other difficulties due to useconomic, business, political, environmental or epidemic conditions, or may shift their business models away from prior practice. Additionally, the countries in which merchandise is manufactured could become subject to new trade restrictions, including increased taxation on imported goods, customs restrictions, tariffs or quotas.

Any disruption, delay or change in our or our vendors’ supply chain, including increased transit times or costs, could negatively impact our inventory levels, delivery timelines and our industry that is difficult to replace, and the talents of our workforce to execute our business strategies and objectives. We have succession plans in place and our Board of Directors reviews these succession plans. If our succession plans do not adequately cover significant and unanticipated turnover, the loss of the services of any of these individuals, or any resulting negative perceptions of our business, could damage our reputation and our business. Additionally, our ability to ~~maintain~~meet customer demand, which in turn may have a material adverse effect on our reputation, results of operations and liquidity. Our corporate social responsibility and sustainability goals, such as our goal to decrease greenhouse gas emissions in our operations and supply chain, may also be adversely impacted by these disruptions.

Other

We are party to contracts, transactions and business relationships with various third parties, including vendors, suppliers, service providers, landlords and ~~motivate~~lenders, who may have performance, payment and other obligations to us. If any of the third parties with whom we do business change the terms and conditions that govern their relationships with us due to changes in their business strategy, or become subject to bankruptcy, receivership or similar insolvency proceedings, our ~~employees~~rights and benefits in relation to ~~effectively attract, develop~~our contracts, transactions and ~~retain our future leaders,~~business relationships with such third parties could be ~~impacted by the uncertainty about the possibility of~~terminated, modified in a ~~Going Private Transaction.~~

~~Our program agreement with TD could adversely impact our business.~~

~~The program agreement with TD was consummated~~manner adverse to us or otherwise impaired, and we may be unable to arrange for alternate or replacement contracts, transactions or business relationships on terms that allow us to maintain customer-facing activities while TD provides Nordstrom-branded payment methods and payment processing services. If we fail to meet certain service levels, TD has the right to assume certain individual servicing functions. If we lose control ofas favorable as our existing contracts, transactions or business relationships, if at all. In such activities and functions, if we do not successfully respond to potential risks and appropriately manage potential costs associated with the program agreement with TD, or if these transactions negatively impact the customer service associated withcircumstance, our ~~cards, resulting in harm to our business reputation and competitive position, our operations,~~ cash flows, financial condition and returns to shareholders could be adversely affected. If TD became unwilling or unable to provide these services or if there are changes to the risk management policies implemented under our program agreement with TD, our results of operations may be negatively impacted.

The decision to wind down business operations in Canada may negatively impact our relationships with vendors that also supply our U.S. operations in a way that might cause less favorable terms and increased costs, result in less timely and efficient deliveries or impact their ability to sell to us.

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~~Ownership~~Our ability to effectively market our brands, sell product through third-party platforms and ~~leasing real estate exposes us to possible liabilities~~make our own apps available for customers relies heavily on a variety of third-party publishers, platforms and ~~losses.~~distribution channels. If the regulatory environment or these third parties limit or change the terms of marketing, distribution or use of data, it could adversely affect our results of operations.

We market our brands, sell product through third-party platforms, and make our own apps available to customers through a variety of third-party publisher and platform channels and our ability to market on any given platform or ~~lease~~channel is subject to the ~~land and/or buildings for all~~policies of that party and regulatory requirements. Our dependency on the interoperability of our ~~stores~~products with popular mobile operating systems, such as Android or iOS, websites, networks, technologies, products and ~~are therefore subject to all~~standards that we do not control, coupled with their unilateral control of the ~~risks~~terms of service and ongoing regulatory scrutiny associated with ~~owning and leasing real estate. In particular,~~targeted advertising, could reduce or eliminate our ability to update our apps or sell product on these platforms. Any changes, bugs or technical issues in such systems or websites may limit our ability to effectively deliver our products, or to target or measure the ~~value~~effectiveness of the assets could decrease, their operating costs could increase, or a store may not be opened as planned due to changes in the real estate market, demographic trends, site competition, dependence on third-party performance or overall economic environment. Additionally, we are potentially subject to liability for environmental conditions, exit costs associated with disposal of a store, commitments to pay base rent for the entire lease term or operate a store for the duration of an operating covenant.

~~Investment and partnerships in new business strategies and acquisitions could disrupt~~ our ~~core business.~~

We have invested in or are pursuing strategic growth opportunities, which may include acquisitions of, or investments in, other businesses, as well as new technologies or other investments to provide a superior customer shopping experience in our stores and digital channels. Additionally, our business model will continue to rely more on partnerships with third parties for certain strategic initiatives and technologies. If these investments, acquisitions or partnerships do not perform as expected or create operational difficulties, we may record impairment charges.ads. If we do not ~~realize~~pick the platforms relevant to our ~~anticipated return on investments,~~customers, if the platforms give preferential treatment to competitors, limit our ~~profitability and growth~~ability to deliver, target or measure the effectiveness of ads, or if there is a sudden shift in platform preference, our ability to market our brand effectively could be ~~adversely~~negatively impacted. Furthermore, to the extent platform users do not “opt-in” to certain data collection and sharing practices, our ability to deliver, target or measure the effectiveness of ads or drive usage on our apps is impacted.

The concentration of stock ownership in a small number of our shareholders may limit a shareholder’s ability to influence corporate matters and impact the price of our shares.

We have regularly reported in our annual proxy statements the holdings of members of the Nordstrom family, including Bruce A. Nordstrom, our former Co-President and Chairman of the Board, his sister Anne E. Gittinger and certain members of the Nordstrom family within our Executive Team. As of March 19, 2024, these individuals beneficially owned an aggregate of approximately 30% of our common stock. As a result, either individually or acting together, they may be able to exercise considerable influence over matters requiring shareholder approval, including the election of directors or other matters impacting our management or corporate governance. In addition, as reported in our periodic filings, our Board of Directors has from time to time authorized share repurchases. While these repurchases may be partially offset by share issuances under our equity incentive plans and as consideration for acquisitions, the repurchases may nevertheless have the effect of increasing the overall percentage interest held by these shareholders.

Our Board of Directors adopted a limited-duration shareholder rights agreement. The Rights Plan would cause substantial dilution to the ownership of any person or group that acquires 10% or more of the outstanding shares of our common stock, subject to certain exceptions in the plan (including that the ownership of Bruce A. Nordstrom, Anne E. Gittinger and certain other members of the Nordstrom family as of the date of the Rights Plan’s adoption is grandfathered under the plan). By effectively preventing a shareholder or group of shareholders other than the Nordstrom family from acquiring 10% or more of our common stock, the Rights Plan may ensure that the Nordstrom family retains its concentration of ownership relative to other shareholders.

The corporate law of the State of Washington, where we are incorporated, provides that approval of a merger or similar significant corporate transaction requires the affirmative vote of two-thirds of a company’s outstanding shares. The interests of the Nordstrom family shareholders may differ from the interest of our shareholders as a whole. The beneficial ownership of the Nordstrom family shareholders may have the effect of discouraging offers to acquire us, delaying or otherwise preventing a significant corporate transaction because the consummation of any such transaction would likely require their approval. As a result of these factors, the market price of our common stock may be affected.

INVESTMENT AND CAPITAL RISKS

If we fail to appropriately manage our capital, we may negatively impact our operations and shareholder return.

We utilize working capital to finance our operations, ~~make~~pay for capital expenditures, acquisitions and ~~acquisitions,~~investments, manage our debt levels and return value to our shareholders through dividends and share repurchases. Sufficient cash and liquidity are necessary to fund our business. Changes in the credit and capital markets, including market disruptions, limited liquidity and interest rate fluctuations, may increase the cost of financing or restrict access to a potential source of liquidity. A deterioration in our capital structure or the quality and stability of our earnings could result in noncompliance with our debt covenants or a downgrade of our credit rating, constraining the financing available to us or limiting our ~~Company. If~~ability to issue dividends or repurchase shares. In 2023, two of the three major ratings agencies revised the Company’s credit rating outlook from stable to negative. These outlook changes, and any future reductions in our credit ratings, could result in restricted access to financing ~~is restricted or our~~and increased borrowing costs ~~increase,~~and could adversely impact our operations and financial ~~condition could be adversely impacted. Further,~~condition. In addition, if we do not properly allocate our capital to maximize returns or we do not maintain financial flexibility, our operations, cash flows and returns to shareholders could be adversely affected.

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Owning and leasing real estate exposes us to possible liabilities and losses.

We own or lease the land, buildings and equipment for all of our Supply Chain Network facilities, stores and corporate locations and are therefore subject to all of the risks associated with owning and leasing real estate. In particular, the value of the assets could decrease, their operating costs could increase or facilities or stores may not be opened as planned due to changes in the real estate market, demographic trends, site competition, dependence on third-party performance or overall economic environment. We are also potentially subject to liability for environmental conditions, exit costs associated with disposal of a store and commitments to pay base rent for the entire lease term or to operate a store for the duration of an operating covenant. In addition, the invalidity of, or default or termination under, any of our leases may accelerate required cash payments or interfere with our ability to use and operate all or a portion of certain of our facilities, which may have an adverse impact on our operations and results.

The ~~concentration~~investment in existing and new locations may not achieve our expected returns, such as our investment in the Canada business, which ultimately did not achieve our expectations.

The locations of ~~stock ownership~~our Supply Chain Network facilities and existing stores, planned store openings and relocations are assessed based upon desirability, demographics and retail environment. In particular, we have expanded our omni-channel market strategy, where we leverage and connect our digital and physical assets within discrete geographic markets to seamlessly serve our customers within those markets and create synergies between our digital assets, Supply Chain Network and stores. Our expansion of this market strategy has allowed us to execute against one of our top priorities of improving Nordstrom Rack performance through the opening of new Nordstrom Rack stores. We must equip our locations with the proper processes, technology and tools for timely and accurate fulfillment and inventory replenishment. This involves certain risks, including properly balancing our capital investments between fulfillment capabilities, technology, digital channels, new stores, relocations and remodels, assessing the suitability of locations in new domestic and international markets and constructing, furnishing and supplying a facility or store in a ~~small number~~timely and cost-effective manner, which may be affected by the actions of third parties, including, but not limited to, private entities and local, state or federal regulatory agencies.

Customers’ expectations regarding speed of delivery are evolving. If we do not effectively integrate our digital and physical assets as part of our ~~shareholders~~market strategy, or select locations to optimize our market strategy, we could ~~limit~~incur significantly higher costs and shipping times that do not meet customer expectations, which in turn could have a material adverse effect on our ~~shareholders’ ability to influence corporate matters.~~

~~We have regularly reported in~~business. Sales through our ~~annual proxy statements the holdings~~digital channels or at our stores may not meet projections as we balance trends between digital and brick-and-mortar shopping channels, which could adversely affect our return on investment. If we do not properly allocate capital expenditures between locations, ensure timely completion of ~~members of the Nordstrom family, including Bruce A. Nordstrom, our former Co-President~~construction projects associated with Supply Chain Network facilities and ~~Chairman of the Board, his sister Anne E. Gittinger~~new, relocated and ~~members of the Nordstrom family within our Executive Team. According to the Schedule 13D/A filed with the SEC on March 5, 2018, these individuals beneficially owned an aggregate of approximately 31%~~remodeled stores or properly maintain any of our ~~common stock. As a result, either individually or acting together, they~~properties, customer expectations may not be able to exercise considerable influence over matters requiring shareholder approval. In addition, as reported in our periodic filings, our Board of Directors has from time to time authorized share repurchases. While these share repurchasesmet, we may ~~be offset in part by share issuances under our equity incentive plans~~lose sales and ~~as consideration for acquisitions, the repurchases~~ may nevertheless have the effect of increasing the overall percentage ownership held by these shareholders. The corporate law of the State of Washington, where the Company is incorporated, provides that approval of a merger or similar significant corporate transaction requires the affirmative vote of two-thirds of a company’s outstanding shares. The beneficial ownership of these shareholders may have the effect of discouraging offers to acquire us, delay or otherwise prevent a significant corporate transaction because the consummation of any such transaction would likely require the approval of these shareholders. As a result, the market price of our common stock could be affected.incur additional expenses.

~~RISKS DUE TO~~ ECONOMIC AND EXTERNAL MARKET ~~FACTORS~~RISKS

Our revenues and operating results are affected by the seasonal nature of our business and cyclical trends in consumer spending.

Our business, like that of other retailers, is subject to seasonal fluctuations and cyclical trends in consumer spending. ~~Due to our Anniversary Sale in July and the holidays in the fourth quarter, our~~Our sales are typically higher in our second quarter, which usually includes most of our Anniversary Sale, and in the fourth quarter due to the holidays. One week of our Anniversary Sale shifted from the second ~~and fourth quarters than~~quarter in 2022 to the ~~first and~~ third ~~quarters of the fiscal year. Any factor that negatively impacts these selling seasons could have an adverse effect on our results of operations for the entire year.~~quarter in 2023. To provide shareholders a better understanding of management’s expectations surrounding results, we provide ~~public guidance~~our financial outlook on our expected operating and financial results for future periods comprised of forward-looking statements subject to certain risks and uncertainties. Any factor that negatively impacts these selling seasons could have an adverse and disproportionate effect on our results of operations for the entire year.

Additionally, factors such as results differing from our outlook, changes in sales and operating income, changes in our market valuations, performance results for the general retail industry, news or announcements by us or our industry competitors or changes in analysts’ recommendations may cause volatility in the price of our common stock and our shareholder returns.

A downturn in economic conditions, currency fluctuations, inflation, unemployment and bankruptcy rates, changes in fiscal stimulus or interest rates and other external market factors have had and could have a significant adverse effect on our businessand stock ~~price~~.price.

During economic downturns or inflationary periods, fewer customers may shop, ~~for the high-quality items in our stores and on our websites,~~ as these ~~products~~purchases may be seen as discretionary, and those who do shop may limit the amount of their purchases. ~~This~~Any reduced demand or changes in customer purchasing behavior may lead to lower sales, higher markdowns and an overly promotional environment or increased marketing and promotional spending.

Additionally, factors such as results differing from guidance, changes in sales and operating income in the peak seasons, changes in our market valuations, performance results for the general retail industry, announcements by us or our industry peers or changes in analysts’ recommendations may still impact the price of our common stock and our shareholder returns.

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Our stores located in shopping centers and malls have been and may be ~~adversely~~ affected by ~~any declines in~~ consumer traffic ofat shopping centers and malls.

The majority of our stores are located within shopping centers and malls and may benefit from the abilities that we and other anchor tenants have to generate consumer traffic. A ~~substantial~~ decline in ~~mall~~shopping center traffic in favor of e-commerce, the development of new shopping centers and malls, the lack of availability of favorable locations within existing or new shopping centers and malls, the success of individual shopping centers and malls and the success or failure of other anchor tenants have impacted and may ~~negatively~~ impact our ability in the future to maintain or grow our ~~sales in existing stores,~~business, as well as our ability to open new stores, which could have an adverse effect on our financial condition or results of operations.

~~Our business depends on third parties for~~Like other retailers, our stores have been impacted by changing levels of theft or vandalism, which may affect consumer traffic in our stores and cause inventory shrinkage. If we experience higher rates of inventory shrinkage at stores located in shopping centers and malls, or if we are unable to effectively reduce the ~~production, supply~~impact of loss or ~~delivery~~theft of ~~goods,~~assets, our operating results could be adversely affected. The severity or quantity of incidents, including perceptions and ~~a disruption could~~reactions, may result in ~~lost sales~~reputational damage or ~~increased costs.~~

~~The continued success~~loss of our operations is tied to our timely receipt of quality merchandise from third parties. Our process to identify qualified vendors and access quality products in an efficient manner on acceptable terms and cost can be complex. Violations of law with respect to quality and safety by our importers, manufacturers or distributors could result in delays in shipments and receipt of goods or damage our reputation, resulting in lost sales. These vendors may experience difficulties due to economic or political conditions or the countries in which merchandise is manufactured could become subject to new trade restrictions, including increased customs restrictions, tariffs or quotas. Additionally, changes in tax and trade policies that impact the retail industry, such as increased taxation on imported goods, could have a material adverse effect on our business, results of operations and liquidity.customer trust.

The results offrom our ~~Credit~~credit card operations could be adversely affected by changes in market ~~conditions.~~conditions or laws.

Revenues earned under our program agreement with TD are indirectly subject to economic and market conditions that are beyond our control, including, but not limited to, interest rates, consumer credit availability, demand for credit, consumer debt levels, payment patterns, delinquency rates, frequency of fee waivers, frequency or volume of governmental stimulus, personal bankruptcy rates, employment trends, laws and other factors. Additionally, changes in net sales partially translate to program agreement revenues. Changes in ~~these~~ economic, market or regulatory conditions, customer behavior or our mix of sales and ~~market conditions~~program agreement revenues could ~~impair~~impact our revenues and profitability.

Our business and operations could be materially and adversely affected by ~~supply chain disruptions, port disruptions,~~ severe weather patterns, climate change, natural disasters, widespread pandemics, epidemics, civil unrest and other natural or man-made economic, political or environmental disruptions.

~~These disruptions~~Disruptions, and government responses, could cause, among other things, ~~a decrease~~decreases in consumer spending that ~~would~~could negatively impact our sales, declines in traffic in urban centers, staffing shortages in our Supply Chain Network facilities, stores ~~distribution centers~~ or corporate offices, interruptions in the flow of merchandise to our stores, disruptions in the operations of our merchandise vendors or property developers, increased costs and a negative impact on our reputation and long-term growth ~~plans.~~plans, which could vary based on the length and severity of the disruption. Health pandemics and epidemics, have in the past and may in the future, impact consumer and government responses, which may have an adverse impact on global economic conditions and our business, results of operations and financial condition. We also have a significant amount of our total sales, stores and square footage inon the ~~west coast~~West Coast of the United States, particularly in California, ~~which increases~~where we have experienced earthquakes, wildfires, flooding and power outages and shortages that increase our exposure to any market-disrupting conditions in this region.

~~RISKS DUE TO~~ LEGAL AND REGULATORY ~~FACTORS~~RISKS

We are subject to certain laws, litigation, regulatory matters and ethical standards, and ~~our~~compliance or failure to comply with or adequately address developments as they arise could adversely affect our reputation and operations.

Our policies, procedures and practices and the technology we implement are ~~designed~~intended to ~~comply with~~address applicable federal, state, local and foreign laws, tariffs, rules and regulations, ~~including those imposed by the SEC, consumer protection and other regulatory agencies, the marketplace, and foreign countries,~~ as well as responsible business, social and environmental practices, all of which may change from time to time. ~~Compliance~~If we, or the third parties we do business with, ~~laws and regulations~~fail to comply with these requirements and/or ~~significant legislative~~ changes ~~may cause~~to them, our business tocould be adversely ~~impacted, or even limit or restrict the activities of our business.~~impacted. In addition, ~~if we fail to comply~~noncompliance with applicable laws and regulations or failure to implement responsible business, social, environmental and supply chain practices we could ~~be subject to~~result in reputational damage, ~~to our reputation,~~ class action lawsuits, regulatory investigations, legal costs and ~~settlement costs,~~penalties, charges and payments, civil and criminal liability, increased cost of regulatory compliance, ~~losing~~loss of our ability to offer or accept credit and debit card payments from our customers, restatements of our financial statements, disruption of our business, loss of customers and loss of ~~customers.~~customer trust. Changes to existing and new privacy and data protection laws may increase compliance expenses and limit business opportunities and strategic initiatives, including customer engagement. Any required changes to our employment practices could result in the loss of employees, reduced sales, increased employment costs, low employee morale and harm to our business and results of operations. In addition, political and economic factors could lead to unfavorable changes in federal, state and foreign tax laws, which may affect our tax assets or liabilities and adversely affect our results of operations. We are also regularly involved in various litigation matters that arise in the ordinary course of business. Litigation or regulatory developments could adversely affect our business and financial condition.

Compliance with Section 404 of the Sarbanes-Oxley Act of 2002 requires management assessments of the effectiveness of our internal controls over financial reporting through documenting, testing, monitoring and enhancement of internal control over financial reporting. If we fail to implement or maintain adequate internal controls, we may not produce reliable financial reports or fail to prevent or detect financial fraud, which may adversely affect our financial position, investor confidence or our stock price.

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Changes to accounting rules and regulations could affect our financial results or financial condition.

Accounting principles and related pronouncements, implementation guidelines and interpretations with regard to a wide variety of accounting matters that are relevant to our business, including, but not limited to, revenue recognition, ~~merchandise inventories, leasing, goodwill, impairment of~~inventory valuation, long-lived ~~assets, stock-based compensation~~asset recoverability, income taxes and ~~tax matters~~contingent liabilities, including assumptions related to our Canada wind-down, are highly complex and involve subjective assumptions, estimates and judgments. Changes in these rules and regulations, changes in our interpretation or our misapplication of the rules or regulations, changes in accounting policies or changes in underlying assumptions, estimates or judgments could adversely affect our financial performance or financial position.

If Nordstrom Canada is unable to make a fair and orderly wind-down of its business operations, or if our existing reserves are not adequate to cover our ultimate liability, our financial condition and results of operations could be adversely affected.

On March 2, 2023, we announced the decision to discontinue support for Nordstrom Canada’s operations. Accordingly, Nordstrom Canada commenced a wind-down of its business operations, obtaining an Initial Order from the Ontario Superior Court of Justice under the CCAA on March 2, 2023 to facilitate the wind-down in an orderly fashion. Nordstrom Canada wound down its Nordstrom and Nordstrom Rack stores across Canada, with the help of a third-party liquidator, and its Canadian e-commerce platform. The e-commerce platform ceased operations on March 2, 2023 and the in-store wind-down was completed in June 2023. As described in Note 2: Canada Wind-down in Item 8, we have incurred $284 in pre-tax charges associated with the wind-down of operations in Canada for the year ended February 3, 2024. Our reserves relating to these matters may not be adequate to cover our ultimate liability or we may suffer other losses for which we have not established reserves, although we believe that possibility is not probable. If Nordstrom Canada is unable to effectively and efficiently finalize the wind-down of business operations, or we incur additional costs, there could be a material adverse effect on the conclusion of the CCAA filing or our financial condition and results of operations.

Item 1B. Unresolved Staff Comments.

None.

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Item 1C. Cybersecurity.

Nordstrom understands that establishing, executing and sustaining effective cybersecurity measures to secure our information systems and preserve the confidentiality, integrity and availability of our data is critical to the success of the business.

Management of Material Risks and Integrated Overall Risk Management

Our comprehensive risk management framework is intended to strategically incorporate cybersecurity risk management across the company, with the objective of ensuring that cybersecurity considerations underpin the decision-making processes at all organizational levels. Our risk management team collaborates closely across various Enterprise-wide business units to continually assess and address identified cybersecurity risks in alignment with business objectives. The CISO regularly updates the CTIO, Chief Financial Officer and Chief Executive Officer on material cybersecurity risks and events.

Engagement with Third Parties on Management of Cybersecurity Risk

Recognizing the dynamic nature of cybersecurity threats, Nordstrom collaborates with external experts, including assessors, consultants and examiners, to evaluate and test our cybersecurity risk preparedness. Regular exams, threat assessments and consultation on security enhancements with these third parties ensure that our cybersecurity strategies align with industry best practices.

Oversight of Third-party Risk

In the course of our business, we regularly exchange data and information with certain third parties in various ways, exposing us to risk related to the cybersecurity posture of and information management practices of those third parties. To try to mitigate this risk, we have implemented processes that may, depending upon the nature of the relationship with the third party, require security assessments and data integration design reviews prior to allowing our systems to connect with theirs. In addition, we seek to require these third parties to adhere to pre-established cybersecurity standards. Where applicable, we try to obtain contractual commitments with those third parties to ensure these security requirements are met.

Risks from Cybersecurity Threats

Nordstrom has not experienced any cybersecurity incident that has materially impacted, or that is reasonably likely to materially impact, our operations, financial condition and cash flows.

Cybersecurity Risk Management Personnel

Primary responsibility for assessing, monitoring, mitigating and managing our cybersecurity risks rests with our information security organization, led by our CISO and supported by our CTIO. The CISO, who has over 20 years of cybersecurity and technology expertise, supports a skilled information security organization that brings expertise in vulnerability management, incident response, penetration testing, regulatory compliance and other critical information security domains. Our information security team maintains certifications from recognized external security authorities such as ISC2, CompTIA, ISACA, GIAC, SANS, PCI and OffSec. The security program is assessed annually by a reputable third party to provide guidance for continuous improvement.

Monitoring and Responding to Cybersecurity Incidents

The security organization stays informed about the latest developments in cybersecurity, implements processes for regular monitoring of information systems and deploys relevant security measures. In the event of a cybersecurity incident, a formal incident response plan is in place for immediate actions and long-term strategies.

Board of Directors Oversight

The Board of Directors has oversight responsibilities regarding cybersecurity risk. At regularly scheduled meetings (at least quarterly), in addition to such additional interactions as may be necessary in specific circumstances, our Chief Executive Officer, CTIO and CISO update the Board on emerging cybersecurity risks and developments impacting Nordstrom.

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Item 2. Properties.

(Square footage amounts in thousands)

The following table summarizes the ~~number of~~Supply Chain Network and retail ~~stores~~locations we own or lease and the ~~percentage of~~ total ~~store~~ square footage ~~represented~~ by ~~each listed~~ category as of February 3, ~~2018~~:

2024:


	Number of locations
	Supply Chain Network	Nordstrom	Nordstrom Rack	Total square footage
Leased buildings on leased land	2	18	259	13,525
Owned buildings on leased land	—	55	—	10,062
Owned buildings on owned land	8	24	1	8,250
Partly owned and partly leased	—	2	—	544
Total	10	99	260	32,381

Number of stores

Nordstrom
Full-Line Stores¹

Nordstrom
Rack and Other²

% of total store
square footage
Leased stores on leased land 26
242
44 %
Owned stores on leased land 63
—
37 %
Owned stores on owned land 33
1
18 %
Partly owned and partly leased store 1
—
1 %
Total 123
243
100 %

¹~~Nordstrom full-line stores include U.S. full line stores, Canada full-line stores and Nordstrom Local.~~

²~~Other includes Trunk Club clubhouses, Jeffrey boutiques and Last Chance stores.~~

The following table summarizes our Supply Chain Network and retail store ~~openings~~count and ~~closures for fiscal 2017 and announced retail store openings and closures for fiscal 2018 by state/province:~~square footage activity:


	Count		Square footage
Fiscal year	2023	2022		2023	2022
Total, beginning of year	368	367		33,693	33,982
Openings:

Nordstrom	—	1		—	—
Nordstrom Rack	19	2		531	55
Relocations, remodels or changes	—	—		(8)	—
Closures	(18)	(2)		(1,835)	(344)
Total, end of year	369	368		32,381	33,693

Number of stores
Fiscal year 2017 Announced 2018
State/Province
Nordstrom
Full-Line Stores¹

Nordstrom
Rack and Other²

Nordstrom
Full-Line Stores¹

Nordstrom
Rack and Other²

Openings
U.S.
Arizona —
—
—
1
California 1
3
—
1
Florida —
1
—
—
Illinois —
2
—
1
Indiana —
1
—
—
Maryland —
1
—
—
Minnesota —
2
—
—
New Jersey —
—
—
1
New York —
1
1
—
Oregon —
1
—
—
Pennsylvania —
—
—
1
Tennessee —
1
—
—
Texas —
2
—
1
Washington —
2
—
—
Canada
Alberta —
—
—
2
Ontario 1
—
—
4
Total Openings 2
17
1
12

Closures
California (1 ) —
—
—
Oregon —
—
(1 ) —
Virginia (1 ) —
—
—
Total Closures (2 ) —
(1 ) —

¹~~Nordstrom full-line stores include U.S. full line stores, Canada full-line stores and Nordstrom Local.~~

²~~Other includes Trunk Club clubhouses, Jeffrey boutiques and Last Chance stores.~~

Table of Contents

The following table lists our Supply Chain Network and retail store count and square footage by ~~state/province~~state as of February 3, ~~2018:~~2024:

Retail stores by channel
Nordstrom Full-Line Stores¹

Nordstrom Rack and Other²
Total
State/Province Count
Square Footage
(000’s)

Count
Square Footage
(000’s)

Count
Square Footage
(000’s)

U.S.
Alabama —
—
1
35
1
35
Alaska 1
97
1
35
2
132
Arizona 2
384
8
287
10
671
California³
31
5,192
53
1,967
84
7,159
Colorado 3
559
6
213
9
772
Connecticut 1
189
1
36
2
225
Delaware 1
127
1
32
2
159
Florida 9
1,389
16
545
25
1,934
Georgia 2
383
5
165
7
548
Hawaii 1
195
2
78
3
273
Idaho —
—
1
37
1
37
Illinois 4
947
16
590
20
1,537
Indiana 1
134
2
60
3
194
Iowa —
—
1
35
1
35
Kansas 1
219
1
35
2
254
Kentucky —
—
1
33
1
33
Louisiana —
—
3
90
3
90
Maine —
—
1
30
1
30
Maryland 4
765
5
186
9
951
Massachusetts 4
595
8
275
12
870
Michigan 3
552
5
178
8
730
Minnesota 2
380
5
173
7
553
Missouri 2
342
2
69
4
411
Nevada 1
207
3
101
4
308
New Jersey 5
991
7
248
12
1,239
New Mexico —
—
1
34
1
34
New York 2
460
14
473
16
933
North Carolina 2
300
2
74
4
374
Ohio 3
549
6
224
9
773
Oklahoma —
—
2
67
2
67
Oregon 4
555
6
218
10
773
Pennsylvania 2
381
6
214
8
595
Puerto Rico 1
143
—
—
1
143
Rhode Island 1
206
1
38
2
244
South Carolina —
—
4
104
4
104
Tennessee 1
145
2
69
3
214
Texas³
9
1,562
18
604
27
2,166
Utah 2
277
4
126
6
403
Virginia 4
746
7
268
11
1,014
Washington 7
1,392
9
354
16
1,746
Washington D.C. —
—
4
115
4
115
Wisconsin 1
150
2
67
3
217
Canada
Alberta 1
142
—
—
1
142
British Columbia 1
231
—
—
1
231
Ontario 4
750
—
—
4
750
Total 123
21,636
243
8,582
366
30,218

¹~~Nordstrom full-line stores include U.S. full line stores, Canada full-line stores and Nordstrom Local.~~

²~~Other includes seven Trunk Club clubhouses, two Jeffrey boutiques and two Last Chance stores.~~

³~~California and Texas had the highest square footage, with a combined 9,325 square feet, representing 31% of our total Company square footage.~~

~~Nordstrom, Inc. and subsidiaries~~13

~~Table of Contents~~


	Supply Chain Network		Nordstrom		Nordstrom Rack		Total
	Count	Square Footage	Count	Square Footage	Count	Square Footage	Count	Square Footage

Alabama	—	—	—	—	1	27	1	27
Alaska	—	—	—	—	1	35	1	35
Arizona	—	—	1	235	10	337	11	572
California	4	2,571	26	3,669	61	2,158	91	8,398
Colorado	—	—	2	387	8	268	10	655
Connecticut	—	—	2	341	1	36	3	377
Delaware	—	—	1	127	1	32	2	159
Florida	1	221	6	1,031	17	560	24	1,812
Georgia	—	—	2	383	4	154	6	537
Hawaii	—	—	1	195	2	78	3	273
Idaho	—	—	—	—	1	37	1	37
Illinois	—	—	4	947	16	594	20	1,541
Indiana	—	—	1	134	2	60	3	194
Iowa	2	1,529	—	—	1	35	3	1,564
Kansas	—	—	1	219	3	90	4	309
Kentucky	—	—	—	—	1	33	1	33
Louisiana	—	—	—	—	3	90	3	90
Maine	—	—	—	—	1	30	1	30
Maryland	1	451	3	603	6	219	10	1,273
Massachusetts	—	—	4	595	7	266	11	861
Michigan	—	—	2	430	5	178	7	608
Minnesota	—	—	2	380	4	134	6	514
Missouri	—	—	2	342	2	69	4	411
Nevada	—	—	1	207	4	132	5	339
New Jersey	—	—	4	817	8	284	12	1,101
New Mexico	—	—	—	—	1	34	1	34
New York	—	—	5	838	10	354	15	1,192
North Carolina	—	—	2	300	2	74	4	374
Ohio	—	—	3	549	6	224	9	773
Oklahoma	—	—	—	—	2	67	2	67
Oregon	1	374	2	363	7	243	10	980
Pennsylvania	1	976	2	381	7	240	10	1,597
Rhode Island	—	—	—	—	1	38	1	38
South Carolina	—	—	—	—	3	101	3	101
Tennessee	—	—	1	145	3	93	4	238
Texas	—	—	8	1,413	21	702	29	2,115
Utah	—	—	2	277	4	130	6	407
Virginia	—	—	2	452	7	268	9	720
Washington	—	—	6	1,270	12	442	18	1,712
Washington D.C.	—	—	—	—	2	66	2	66
Wisconsin	—	—	1	150	2	67	3	217
Total	10	6,122	99	17,180	260	9,079	369	32,381

Our headquarters are located in Seattle, Washington, where our offices consist of both leased and owned space. On March 2, 2023, Nordstrom Canada commenced a wind-down of its business operations (see Note 2: Canada Wind-down in Item 8 for more information).

~~For use by our Retail segment,~~As of March 19, 2024, we ~~have:~~

~~six owned merchandise distribution centers (Portland, Oregon; Dubuque, Iowa; Ontario, California; Newark, California; Upper Marlboro, Maryland~~have announced 22 Nordstrom Rack store openings in 2024, four Nordstrom Rack store openings in 2025 and ~~Gainesville, Florida),~~

~~two owned fulfillment centers (Cedar Rapids, Iowa and Elizabethtown, Pennsylvania),~~

one ~~leased~~ fulfillment center ~~(San Bernardino, California)~~closure in 2024.

Nordstrom, Inc. and subsidiaries23

~~three leased administrative offices (Chicago, Illinois; Los Angeles, California and New York City, New York).~~

Table of Contents

~~For use by our Credit segment, we have one leased office building (Centennial, Colorado).~~

Item 3. Legal Proceedings.

We are subject from time to time to various claims and lawsuits arising in the ordinary course of business, including lawsuits alleging violations of state and/or federal wage and hour and other employment laws, privacy and other consumer-based claims. Some of these lawsuits may include certified classes of litigants, or purport or may be determined to be class or collective actions and seek substantial damages or injunctive relief, or both, and some may remain unresolved for several years. We believe the recorded ~~reserves~~accruals in our Consolidated Financial Statements are adequate in light of the probable and estimable liabilities.

On March 2, 2023, Nordstrom Canada commenced a wind-down of its business operations pursuant to a CCAA proceeding overseen by the Ontario Superior Court of Justice. See Note 2: Canada Wind-down in Item 8 for more information.

As of the date of this report, we do not believe any other currently identified claim, proceeding or litigation, either alone or in the aggregate, will have a material impact on our results of operations, financial position or cash flows. Since these matters are subject to inherent uncertainties, our view of them may change in the future.

Item 4. Mine Safety Disclosures.

None.

Table of Contents

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.

(Dollar and share amounts in millions, except per share amounts and where otherwise noted)

MARKET ~~SHAREHOLDER~~ AND ~~DIVIDEND~~SHAREHOLDER INFORMATION

Our common stock, without par value, is traded on the ~~New York Stock Exchange~~NYSE under the symbol “JWN.” The approximate number of record holders of common stock as of March ~~12, 2018~~11, 2024 was ~~154,000, based upon the number of registered and beneficial shareholders and the number of employee shareholders in the Nordstrom 401(k) Plan.~~4,435. On this date, we had ~~167,790,511~~163,258,218 shares of common stock outstanding.

DIVIDENDS

The ~~high and low prices of~~following table summarizes our ~~common stock and~~historical dividends declared ~~for each quarter~~and paid per share:


Fiscal year	2023	2022
1st Quarter	$0.19	$0.19
2nd Quarter	0.19	0.19
3rd Quarter	0.19	0.19
4th Quarter	0.19	0.19
Full Year	$0.76	$0.76

Any future determination to pay cash dividends and the amount of ~~2017~~dividends will be at the discretion of the Board of Directors and ~~2016~~ ~~are presented~~will be dependent upon our financial condition, operating results, capital requirements, contractual commitments and such other factors as the Board of Directors deems relevant (see Note 11: Shareholders’ Equity in ~~the table below:~~

Common Stock Price
2017 2016 Dividends per Share
High Low High Low 2017 2016
1st Quarter $48.45 $40.70 $59.37 $46.65 $0.37 $0.37
2nd Quarter $50.32 $39.53 $51.74 $35.01 $0.37 $0.37
3rd Quarter $49.00 $39.63 $55.23 $39.05 $0.37 $0.37
4th Quarter $53.00 $37.79 $62.82 $42.32 $0.37 $0.37
Full Year $53.00 $37.79 $62.82 $35.01 $1.48 $1.48
Item 8).

SHARE REPURCHASES

~~(Dollar amounts in millions)~~

~~In February 2017, our Board~~We repurchased no shares of ~~Directors authorized a program to repurchase up to $500 of our outstanding~~ common stock ~~through August 31, 2018.~~

Induring the fourth quarter of ~~2017, we made no share repurchases~~2023 and we had ~~$414 of~~$438 remaining in share repurchase capacity as of February 3, ~~2018. We do not plan to~~2024.

See Note 11: Shareholders’ Equity in Item 8 for more information about our August 2018 and May 2022 share repurchase ~~shares while the Group explores the possibility of making a going private proposal.~~programs. The actual timing, price, manner and amounts of future share repurchases, if any, will be subject to the discretion of the Board of Directors, contractual commitments, market and economic conditions and applicable SEC rules.

Nordstrom, Inc. and subsidiaries1525

Table of Contents

STOCK PRICE PERFORMANCE

The following graph compares the cumulative total return of Nordstrom common stock, Standard & Poor’s Retail Index (“S&P Retail”) ~~and~~, Standard & Poor’s 500 Index (“S&P 500”) and Nordstrom’s peer group for each of the last five fiscal years ~~ending~~ ended February 3, ~~2018. The~~2024. S&P Retail ~~Index~~ is composed of 2917 retail companies ~~including Nordstrom,~~ representing an industry group of the S&P 500. Our peer group is consistent with the retail peer group that we include in the Compensation Discussion and Analysis section of our Proxy Statement for our 2024 Annual Meeting of Shareholders and is weighted by the market capitalization of each component. The following graph assumes an initial investment of $100 each in Nordstrom common stock, ~~the~~ S&P Retail, ~~and the~~ S&P 500 and Nordstrom’s peer group on February 2, ~~2013~~2019 and assumes reinvestment of dividends.


End of fiscal year1	2018	2019	2020	2021	2022	2023
Nordstrom common stock	$100	$85	$83	$51	$45	$46
S&P Retail	$100	$121	$171	$181	$150	$210
S&P 500	$100	$122	$142	$172	$161	$199
Nordstrom’s peer group	$100	$105	$118	$127	$136	$151

1 Dollar amounts are in ones.

End of fiscal year 2012
2013
2014
2015
2016
2017
Nordstrom common stock 100
106
144
102
91
105
Standard & Poor’s Retail Index 100
125
154
179
211
299
Standard & Poor’s 500 Index 100
120
141
138
167
206

Table of Contents

Item 6. ~~Selected Financial Data.~~[Reserved]

~~Dollars in millions except per square foot and per share amounts~~

The following selected financial data are derived from the audited Consolidated Financial Statements and should be read in conjunction with Item 1A: Risk Factors, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8: Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Fiscal year 2017
2016
2015
2014
2013
Earnings Results
Net sales
$15,137

$14,498

$14,095

$13,110

$12,166
Credit card revenues, net¹
341

259

342
396
374
Gross profit 5,247

5,058

4,927
4,704
4,429
Selling, general and administrative (“SG&A”) expenses (4,662 ) (4,315 ) (4,168 ) (3,777 ) (3,453 )
Earnings before interest and income taxes (“EBIT”) 926

805

1,101
1,323
1,350
Net earnings 437

354

600
720
734

Balance Sheet and Cash Flow Data
Cash and cash equivalents
$1,181

$1,007

$595

$827

$1,194
Merchandise inventories 2,027

1,896
1,945
1,733
1,531
Land, property and equipment, net 3,939

3,897
3,735
3,340
2,949
Total assets¹
8,115

7,858
7,698
9,245
8,574
Total long-term debt¹
2,737

2,774
2,805
3,131
3,113
Cash flow from operations¹
1,400

1,658
2,470
1,243
1,345
Capital expenditures 731
846
1,082
861
803

Performance Metrics
Net sales increase 4.4 % 2.9 % 7.5 % 7.8 % 3.4 %
Comparable sales increase (decrease)²
0.8 % (0.4 %) 2.7 % 4.0 % 2.5 %
Gross profit % of net sales 34.7 % 34.9 % 35.0 % 35.9 % 36.4 %
SG&A % of net sales 30.8 % 29.8 % 29.6 % 28.8 % 28.4 %
EBIT % of net sales 6.1 % 5.6 % 7.8 % 10.1 % 11.1 %
Capital expenditures % of net sales 4.8 % 5.8 % 7.7 % 6.6 % 6.6 %
Return on assets 5.4 %
4.5 %
6.6 %
8.1 %
8.7 %
Return on invested capital (“ROIC”)³
9.7 %
8.4 %
10.7 %
12.6 %
13.6 %
Sales per square foot
$506

$498

$507

$493

$474
4-wall sales per square foot
$384

$392

$410

$413

$408
Inventory turnover rate 4.67
4.53
4.54
4.67
5.07

Per Share Information
Earnings per diluted share⁴

$2.59

$2.02

$3.15

$3.72

$3.71
Dividends declared per share¹
1.48
1.48
6.33
1.32
1.20

Store Information (at year-end)
Nordstrom full-line stores⁵
123
123
121
117
117
Nordstrom Rack and other⁶
243
226
202
175
143
Total square footage 30,218,000
29,792,000
28,610,000
27,061,000
26,017,000

¹ Amounts were impacted by the October 1, 2015, credit card receivable transaction. As a result of the transaction, the dividends paid in the fiscal year 2015 included a special cash dividend of $4.85 per share. For further information regarding these impacts, see Note 2: Credit Card Receivable Transaction and Note 11: Shareholders’ Equity in Item 8.

² The 53rd week is not included in comparable sales calculations (see Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information about the 53rd week).

³ See ROIC (non-GAAP financial measure) in Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information and reconciliation to the most directly comparable GAAP financial measure.

⁴~~Earnings per diluted share included the impact of the Trunk Club goodwill impairment charge of $1.12 per share in fiscal year 2016.~~

⁵~~Nordstrom full-line stores include U.S. full line stores, Canada full-line stores and Nordstrom Local.~~

⁶~~Other includes Trunk Club clubhouses, Jeffrey boutiques and Last Chance stores.~~

~~Nordstrom, Inc. and subsidiaries~~17

~~Table of Contents~~

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(Dollar ~~share~~ and ~~square footage~~share amounts in millions, except ~~percentages,~~ per share amounts and ~~per square foot amounts~~where otherwise noted)

~~OVERVIEW~~

~~Nordstrom is~~The following MD&A provides a leading fashion retailer offering apparel, shoes, cosmetics and accessories for women, men, young adults and children. We offer an extensive selection of high-quality brand-name and private label merchandise in the U.S. and Canada. We serve customers through two brands — Nordstrom full-price and Nordstrom Rack off-price. With customers increasingly engaging with Nordstrom in multiple ways, we’re focused on providing a seamless experience across stores and online. Our operations currently consistnarrative of our ~~Nordstrom U.S.~~financial performance and Canada full-line stores, Nordstrom.com, Nordstrom Rack stores, Nordstromrack.com/HauteLook, Trunk Club, Jeffrey boutiques, Last Chance clearance stores and Nordstrom Local. Our customers can participate in our Nordstrom Rewards loyalty program which allows themis intended to earn merchandise, services and other experiences. We also offer our customers a variety of payment products and services, including our Nordstrom co-branded credit cards. As we aspire to be the best fashion retailer, our customer strategy is centered on three strategic pillars: providing a differentiated product offering, delivering exceptional services and experiences, and leveraging the strength of our brand.

In 2017, net earnings were $437, or $2.59 per diluted share, which included impacts associated with the Tax Cuts and Jobs Act (the “Tax Act”), consisting of a $0.25 per share reduction related to our income tax provision and a $0.06 per share decrease for a one-time investment in our employees. We reached record sales of $15 billion in 2017. Our net sales increased 4.4%, inclusive of approximately $220 or 150 basis points from the impact of the 53rd week, while comparable sales increased 0.8% and are not inclusive of the 53rd week.

~~We achieved the following milestones in executing our growth plans:~~

Nordstrom experienced continued positive customer trends, reflecting customer growth of 4% to 33 million customers. Additionally, 9 million customers are shopping with us in multiple ways, a 6% increase over the previous year.

~~Generational investments, which include Nordstromrack.com/HauteLook, Canada and Trunk Club, contributed $1.5 billion in sales.~~

~~In the Nordstrom full-price business, strategic brands, including product with limited distribution and Nordstrom proprietary labels, continued to deliver outsized sales growth.~~

~~The Nordstrom Rack off-price business gained 6 million new customers with approximately one-third of off-price customers expected to cross-shop the full-price business over time.~~

~~Nordstrom Rewards loyalty program customers increased by 35% to 10.5 million. Sales from Nordstrom Rewards customers represented 51% of sales, an increase from 44% in 2016.~~

Looking ahead to 2018, we are executing on our three strategic pillars through a series of initiatives. On April 12, our Nordstrom Men’s Store NYC is slated to open, with our Nordstrom NYC store opening in Fall 2019. We expect this store to be the biggest and best statement of the Nordstrom brand, serving as a gateway to new customers both domestically and internationally.

We are also focusing on further integrating our digital and physical assets in our top markets in order to deliver best-in-class services and experiences to customers in those areas. We will bring our capabilities across supply chain, technology, marketing, product and services to create a digitally-connected and differentiated experience for customers to shop on their terms, starting in Los Angeles, our largest market. We believe that we will gain learnings from our experiences in the Los Angeles market that we can apply to other markets in the future.

Another key initiative for 2018 is the introduction of six Nordstrom Rack stores in Canada, where we completed our full-line store expansion plans last September. Similar to our experience in the U.S., we expect strong synergies between our full-price and off-price businesses.

Finally, we will continue to curate our assortment to provide newness and the opportunity for discovery for our customers. In our full-price business, our focus is on strategic brand growth through new launches and our existing partners. In our off-price business, leveraging our vendor partnerships enables us to offer the best brands at the best prices.

Our strategic brand partnerships and combined digital and physical assets make us uniquely positioned in the marketplace. We believe our diversified and resilient business model will continue to serve us well while creating value for our shareholders, customers and employees.

~~Table of Contents~~

~~RESULTS OF OPERATIONS~~

~~Our reportable segments in~~ ~~2017~~ are Retail and Credit. We analyze our results of operations through earnings before interest and income taxes for our Retail Business and Credit, while interest expense, income taxes and earnings per share are discussed on a total Company basis.

~~Similar to many other retailers, Nordstrom follows the retail 4-5-4 reporting calendar, which included an extra week in the fourth quarter of~~ ~~2017~~ (the “53rd week”). References to 2017 relate to the 53-week fiscal year ended February 3, 2018. References to 2016 and 2015 are based on a 52-week fiscal year. However, the 53rd week is not included in the comparable sales calculations.

~~RETAIL BUSINESS~~

Our Retail Business includes our Nordstrom U.S. and Canada full-line stores, Nordstrom.com, Nordstrom Rack stores, Nordstromrack.com/HauteLook, Trunk Club, Jeffrey boutiques, Last Chance clearance stores and Nordstrom Local. For purposes of discussion and analysispromote understanding of our results of operations ~~of our Retail Business, we combine our Retail segment results~~and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, ~~revenues~~Item 8: Financial Statements and expenses in the “Corporate/Other” column of Note 15: Segment Reporting in Item 8 (collectively, the “Retail Business”). Amounts in the “Corporate/Other” column include unallocated corporate expensesSupplementary Data and assets (including unallocated assets in corporate headquarters, consisting primarily of cash, land, buildings and equipment and deferred tax assets), sales return reserves, inter-segment eliminations and other adjustments to segment results necessary for the presentation of consolidated financial results in accordance with generally ~~accepted accounting principles.~~

Certain metrics we use to evaluate the Retail Business may not be calculated in a consistent manner among industry peers. Provided below are definitions of metrics we present within our analysis of the Retail Business:

~~Comparable Sales~~ – ~~sales from stores that have been open at least one full year at the beginning of the year~~

~~Total Company comparable sales include sales from our online channels~~

~~Gross Profit – net sales less cost of sales and related buying and occupancy costs~~

~~Inventory Turnover Rate – trailing 12-months cost of sales and related buying and occupancy costs (for all segments) divided by the trailing 4-quarter average inventory~~

~~Total Sales Per Square Foot – net sales divided by weighted-average square footage~~

4-wall Sales Per Square Foot – sales for Nordstrom U.S. and Canada full-line stores, Nordstrom Rack stores, Trunk Club clubhouses, Jeffrey boutiques, Last Chance clearance stores and Nordstrom Local divided by their weighted-average square footage

~~Summary~~

~~The following table summarizes~~discusses the results of operations for fiscal year 2023 compared with 2022.For our ~~Retail Business:~~

comparison and discussion of 2022 and 2021, see Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II of our 2022 Annual Report. For our discussion of market risk information for 2022, see Item 7A: Quantitative and Qualitative Disclosures About Market Risk in Part II of our 2022 Annual Report. The following discussion and analysis contains forward-looking statements and should also be read in conjunction with Item 1A: Risk Factors in Part I, as well as other cautionary statements and risks described elsewhere in this 2023 Annual Report, before deciding to purchase, hold or sell shares of our common stock.

Fiscal year 2017 2016 2015
Amount

% of net
sales¹

Amount

% of net
sales¹

Amount

% of net
sales¹

Net sales
$15,137
100.0 %
$14,498
100.0 %
$14,095
100.0 %
Cost of sales and related buying and occupancy costs (9,877 ) (65.3 %) (9,434 ) (65.1 %) (9,161 ) (65.0 %)
Gross profit 5,260
34.7 % 5,064
34.9 % 4,934
35.0 %
Selling, general and administrative expenses (4,508 ) (29.8 %) (4,159 ) (28.7 %) (4,016 ) (28.5 %)
Goodwill impairment —
—
(197 ) (1.4 %) —
—
Earnings before interest and income taxes
$752
5.0 %
$708
4.9 %
$918
6.5 %

¹~~Subtotals and totals may not foot due to rounding.~~


Overview			28
Results of Operations			29
Liquidity			35
Capital Resources			38
Critical Accounting Estimates			40
Recent Accounting Pronouncements			41

Nordstrom, Inc. and subsidiaries1927

Table of Contents

OVERVIEW

~~Retail Business Net Sales~~In 2023, we reported net earnings of $134, or 0.9% of net sales, $0.82 per diluted share and EBIT of $251, or 1.8% of net sales. Adjusted EBIT1 was $567, or 4.0% of net sales, and Adjusted EPS1 was $2.12, which exclude the impacts of charges related to the wind-down of Canadian operations and a supply chain asset impairment and related charge.

Total company net sales decreased 5.8%, compared with 2022. This included a negative 245 basis point impact from the wind-down of Canadian operations and a positive impact of approximately $190, or 130 basis points, from the 53rd week. We saw sequential improvement in topline trends across both banners throughout the year.

We continued to manage with leaner inventories and exited 2023 with overall ending inventory levels 3% lower than the fourth quarter of 2022 and a positive sales-to-inventory spread. This lower level of inventory required fewer markdowns and helped drive 95 basis points of expansion in our gross profit as a rate of sales, compared with 2022.

We remain committed to delivering profitable growth while improving the customer experience. Our results reflect our focus throughout 2023 on our three priorities: improve Nordstrom Rack performance, increase inventory productivity and optimize our supply chain. We will continue to build on the progress we made in 2023 as we focus our efforts on three refreshed key priorities in 2024: driving Nordstrom banner growth, optimizing operationally and building on momentum at the Rack.

Driving Nordstrom banner growth – Our first priority is to drive growth at our Nordstrom banner, with a focus on digital-led growth supported by our stores. In 2024, we plan to launch our digital marketplace on Nordstrom.com, which will allow us to grow our curated online assortment to serve more customers on even more occasions through increasing our use of unowned inventory. Marketplace will allow our customers to shop more products and sizes from their favorite brands, while providing them more access to new and emerging brands. Expanding our assortment through unowned inventory has the potential to drive GMV growth in addition to providing compelling economics.

We will also focus on driving growth at our Nordstrom banner through increasing customer engagement and improving retention. We will do this through amplifying the brands that matter most to our customers and ensuring we have consistent depth in these brands across our stores and online, with our Beauty division playing a prominent role.

Optimizing operationally – We made significant progress on our supply chain initiatives in 2023, which drove improvements in customer experience and profitability. We delivered a better experience to our customers through faster delivery, lower cancellation rates and increased accuracy of inventory, while also driving cost savings. In the fourth quarter of 2023, our team delivered the sixth consecutive quarter of 50-plus basis points of improvement in variable supply chain expense savings, while at the same time improving our click-to-delivery speed.

We plan to build upon these successes in 2024, with the end goal of enhancing the customer experience through faster delivery, and improving our cost position by maximizing our inventory value throughout its lifecycle. We are making investments in systems and technology enablers to standardize and streamline our inventory processes, expanding the scale of our RFID utilization and improving the inventory movement within our business.

Building on momentum at Nordstrom Rack – In 2023, we opened 19 new stores and our intent is to open 22 new stores in 2024. We believe new Rack stores are a great investment, with returns that exceed our cost of capital and have a short payback period. Expanding our network of stores also brings our omni-channel services closer to the customer, giving them more reasons and opportunities to engage with us.

Our priority for 2024 is to continue building on our momentum from 2023 and deliver topline Rack growth, led by stores and supported by enhanced digital capabilities. We aim to deliver great brands at great prices for our customers at Nordstrom Rack, and we continue to improve by growing the most desirable brands offered, driving greater engagement and profitability at NordstromRack.com and expanding our reach and convenience with new Rack stores in key markets.

We are proud of the efforts that we undertook in 2023, as well as the outcomes that enhanced the customer experience and drove improved financial results. We are committed to delivering profitable growth while improving the customer experience, and we expect 2024 to be a year of continued momentum toward the long-term strength and durability of our business.

1 Adjusted EBIT and Adjusted EPS are non-GAAP financial measures. For a reconciliation between GAAP and non-GAAP financial measures, see Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT margin and Adjusted EPS (Non-GAAP financial measures) below.

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RESULTS OF OPERATIONS

In our ongoing effort to enhance the customer experience, we are focused on providing ~~customers with~~ a seamless retail experience across our ~~channels. While~~Company. We invested early in integrating our operations, merchandising and technology across our stores and online in both our Nordstrom and Nordstrom Rack banners. By connecting our digital and physical assets across Nordstrom and Nordstrom Rack, we are able to better serve customers ~~may engage with us through multiple channels,~~when, where and how they want to shop. We have one Retail reportable segment and analyze our results on a total Company basis, using customer, market share, operational and net sales metrics.

We operate on a 52/53-week fiscal year ending on the Saturday closest to January 31st. References to 2023 relate to the 53-week fiscal year ending February 3, 2024. References to any other years included within this document are based on a 52-week fiscal year.

We monitor a number of key operating metrics to evaluate our performance. In addition to net sales, net earnings and other results under GAAP, two other key operating metrics we ~~know they value~~use are GMV and inventory turnover rate. Beginning in the ~~overall Nordstrom brand experience and view us simply as Nordstrom, which is ultimately~~first quarter of 2023, we made changes to how we ~~view~~calculate these metrics to more closely align with how our ~~business. The following~~business is operated. Changes in the methodologies are discussed below and prior periods have been adjusted to reflect a ~~summary~~comparable presentation.

•GMV: calculated as the total dollar value of merchandise sold through our digital platforms and stores. GMV includes net merchandise sales from inventory we own, as well as the retail value of merchandise sold under our unowned inventory models with our vendors. We use GMV as an indicator of the scale and growth of our ~~net~~operations and the impact of our unowned inventory models. Prior to the first quarter of 2023, we also included non-merchandise sales in our GMV calculation.

•Inventory Turnover Rate: calculated as the trailing 4-quarter merchandise cost of sales divided by ~~channel for~~the trailing 13-month average inventory. Inventory turnover rate is an indicator of our ~~Retail Business:~~

Fiscal year 2017
2016
2015
Net sales by channel:
Nordstrom full-line stores - U.S.¹

$6,951

$7,186

$7,633
Nordstrom.com 2,887
2,519

2,300
Full-price 9,838
9,705
9,933

Nordstrom Rack 4,059
3,809
3,533
Nordstromrack.com/HauteLook 897

700

532
Off-price 4,956
4,509
4,065

Other retail²
614
554
378
Retail segment 15,408
14,768
14,376
Corporate/Other (271 ) (270 ) (281 )
Total net sales
$15,137

$14,498

$14,095

Net sales increase 4.4 % 2.9 % 7.5 %

Comparable sales increase (decrease) by channel³:

Nordstrom full-line stores - U.S. (4.2 %) (6.4 %) (1.1 %)
Nordstrom.com 13.1 % 9.5 % 15.2 %
Full-price 0.4 % (2.7 %) 2.3 %
Nordstrom Rack (1.9 %) 0.2 % (1.0 %)
Nordstromrack.com/HauteLook 25.5 % 31.7 % 47.4 %
Off-price 2.5 % 4.5 % 4.3 %
Total Company 0.8 % (0.4 %) 2.7 %

Sales per square foot:
Total sales per square foot
$506

$498

$507
4-wall sales per square foot 384
392
410
Full-line sales per square foot - U.S. 337
346
370
Nordstrom Rack sales per square foot 497
507
523

¹ ~~Nordstrom full-line stores - U.S. includes Nordstrom Local.~~

² ~~Other retail includes Nordstrom Canada full-line stores, Trunk Club~~success in optimizing inventory volumes in accordance with customer demand. Prior to the first quarter of 2023, we calculated inventory turnover rate as the trailing 4-quarter cost of sales and ~~Jeffrey boutiques.~~

³~~The 53rd week is not included in comparable sales calculations.~~related buying and occupancy costs divided by the trailing 4-quarter average inventory.

Net Sales ~~(2017 vs. 2016)~~

~~In 2017, total~~The following table summarizes net sales:


Fiscal year	2023		2022
Net sales:
Nordstrom	$9,436		$10,279
Nordstrom Rack	4,783		4,813
Total net sales	$14,219		$15,092

Net sales (decrease) increase:
Nordstrom	(8.2	%)	6.6	%
Nordstrom Rack	(0.6	%)	1.1	%
Total Company	(5.8	%)	4.8	%

Digital sales:
Digital sales as a % of total net sales	36	%	38	%
Digital sales decrease	(10	%)	(6	%)

GMV (decrease) increase:
Nordstrom	(8.5	%)	6.5	%
Total Company	(6.1	%)	4.6	%

Total Company net sales ~~increased 4.4%, while comparable~~and GMV decreased for the full fiscal year compared with 2022. The wind-down of our Canadian operations as of March 2, 2023 had a negative impact on net sales ~~increased 0.8%~~of 245 basis points compared with 2022 (see Note 2: Canada Wind-down in Item 8). ~~During the year, we opened two Nordstrom full-line stores, including one in Canada,~~This was partially offset by an approximately 130 basis point positive impact and ~~17 Nordstrom Rack stores. The 53rd week contributed~~ approximately ~~$220~~$190 in additional net ~~sales.~~

~~Full-price net~~ sales ~~which consists of~~related to the ~~U.S. full-line~~53rd week. For the full fiscal year, active and ~~Nordstrom.com channels, increased 1.4%~~beauty were the strongest categories compared with 2016, while comparable sales increased 0.4%. Also on a comparable basis, full-price sales reflected an increase in the average selling price per item sold, partially offset by a decrease in the number of items sold. Kids was the top-performing merchandise category.

Off-price net sales, which consists of Nordstrom Rack and Nordstromrack.com/HauteLook channels, increased 9.9%, compared with 2016 and comparable sales increased 2.5%. Nordstromrack.com/HauteLook had a comparable sales increase of 25.5% and now represents over 18% of off-price sales. Nordstrom Rack net sales increased 6.6%, primarily attributable to 17 new store openings in 2017, while comparable sales decreased 1.9%. On a comparable basis, the average selling price per item sold and the total number of items sold decreased at Nordstrom Rack. The top-performing Nordstrom Rack merchandise category was Beauty.

2022.

20Nordstrom, Inc. and subsidiaries29

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~~Net Sales (2016 vs. 2015)~~

In ~~2016, total Company~~Nordstrom net sales ~~increased 2.9%, while comparable sales~~and GMV decreased ~~0.4%. During the year, we opened three Nordstrom full-line stores, including two in Canada, and 21 Nordstrom Rack stores.~~

~~Full-price net sales decreased 2.3%~~ compared with ~~2015, while comparable sales decreased 2.7%. Also on a comparable basis, full-price sales~~2022, which reflected a decrease in the ~~total~~ number of items sold, partially offset by an increase in the average selling price per item sold. The ~~top-performing merchandise category was Beauty.~~

~~Off-price~~wind-down of Canadian operations had a negative impact on Nordstrom banner net sales ~~increased 10.9%,~~of 360 basis points, partially offset by a 120 basis point positive impact from the 53rd week, compared with ~~2015~~ ~~and comparable sales increased 4.5%. Nordstromrack.com/HauteLook had comparable sales increase of 31.7% and represented 15% of off-price sales.~~ 2022.

Nordstrom Rack net sales ~~increased 7.8%, primarily attributable to 21 new store openings~~decreased compared with 2022, which reflected a decrease in ~~2016. On a comparable basis,~~ the ~~total~~ number of items sold, ~~increased at Nordstrom Rack,~~ partially offset by ~~a decrease~~an increase in the average selling price per item sold. ~~Kids was the top-performing~~Eliminating store fulfillment for Nordstrom Rack ~~merchandise category.~~digital orders during the third quarter of 2022 negatively impacted Nordstrom Rack sales by approximately 300 basis points for the full fiscal year compared with 2022. This was partially offset by an approximately 150 basis point positive impact related to the 53rd week.

~~Retail Business~~ Digital sales decreased compared with 2022. Eliminating store fulfillment for Nordstrom Rack digital orders during the third quarter of 2022 and sunsetting Trunk Club in the second quarter of 2022 negatively impacted digital sales by approximately 350 basis points for the full fiscal year compared with 2022.

During the year, we opened 19 Nordstrom Rack stores and relocated one Nordstrom Rack store. We closed one Nordstrom store, one Nordstrom Local service hub, one ASOS | Nordstrom store and two Nordstrom Rack stores. In addition, we deconsolidated six Nordstrom and seven Nordstrom Rack stores in Canada as of March 2, 2023 (see Note 2: Canada Wind-down in Item 8).

See Note 3: Revenue in Item 8 for information about disaggregated revenues.

Credit Card Revenues, Net

Credit card revenues, net increased $36 compared with 2022, due to increased finance charges from higher rates and outstanding balances, and revenue recognized in connection with our 2022 TD program agreement amendment. The increase was partially offset by increased credit losses.

2024 Total Revenue Outlook

In fiscal 2024, we expect a total revenue range, including retail sales and credit card revenues, of 2% decline to 1% growth compared with the 53-week fiscal 2023, which includes an approximately 135 basis point unfavorable impact from the 53rd week.

Gross Profit

The following table summarizes ~~the Retail Business~~ gross ~~profit (“Retail GP”):~~

Fiscal year 2017
2016
2015
Retail gross profit
$5,260

$5,064

$4,934
Retail gross profit as a % of net sales 34.7 % 34.9 %
35.0 %
Inventory turnover rate 4.67
4.53
4.54
profit:


Fiscal year	2023		2022
Gross profit	$4,916		$5,073
Gross profit as a % of net sales	34.6	%	33.6	%
Inventory turnover rate	3.58		3.45

Gross ~~Profit (2017 vs. 2016)~~

~~Retail~~GPprofit decreased 18 ~~basis points in 2017 when~~$157, compared with ~~2016,~~2022, primarily due to ~~higher planned~~lower sales, partially offset by lower markdowns and lower buying and occupancy ~~expenses related~~costs. Gross profit increased 95 basis points as a rate of net sales, compared with 2022, due to ~~new store growth for Nordstrom Rack~~lower markdowns and ~~Canada.Continued focus~~lower buying and occupancy costs, partially offset by deleverage on lower sales.

Ending inventory ~~execution led to improvements~~as of February 3, 2024 decreased 3%, compared with January 28, 2023, versus a 2% increase in sales in the fourth quarter of 2023, compared with 2022. The decrease in inventory ~~turnover rate in~~ ~~2017~~.

~~Gross Profit (2016 vs. 2015)~~

~~Our Retail GP rate was relatively flat~~levels compared with ~~2015, reflecting higher occupancy costs associated with Nordstrom Rack and Canada store growth, in addition to increased markdowns in the first half~~2022 is a result of ~~the year to realign inventory to sales trends. This was offset by~~continued strong inventory ~~execution during the remainder~~discipline.

Table of ~~the year and reduced competitive markdowns.~~Contents

~~Retail Business~~

Selling, General and Administrative Expenses

~~Retail Business selling, general and administrative expenses (“Retail SG&A”) are summarized in the following table:~~

Fiscal year 2017
2016
2015
Retail selling, general and administrative expenses
$4,508

$4,159

$4,016
Retail selling, general and administrative expenses as a % of net sales 29.8 % 28.7 % 28.5 %

~~Selling, General and Administrative Expenses (2017 vs. 2016)~~

~~Our Retail~~ SG&A ~~rate increased 99 basis points in 2017 and increased $349 compared with 2016 primarily due to planned technology and performance related expenses.~~

~~Selling, General and Administrative Expenses (2016 vs. 2015)~~

~~Our Retail SG&A rate increased 19 basis points in~~ ~~2016~~ ~~and increased~~ ~~$143~~ ~~compared with~~ ~~2015~~ ~~primarily due to technology and fulfillment expenses.~~

~~Retail Business Goodwill Impairment~~

~~We recognized a goodwill impairment charge of $197 in 2016 related to Trunk Club (see Note 8: Fair Value Measurements in Item 8).~~

~~Nordstrom, Inc. and subsidiaries~~21

~~Table of Contents~~

~~CREDIT SEGMENT~~

The Nordstrom credit and debit card products are designed to strengthen customer relationships and grow retail sales by providing loyalty benefits, valuable services and payment products. We believe our credit business allows us to build deeper relationships with our customers by fully integrating the Nordstrom Rewards loyalty program with our retail business and providing better service, which in turn fosters greater customer loyalty. Nordstrom cardholders tend to visit our stores more frequently and spend more than non-cardholders. Nordstrom private label credit and debit cards can be used at a majority of our U.S. retail businesses, while Nordstrom Visa credit cards also may be used for purchases outside of Nordstrom (“outside volume”). In 2017, we began offering a Canadian Nordstrom-branded Visa card, which can be used for purchases inside and outside of Nordstrom.

~~Summary~~

~~The table below provides a detailed view of the operational results of our Credit segment, consistent with Note 15: Segment Reporting in Item 8:~~

Fiscal year 2017
2016
2015
Credit card revenues, net
$341

$259

$342
Credit expenses (167 ) (162 ) (159 )
Earnings before interest and income taxes
$174

$97

$183

Credit and debit card volume¹:

Inside
$5,987

$5,858

$5,953
Outside 4,434
4,160
4,309
Total volume
$10,421

$10,018

$10,262

¹ ~~Credit and debit card volume represents sales on the total portfolio plus applicable sales taxes.~~

~~Credit Card Revenues, net~~

~~The following is a summary of our credit card revenues, net~~:

Fiscal year 2017
2016

2015¹

Credit program revenues, net
$331

$246

$64
Other 10
13
278
Total credit card revenues, net
$341

$259

$342

¹ ~~Other in fiscal year 2015 consisted of $173 of finance charge revenue, $61 in interchange fees and $44 of late fees and other revenue.~~

Credit program revenues, net include our portion of the ongoing credit card revenue, net of credit losses, from both sold and newly generated credit card receivables pursuant to our program agreement with TD. Asset amortization and deferred revenue recognition associated with the assets and liabilities recorded as part of the transaction are also recorded in credit program revenues, net. Revenue earned under the program agreement is impacted by the credit quality of receivables, both owned and serviced, and factors such as deteriorating economic conditions, declining creditworthiness of cardholders and the success of account management and collection activities may heighten the risk of credit losses.

Other credit card revenues included finance charge revenue, interchange fees and late fees. Finance charges represented interest earned on unpaid balances while interchange fees were earned from the use of Nordstrom Visa credit cards at merchants outside of Nordstrom. Late fees were assessed when a credit card account becomes past due. We continued to recognize revenue in this manner for credit card receivables retained (employee receivables) subsequent to the close of the October 2015 credit card receivable transaction until we sold our remaining receivables in November 2017.

Credit Card Revenues, net increased $82 in 2017 reflecting our strategic partnership with TD to responsibly grow our receivables and associated revenues and a reduction in amortization expense related to the sale of the credit card portfolio. Credit Card Revenues, net decreased $83 in 2016 due to the credit card receivable transaction and the new program agreement.

~~Table of Contents~~

~~Credit Expenses~~

~~Credit expenses consist of operational, bad debt and occupancy expenses.~~

~~Credit Expenses (2017~~ ~~vs.~~ ~~2016~~)

~~Total credit expenses increased $5 in~~ ~~2017~~ ~~compared with~~ ~~2016~~ ~~due to an increase in costs associated with the Nordstrom Rewards loyalty program.~~

~~Credit Expenses (2016vs.~~ ~~2015~~)

~~Total credit expenses increased $3 in~~ ~~2016~~ ~~compared with~~ ~~2015~~ primarily due to a $64 gain partially offset by $32 of expenses incurred in 2015 associated with the credit card receivables transaction and a decrease in bad debt expense subsequent to the sale of the credit card receivables in October 2015.

~~TOTAL COMPANY RESULTS~~

~~Interest Expense, Net~~

~~Interest expense~~ is summarized in the following table:


Fiscal year	2023		2022
SG&A expenses	$4,855		$5,046
SG&A expenses as a % of net sales	34.2	%	33.4	%

Fiscal year 2017

2016

2015
Interest on long-term debt and short-term borrowings
$168

$147

$153
Less:
Interest income (5 ) (1 ) —
Capitalized interest (27 ) (25 ) (28 )
Interest expense, net
$136

$121

$125

~~Interest Expense, Net (2017 vs. 2016)~~

~~Interest expense, net increased $15~~SG&A decreased $191 in ~~2017~~2023, compared with ~~2016~~2022, primarily due to lower variable costs, driven by lower sales and supply chain efficiency initiatives, partially offset by higher labor costs and a ~~net interest expense~~$32 supply chain asset impairment and related charge. In 2022, SG&A included a supply chain technology and related asset impairment charge of ~~$18 related~~$70 and a $51 gain on sale of our interest in a corporate office building. SG&A increased 70 basis points as a rate of net sales compared with 2022, primarily due to deleverage on lower sales and higher labor costs, partially offset by supply chain efficiencies.

Canada Wind-down Costs

We recognized charges associated with the ~~$650 debt refinancing completed~~wind-down of Nordstrom Canada of $284 in the ~~first quarter of 2017~~year ended February 3, 2024 (see Note ~~7: Debt and Credit Facilities~~2: Canada Wind-down in Item 8).

Earnings Before Interest and Income Taxes

EBIT is summarized in the following table:


Fiscal year	2023		2022
EBIT	$251		$465
EBIT as a % of net sales	1.8	%	3.1	%

EBIT decreased $214 and 130 basis points as a rate of net sales in 2023, compared with 2022, primarily due to $284 of expenses associated with the wind-down of Canadian operations, a $32 supply chain asset impairment and related charge and lower sales, partially offset by an improved gross profit rate and supply chain efficiency initiatives. In 2022, EBIT included a supply chain technology and related asset impairment charge of $70, a $51 gain on sale of our interest in a corporate office building, and an $18 impairment charge related to costs associated with the wind-down of Trunk Club.

Interest Expense, Net ~~(2016 vs. 2015)~~

Interest expense, net is summarized in the following table:


Fiscal year	2023	2022
Interest on long-term debt and short-term borrowings	$150	$150

Interest income	(33)	(10)
Capitalized interest	(13)	(12)
Interest expense, net	$104	$128

Interest expense, net decreased $4$24 in ~~2016~~2023 compared with ~~2015~~ 2022, primarily due to ~~the defeasance~~an increase in interest income from higher prevailing rates.

Nordstrom, Inc. and subsidiaries31

Table of ~~our $325 Series 2011-1 Class A Notes in the third quarter of 2015.~~Contents

Income Tax Expense

Income tax expense is summarized in the following table:


Fiscal year	2023		2022
Income tax expense	$13		$92
Effective tax rate	8.6	%	27.2	%

Fiscal year 2017
2016
2015
Income tax expense
$353

$330

$376
Effective tax rate 44.7 % 48.2 % 38.6 %

In December 2017, the Tax Act was signed into law. Among numerous other provisions, the Tax Act significantly revises the U.S. federal corporate income tax by reducing the statutory rate from 35% to 21%, imposing a mandatory one-time transition tax on accumulated unrepatriated earnings of foreign subsidiaries and enhancing and extending the option to claim accelerated depreciation on qualified property. The Tax Act also revises tax laws that will affect 2018, including, but not limited to, eliminating certain deductions for executive compensation and limiting the deduction for interest. We have reasonably estimated the effects of the Tax Act and recorded provisional amounts in our Consolidated Financial Statements as of February 3, 2018. Net earnings included $42 related to the Tax Act, which includes a provisional one-time, non-cash charge of $51 related to the revaluation of our net deferred tax assets for the change in statutory tax rate and for the impacts associated with the future limitations on executive compensation, partially offset by cash tax savings from a lower federal tax rate.As we complete our analysis of the Tax Act and interpret any additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service (“IRS”) and other standard-setting bodies, we may make adjustments to the provisional amounts, which may materially impact our provision for income taxes in the period in which the adjustments are recorded.

~~Nordstrom, Inc. and subsidiaries~~23

~~Table of Contents~~

The following table illustrates the components of our effective tax rate:


Fiscal year	2023		2022
Statutory rate	21.0	%	21.0	%
State and local income taxes, net of federal income taxes	4.0	%	5.9	%
Federal credits	(4.7	%)	(3.8	%)
Non-deductible expenses	2.9	%	1.2	%
Stock-based compensation	5.1	%	1.8	%
Valuation allowance	6.6	%	0.4	%
Taxes on foreign operations	1.5	%	1.6	%
Excess tax over book loss on Canada wind-down	(18.2	%)	—
Resolution of prior period tax matters	(11.2	%)	—
Other, net	1.6	%	(0.9	%)
Effective tax rate	8.6	%	27.2	%

Fiscal year 2017
2016
2015
Statutory rate¹
33.7 % 35.0 % 35.0 %
Tax Act impact 6.1 % —
—
Goodwill impairment —
10.1 % —
State and local income taxes, net of federal income taxes 4.5 % 5.1 % 4.1 %
Non-deductible acquisition-related items 0.3 % 0.6 % 0.4 %
Federal credits (0.7 %) (0.6 %) (0.6 %)
Other, net 0.8 % (2.0 %) (0.3 %)
Effective tax rate 44.7 % 48.2 % 38.6 %

¹ ~~The statutory rate in 2017 is reduced due to tax reform.~~

~~Income Tax Expense (2017 vs. 2016)~~

The decrease in the effective tax rate for ~~2017~~2023, compared with ~~2016~~2022, was primarily due to ~~the non-deductible goodwill impairment charge of $197~~additional tax benefits related to ~~Trunk Club~~the wind-down of Canadian operations and the favorable resolution of certain tax matters, partially offset by increases from additional tax expense for stock-based compensation and valuation allowance increases for Canadian deferred tax assets prior to deconsolidation.

Earnings Per Share

EPS is as follows:


Fiscal year	2023	2022
Basic	$0.83	$1.53
Diluted	$0.82	$1.51

Diluted EPS decreased $0.69 in the third quarter of 2016 (see Note 8: Fair Value Measurements in Item 8). Excluding the impact of the Trunk Club goodwill impairment, our effective tax rate for 2017 would have increased approximately 700 basis points2023 compared with ~~the prior year~~2022, primarily due to a ~~provisional, one-time tax charge~~net unfavorable impact of $1.30 per diluted share related to the ~~revaluation~~wind-down of ~~net deferred tax assets as a result of the Tax Act (see Note 13: Income Taxes in Item 8 for additional information).~~

~~Income Tax Expense (2016 vs. 2015)~~

The increase in the effective tax rate for 2016 compared with 2015 was primarily due to the non-deductible goodwill impairment charge of $197 related to Trunk Club. Excluding the impact of the Trunk Club goodwill impairment, our effective tax rate for 2016 would have decreased approximately 100 basis points compared with the prior year primarily due to an increase in nontaxable income.

~~Earnings Per Share~~

~~Earnings per share is as follows:~~

Fiscal year 2017
2016
2015
Basic
$2.62

$2.05

$3.22
Diluted
$2.59

$2.02

$3.15

~~Earnings Per Share (2017 vs. 2016)~~

~~For 2017, diluted earnings per share (“EPS”) of $2.59 included impacts associated with the Tax Act consisting of a $0.25 per share reduction related to our income tax provision~~Canadian operations and a $0.06 per share decrease for a one-time investment in our employees. The impact of the Trunk Club goodwill impairment charge of $197 in 2016 was approximately $1.12 per share. Excluding the impact of these items, EPS decreased in ~~2017~~ ~~compared with~~ ~~2016~~ ~~due to planned increases in~~ supply chain asset impairment and ~~technology costs associated with our growth initiatives,~~related charge in 2023 and lower sales, partially offset by an ~~increase in net sales.~~improved gross profit rate and supply chain efficiency initiatives.

~~Earnings Per Share (2016 vs. 2015)~~

The decrease in EPS for 2016 compared with 2015 was primarily due to the Trunk Club goodwill impairment charge in 2016. Excluding the goodwill impairment charge, EPS in 2016 was relatively flat compared with ~~2015~~ ~~due to higher technology and fulfillment costs supporting multi-channel growth, offset by a decrease in shares outstanding as a result of share repurchases during the year.~~32

~~Fourth Quarter Results~~

~~The following are our results for the fourth quarters of 2017 and 2016:~~

Quarter ended February 3, 2018
January 28, 2017
Net sales
$4,600

$4,243
Credit card revenues, net 102

73
Gross profit 1,631
1,523
Gross profit as a % of net sales 35.5 % 35.9 %
Retail selling, general and administrative expenses (1,337 ) (1,134 )
Retail selling, general and administrative expenses as a % of net sales (29.1 %) (26.7 %)
Credit expenses (52 ) (42 )
Net earnings 151
201
EPS (diluted)
$0.89

$1.15

Table of Contents

Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT Margin and Adjusted EPS (Non-GAAP financial measures)

~~Net Sales~~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.

~~Total Company net sales increased 8.4% in the fourth quarter~~Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT margin and Adjusted EPS are not measures of ~~2017, compared with the same period in 2016, inclusive of approximately $220 related to the 53rd week,~~financial performance under GAAP and ~~comparable sales increased 2.6%.~~

Full-price net sales increased 6.1% for the fourth quarter of 2017, compared with the same period in 2016, while comparable sales increased 2.4%. Also on a comparable basis for the quarter, full-price sales reflected increases in the average selling price per item sold and the total number of items sold. For the fourth quarter, the top-performing merchandise categories were Kids’ and Men’s Apparel.

Off-price net sales increased 15% for the fourth quarter of 2017, compared with the same period in 2016, while comparable sales increased 3.7%. Nordstrom Rack net sales increased 11.4%, attributable to 17 new store openings since the end of 2016. On a comparable basis, there was a decrease at Nordstrom Rack in the average selling price per item sold while the number of items sold was flat. Beauty was the top-performing Nordstrom Rack merchandise category.

~~Credit Card Revenues, net~~

Credit card revenues, net increased $29 for the fourth quarter, compared with the same period in the prior year, reflecting our strategic partnership with TD to responsibly grow our receivables and associated revenues with new and enhanced product offerings. In addition, the impact of the 53rd week contributed approximately $10 in additional revenue.

~~Gross Profit~~

Our total Company gross profit rate decreased 44 basis points for the fourth quarter compared with the same period in 2016, primarily due to higher occupancy expenses related to new store growth for Nordstrom Rack and Canada. Merchandise margin performance was in-line with our expectations, reflecting continued strength in regular price selling trends. Ending inventory increased 6.9% over last year, generally in-line with our expectations.

~~Retail Selling, General and Administrative Expenses~~

Our Retail SG&A rate increased 231 basis points compared with the same period in 2016. The increase reflected higher supply chain, marketing and technology expenses associated with our growth initiativesshould be considered in addition to, and not as a ~~legal settlement gain in 2016~~substitute for, net earnings, net earnings as a percent of ~~$22, or approximately 50 basis points.~~

~~Credit Expenses~~

~~In the fourth quarter of 2017, total credit expenses increased $10 compared with the fourth quarter of 2016, driven primarily by increased technology costs.~~

~~Earnings Per Share~~

~~EPS for the fourth quarter of 2017 was $0.89~~net sales, operating cash flows, earnings per share, earnings per diluted share ~~which included impacts associated~~or other financial measures performed in accordance with ~~the Tax Act consisting~~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 ~~$0.25 reduction related~~reconciliation of net earnings to ~~our~~Adjusted EBIT and Adjusted EBITDA and net earnings as a percent of net sales to Adjusted EBIT margin:


Fiscal year	2023		2022
Net earnings	$134		$245
Income tax expense	13		92
Interest expense, net	104		128
Earnings before interest and income taxes	251		465
Supply chain asset impairment and related charges	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	567		502
Depreciation and amortization expenses	586		604
Amortization of developer reimbursements	(69)		(72)
Adjusted EBITDA	$1,084		$1,034

Net sales	$14,219		$15,092
Net earnings as a % of net sales	0.9	%	1.6	%
EBIT margin %	1.8	%	3.1	%
Adjusted EBIT margin %	4.0	%	3.3	%

The following is a reconciliation of diluted EPS to Adjusted EPS:


Fiscal year	2023	2022
Diluted EPS	$0.82	$1.51
Supply chain asset impairment and related charges	0.19	0.44
Canada wind-down costs	1.74	—
Trunk Club wind-down costs	—	0.11
Gain on sale of interest in a corporate office building	—	(0.31)
Income tax impact on adjustments1	(0.63)	(0.06)
Adjusted EPS	$2.12	$1.69

1 The income tax ~~provision and a $0.06 decrease for a one-time pre-tax investment in our employees compared with $1.15 per diluted share~~impact of non-GAAP adjustments is calculated using the estimated tax rate for the ~~same period in 2016. Excluding the impact of the Tax Act, EPS per diluted share increased due to higher net sales.~~

~~For further information on our quarterly results in 2017 and 2016, refer to Note 16: Selected Quarterly Data in Item 8.~~

~~2018 Guidance~~

~~Our expectations for 2018, which are shown in comparison to the 53-week fiscal 2017 where applicable, are as follows:~~



~~Net sales~~	~~$15.2 to $15.4 billion~~
~~Comparable sales (percent)~~	~~0.5 to 1.5~~
~~EBIT~~	~~$885 to $940 million~~
~~Earnings per diluted share (excluding the impact of any future share repurchase)~~	~~$3.30 to $3.55~~

~~The Company’s guidance also incorporates the following assumptions:~~

~~The effective tax rate is expected to be approximately 27.5%.~~

~~The impact of revenue recognition accounting changes is estimated to reduce EBIT by approximately $30.~~

The 53rd week in fiscal 2017 creates a timing shift in the 4-5-4 calendar for fiscal 2018 that is expected to impact comparisons to the prior year. This includes the shift in the Anniversary Sale event from the second and third quarters in 2017 to primarily the second quarter in 2018.

As a result of the evolution of our operations, our reportable segments have become progressively more integrated such that we will change our reportable segments to one reportable segment to align with how management will view the results of our operations in the first quarter of 2018, as discussed in Note 15: Segment Reporting in Item 8. These changes are not expected to impact total Company net earnings, earnings per share, financial position or cash flows. In addition, we are evaluating our legacy store based metrics, such as those calculated based on square footage, and migrating to metrics that are more relevant to how customers are engaging with us.

respective non-GAAP adjustment.

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~~Return on Invested Capital (“ROIC”)~~Adjusted ROIC (Non-GAAP financial measure)

We believe that Adjusted ROIC is a useful financial measure for investors in evaluating the efficiency and effectiveness of the capital we have invested in our ~~use of capital~~business to generate returns over time. In addition, we have incorporated it in our executive incentive measures and we believe ~~ROIC~~it is an important ~~component~~indicator of shareholders’ return over the long term. In addition, we incorporate ROIC in our executive incentive compensation measures. For the 12 fiscal months ended February 3, 2018, our ROIC increased to 9.7% compared with 8.4% for the 12 fiscal months ended January 28, 2017. Results for the prior period were negatively impacted by approximately 330 basis points due to the Trunk Club non-cash goodwill impairment charge

Beginning in the ~~third~~second quarter of ~~2016 (see Note 8: Fair Value Measurements in Item 8).~~

~~We define~~2023, the Adjusted ROIC ascalculation was updated to exclude certain items that we do not consider representative of our core operating performance. Refer to non-operating related adjustments included within adjusted net operating profit after tax ~~divided by our~~and adjusted average invested ~~capital using the trailing 12-month average.~~capital. Prior periods have been modified to conform with current period presentation.

Adjusted ROIC is not a measure of financial performance under ~~generally accepted accounting principles (“GAAP”)~~GAAP and should be considered in addition to, and not as a substitute for, return on assets, net earnings, total assets or other GAAP financial ~~measures prepared in accordance with GAAP.~~measures. Our method of ~~determining~~calculating a non-GAAP financial ~~measures~~measure may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The financial measure calculated under GAAP which is most directly comparable to Adjusted ROIC is return on assets. The following shows the components to reconcile the return on assets calculation to Adjusted ROIC:


Fiscal year	2023		2022
Net earnings	$134		$245
Income tax expense	13		92
Interest expense	137		138
Earnings before interest and income tax expense	284		475

Operating lease interest1	86		85


Non-operating related adjustments2	316		38
Adjusted net operating profit	686		598
Adjusted estimated income tax expense3	(172)		(162)
Adjusted net operating profit after tax	$514		$436

Average total assets	$8,766		$9,069
Average noncurrent deferred property incentives in excess of ROU assets4	(157)		(197)
Average non-interest bearing current liabilities	(2,954)		(3,185)
Non-operating related adjustments5	394		—
Adjusted average invested capital	$6,049		$5,687

Return on assets	1.5	%	2.7	%
Adjusted ROIC	8.5	%	7.7	%

1 Operating lease interest is a ~~reconciliation~~component of operating lease cost recorded in occupancy costs. We add back operating lease interest for purposes of calculating adjusted net operating profit for consistency with the ~~components~~treatment of ~~ROIC~~interest expense on our debt.

2 See the Adjusted EBIT and ~~return~~Adjusted EBITDA section, as well as our 2022 Annual Report, for detailed information on ~~assets:~~

certain non-operating related adjustments.

12 Fiscal Months Ended
February 3, 2018
January 28, 2017
January 30, 2016
January 31, 2015
February 1, 2014
Net earnings
$437

$354

$600

$720

$734
Add: income tax expense¹
353
330
376
465
455
Add: interest expense 141
122
125
139
162
Earnings before interest and income tax expense 931
806
1,101
1,324
1,351

Add: rent expense 250
202
176
137
125
Less: estimated depreciation on capitalized operating leases²
(133 ) (108 ) (94 ) (74 ) (67 )
Net operating profit 1,048
900
1,183
1,387
1,409

Less: estimated income tax expense (468 ) (416 ) (456 ) (544 ) (539 )
Net operating profit after tax
$580

$484

$727

$843

$870

Average total assets
$8,055

$7,917

$9,076

$8,860

$8,398
Less: average non-interest-bearing current liabilities³
(3,261 ) (3,012 ) (2,993 ) (2,730 ) (2,430 )
Less: average deferred property incentives and deferred rent liability³
(644 ) (644 ) (548 ) (502 ) (489 )
Add: average estimated asset base of capitalized operating leases⁴
1,805
1,512
1,236
1,058
929
Average invested capital
$5,955

$5,773

$6,771

$6,686

$6,408

Return on assets⁵
5.4 % 4.5 % 6.6 % 8.1 % 8.7 %
ROIC⁵
9.7 % 8.4 % 10.7 % 12.6 % 13.6 %

¹~~Results~~3 Adjusted estimated income tax expense is calculated by multiplying the adjusted net operating profit by the adjusted effective tax rate (which removes the impact of non-operating related adjustments) for the ~~12 months~~trailing twelve-month periods ended February 3, ~~2018, include $42 impact~~2024 and January 28, 2023. The adjusted effective tax rate is calculated by dividing adjusted income tax expense by adjusted earnings before income taxes for the same trailing twelve-month periods.

4 For leases with property incentives that exceed the ROU assets, we reclassify the amount from assets to other current liabilities and other liabilities on the Consolidated Balance Sheets. The current and noncurrent amounts are used to reduce average total assets above, as this better reflects how we manage our business.

5 Non-operating related adjustments primarily relate to the ~~Tax Act.~~

²~~Capitalized operating leases is~~wind-down of our ~~best estimate of the asset base we would record~~Canadian operations for ~~our leases that are classified as operating if they had met the criteria for a capital lease or we had purchased the property. Asset base is calculated as described in footnote 4 below.~~

³~~Balances associated with our deferred rent liability have been classified as long-term liabilities in the current period.~~

⁴~~Based upon~~ the trailing 12-month average of the monthly asset base. The asset base for each month is calculated as the trailing 12 months of rent expense multiplied by eight. The multiple of eight times rent expense is a commonly used method of estimating the asset base we would record for our capitalized operating leases described in footnote 2.

⁵~~Results for 12 fiscal months~~twelve-month period ended January 28, 2017 include the $197 impact of the Trunk Club non-cash goodwill impairment charge in the third quarter of 2016, which negatively impacted the prior period return on assets by approximately 240 basis points and ROIC by approximately 330 basis points.

February 3, 2024.

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LIQUIDITY ~~AND CAPITAL RESOURCES~~

We strive to maintain a level of liquidity sufficient to allow us to cover our seasonal cash needs and to maintain appropriate levels of short-term borrowings. ~~We believe that~~In the short term, our ~~operating~~ongoing working capital and capital expenditure requirements, and any dividend payments or share repurchases, are generally funded through cash flows ~~available credit facility~~generated from operations. In addition, we have access to the commercial paper market and ~~potential future borrowings are sufficient to meet~~can draw on our ~~cash requirements~~Revolver for ~~the next 12 months~~working capital, capital expenditures and ~~beyond.~~

general corporate purposes. Over the long term, we manage our cash and capital structure to maximize shareholder return, maintain our financial position, manage refinancing risk and allow flexibility for strategic initiatives. We regularly assess our debt and leverage levels, capital expenditure requirements, debt service payments, dividend payouts, ~~potential~~ share repurchases and other future investments.

We ~~believe that as of~~ ~~February 3, 2018, our existing~~ended fiscal year 2023 with $628 in cash and cash equivalents ~~on-hand~~and $770 of ~~$1,181,~~additional liquidity available ~~credit facilities~~on our Revolver. Cash and cash equivalents as of ~~$800~~February 3, 2024 decreased from $687 in 2022, driven by payments for capital expenditures, Canadian guarantee settlements (see Note 2: Canada Wind-down in Item 8) and ~~potential future operating~~dividends, partially offset by cash flows from earnings.

As of February 3, 2024, we had $250 in current maturities of long-term debt due April 2024 (see Note 6: Debt and ~~borrowings will be~~Credit Facilities in Item 8). We intend to retire this outstanding debt during the first quarter of 2024 using cash on hand. We believe that our cash flows from operations are sufficient to ~~fund these scheduled~~meet our cash requirements for the next 12 months and beyond. Our cash requirements are subject to change as business conditions warrant and opportunities arise and we may elect to raise additional funds in the future ~~payments and potential long-term initiatives.~~through the issuance of either debt or equity.

The following is a summary of our cash flows by activity:

Fiscal year 2017
2016
2015
Net cash provided by operating activities
$1,400

$1,658

$2,470
Net cash used in investing activities (684 ) (791 ) (144 )
Net cash used in financing activities (542 ) (455 ) (2,558 )


Fiscal year	2023	2022
Net cash provided by operating activities	$621	$946
Net cash used in investing activities	(571)	(393)
Net cash used in financing activities	(109)	(186)

Operating Activities

The majority of our operating cash inflows are derived from sales. We also receive cash payments for property incentives from ~~developers.~~developers and vendors. Our operating cash outflows generally consist of payments to our merchandise vendors (net of vendor allowances), and shipping carriers, payments to our employees for wages, salaries and other employee benefits and payments to our landlords for rent. Operating cash outflows also include payments for income taxes and interest payments on our short-term and long-term borrowings.

Net cash provided by operating activities decreased ~~by $258 between 2017~~$325 between 2023 and ~~2016 primarily~~2022 primarily due to changes in working capital driven by the amended TD program agreement in 2022, timing of ~~tax refunds~~purchases and ~~payments. Net cash provided by operating activities decreased by $812 between 2016~~payments for inventory and ~~2015 primarily due to $1,297 of proceeds in 2015 from the sale of our credit card receivables originated at Nordstrom~~Canadian guarantee settlements (see Note 2: ~~Credit Card Receivable Transaction~~Canada Wind-down in Item 8). ~~When removing the impact of the sale proceeds, operating cash flows increased from 2015 primarily due to improvements in working capital.~~

Investing Activities

Our investing cash outflows include payments for capital expenditures, including technology, stores and supply chain improvements. Our investing cash inflows are generally from proceeds from sales of property and equipment. ~~Our investing cash outflows include payments for~~Activity also includes the purchase and sale of financial interests of certain private companies and venture capital expenditures, including stores, supply chain improvements and information technology costs. In addition, other investing includes payments for investments in other companies, as well as proceeds from distributions or sales of these investments.funds.

Net cash used in investing activities ~~decreased by $107 between 2017~~ increased $178 between 2023 and ~~2016 primarily~~2022, primarily due to ~~a decrease in~~increased capital ~~expenditures. Net cash used in investing activities increased by $647 between 2016 and 2015 primarily due to $890 of proceeds in 2015 from~~expenditures for Nordstrom Rack new store openings, the sale of our ~~credit card receivables originated at third parties, partially offset by~~interest in a corporate office building in 2022 and the decrease in ~~capital expenditures~~cash and cash equivalents resulting from the deconsolidation of Canada in ~~2016.~~2023 (see Note 1: Nature of Operations and Summary of Significant Accounting Policies and Note 2: Canada Wind-down in Item 8).

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Capital Expenditures

Our capital expenditures, net are summarized as follows:


Fiscal year	2023		2022
Capital expenditures	$569		$473
Deferred property incentives1	(35)		(20)
Capital expenditures, net	$534		$453



Capital expenditures, net category allocation:
Technology	59	%	66	%
New stores, relocations, remodels and other	31	%	24	%
Supply chain	10	%	10	%
Total	100	%	100	%

Fiscal year 2017
2016
2015
Capital expenditures
$731

$846

$1,082
Less: deferred property incentives¹
(64 ) (65 ) (156 )
Capital expenditures, net
$667

$781

$926

Capital expenditures % of net sales 4.8 % 5.8 % 7.7 %

Capital expenditures, net category allocation:
New stores, relocations and remodels²
65 % 61 % 61 %
Information technology 30 % 28 % 33 %
Other³
5 % 11 % 6 %
Total 100 % 100 % 100 %

¹Deferred property incentives are included in our cash provided by operations in our Consolidated Statements of Cash Flows in Item 8. We operationally view the property incentives we receive from our developers and vendors as an offset to our capital expenditures.

² ~~New stores, relocations and remodels include~~


Fiscal year	20241	2023		2022		2021		2020		2019
Capital expenditures as a % of net sales	3%-4%	4.0	%	3.1	%	3.5	%	3.7	%	6.2	%

1 Rate represents amounts forecasted in 2024.

Capital expenditures as a percentage of net sales in 2023 was on the ~~impact~~higher end of our ~~expansion into~~outlook, and increased compared with 2022, primarily due to Nordstrom Rack new ~~markets, including Nordstrom Canada~~store openings in 2023 and ~~Nordstrom NYC.~~

³~~Other capital expenditures consist of ongoing improvements to~~investments in our stores ~~in the ordinary course of business and expenditures related~~ to ~~various growth initiatives.~~

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~~Table of Contents~~

~~Capital expenditures, net decreased $114 in 2017 compared with 2016 due~~support continued growth. Going forward, we expect capital expenditure requirements on average to ~~reduced spend for Canada full-line stores. Capital expenditures, net decreased $145 in 2016 compared with 2015 due~~range from 3% to ~~reduced spend associated with full-line relocations and new full-line stores.~~

~~The following table summarizes our store count and square footage activity:~~

Store count Square footage
Fiscal year 2017
2016
2015
2017

2016

2015
Total, beginning of year 349
323
292
29.8
28.6
27.1
Store openings¹:

Nordstrom full-line stores²
2
3
5
0.2
0.6
0.8
Nordstrom Rack and other stores³
17
24
27
0.5
0.8
0.9
Stores closed (2 ) (1 ) (1 ) (0.3 ) (0.2 ) (0.2 )
Total, end of year 366
349
323
30.2
29.8
28.6

Relocations and other¹
3
3
1
—
—
—

¹~~Store openings include adjustments due to store relocations or remodels.~~

²~~Nordstrom full-line stores include U.S. full line stores, Canada full-line stores and Nordstrom Local.~~

³~~Other includes Trunk Club clubhouses, Jeffrey boutiques and Last Chance stores.~~

~~To date in~~ ~~2018, we have opened three Nordstrom Rack stores and plan to open 9 additional Nordstrom Rack stores and the Nordstrom Men’s Store NYC, increasing our retail square footage by approximately 1%.~~

~~Our capital expenditures, net over the next five years is expected to be approximately $3,200, or~~ 4% of net sales, ~~compared with $3,839, or 6%~~and primarily support investments in technology and stores. Approximately $32 of ~~net sales, over the previous five years. Although we plan~~ our ~~spending in 2018 and 2019~~purchase obligation commitments relate to ~~increase when compared with 2017 due to a new West Coast fulfillment center and Nordstrom NYC pre-opening costs,~~capital expenditures, all of which we expect ~~reductions~~to impact our liquidity in the ~~following years. We do not expect capital expenditures, net to exceed 5% of net sales~~next year (see Note 13: Commitments and Contingencies in ~~any of the next five years.~~Item 8).

Financing Activities

The majority of our financing activities include long-term debt or Revolver proceeds and/or payments, dividend payments and repurchases of common ~~stock repurchases.~~stock.

Net cash used in financing activities ~~increased $87 between 2017~~ decreased $77 between 2023 and ~~2016~~2022 primarily due to decreased share repurchases in 2023 compared with 2022.

Share Repurchases

In determining the size and timing of share repurchases, we analyze a ~~decrease~~number of different factors, including our liquidity position, current market and economic conditions and alternative uses of capital, including those used to offset anticipated dilution from equity incentive plans. Share repurchases are made as conditions warrant in ~~cash book overdrafts as a result~~the open market and are then retired. We repurchased 0.03 shares of ~~payment timing differences. Net cash used~~our common stock for $1 in ~~financing activities decreased $2,103 between 2016~~2023, compared with 2.8 shares repurchased for $62 in 2022, and ~~2015 primarily due to a decrease~~had $438 remaining in ~~cash dividends paid and~~ share repurchase ~~activity.~~

~~Borrowing Activity~~

~~During 2017, we issued $350 aggregate principal amount~~capacity as of ~~4.00% senior unsecured notes due March 2027~~February 3, 2024. The actual timing, price, manner and ~~$300 aggregate principal amount~~amounts of ~~5.00% senior unsecured notes due January 2044. We recorded debt issuance costs incurred as a result~~future share repurchases, if any, will be subject to the discretion of the ~~issuance in other financing activities, net in the Consolidated Statements~~Board of ~~Cash Flows in Item 8. With the proceeds of these new notes, we retired our $650 senior unsecured notes that were due January 2018~~Directors, contractual commitments, market and economic conditions and applicable SEC rules (see Note ~~7: Debt and Credit Facilities~~11: Shareholders’ Equity in Item 8).

~~In 2015, as a condition of closing the credit card receivable transaction, we defeased $325 in secured Series 2011-1 Class A Notes in order to provide the receivables to TD free and clear.~~

Dividends

In 2017, we paid dividends of $247, or $1.48 per share, compared with $256, or $1.48 per share, in 2016 and $1,185, or $6.33 per share, in 2015. Dividends paid in 2015 included a special cash dividend of $905, or $4.85 per share, in addition to our quarterly dividends totaling $1.48 per share. The special dividend was authorized by our Board of Directors on October 1, 2015, and was paid using proceeds from the sale of our credit card receivables. In determining the dividends to pay, we analyze our dividend payout ratio and dividend yield, while taking into consideration our current and projected operating performance and ~~liquidity. Our~~liquidity, subject to our Revolver covenants (see Note 6: Debt and Credit Facilities in Item 8). In 2023, we paid dividends of $123, or $0.76 per share, compared with $119, or $0.76 per share, in 2022 (see Note 11: Shareholders’ Equity in Item 8). We expect a continuation of our 2023 dividend ~~payout ratio target range is 30% to 35% and is calculated as our dividend payments divided by net earnings.~~payment levels throughout 2024.

In February ~~2018,~~2024, subsequent to year end, we declared a quarterly dividend of ~~$0.37~~$0.19 per share, which will be paid on March ~~20, 2018.~~

27, 2024 to shareholders of record as of March 12, 2024.

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Cash Requirements

~~Share Repurchases~~We have various commitments and other executory contracts that are disclosed in the following Notes to Consolidated Financial Statements in Item 8:

•Note 2: Canada Wind-down

•Note 5: Leases

•Note 6: Debt and Credit Facilities

•Note 8: Self-Insurance

•Note 9: Supplemental Executive Retirement Plan

•Note 12: Income Taxes

•Note 13: Commitments and Contingencies

Other commitments include $63 for deferred compensation and other accrued benefits, $9 of which is payable within one year.

Off-Balance Sheet Arrangements

In ~~October 2015,~~connection with our ~~Board~~workers’ compensation programs, we have a standby letter of ~~Directors authorized a program to repurchase up to $1,000 of~~credit issued on our outstanding common stock, through March 1, 2017. There was $409 of unused capacity upon program expiration. In February 2017, our Board of Directors authorized an additional program to repurchase up to $500 of our outstanding common stock, through August 31, 2018. During the first quarter of 2017, we repurchased 4.6 shares of our common stock for an aggregate purchase price of $206. Since June 2017, when we suspended the February 2017 program, we did notbehalf with $13 available and ~~do not plan to repurchase shares while the Group explores the possibility of a Going Private Transaction. We had $414 remaining in share repurchase capacity~~$2 outstanding as of February 3, ~~2018. The actual timing, price, manner~~2024 (see Note 8: Self-Insurance in Item 8). In addition, we issued a standby letter of credit of $30 in the fourth quarter of 2023 reducing our short-term borrowing capacity on our Revolver (see Note 6: Debt and ~~amounts of~~Credit Facilities in Item 8). In management’s opinion, we have no off-balance sheet arrangements that have a material current or future ~~share repurchases, if any, will be subject to market and economic conditions and applicable SEC rules.~~effect on our financial condition or financial statements.

Free Cash Flow (Non-GAAP financial measure)

Free Cash Flow is one of our key liquidity measures and, when used in conjunction with GAAP measures, we believe it provides investors with a meaningful analysis of our ability to generate cash from our business. ~~For the year ended~~ ~~February 3, 2018, we had Free Cash Flow of $383 compared with $560 for the year ended January 28, 2017.~~

Free Cash Flow is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, operating cash flows or other financial measures prepared in accordance with GAAP. Our method of ~~determining~~calculating a non-GAAP financial ~~measures~~measure may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The financial measure calculated under GAAP which is most directly comparable to Free Cash Flow is net cash provided by operating activities. The following is a reconciliation of net cash provided by operating activities to Free Cash Flow:


Fiscal year	2023	2022
Net cash provided by operating activities	$621	$946
Capital expenditures	(569)	(473)
Change in cash book overdrafts	2	(14)
Free Cash Flow	$54	$459

Nordstrom, Inc. and subsidiaries37

Fiscal year 2017
2016
2015
Net cash provided by operating activities
$1,400

$1,658

$2,470
Less: capital expenditures (731 ) (846 ) (1,082 )
Less: cash dividends paid (247 ) (256 ) (1,185 )
Add: proceeds from sale of credit card receivables originated at third parties 16
—
890
Add: change in credit card receivables originated at third parties —
—
34
(Less) Add: change in cash book overdrafts (55 ) 4
23
Free Cash Flow
$383

$560

$1,150

Table of Contents

~~Credit~~

CAPITAL RESOURCES

Borrowing Capacity and ~~Commitments~~Activity

As of February 3, ~~2018,~~2024, we had ~~total~~no borrowings outstanding under our Revolver that expires in May 2027 and our short-term borrowing capacity was reduced by $30 to $770 as a result of ~~$800 under our senior unsecured revolving~~issuing a standby letter of credit ~~facility (“revolver”) that expires~~ in ~~April 2020. Under~~ the ~~terms~~fourth quarter of our revolver, we pay a variable rate of interest and a commitment fee based on our debt rating. The revolver is available for working capital, capital expenditures and general corporate purposes. We have the option to increase the revolving commitment by up to $200, to a total of $1,000, provided that we obtain written consent from the lenders.

Our $800 commercial paper program allows us to use the proceeds to fund operating cash requirements. Under the terms of the commercial paper agreement, we pay a rate of interest based on, among other factors, the maturity of the issuance and market conditions. The issuance of commercial paper has the effect, while it is outstanding, of reducing available liquidity under the revolver by an amount equal to the principal amount of commercial paper.

2023. As of February 3, ~~2018,~~2024, we had no issuances outstanding under our commercial paper ~~program~~program. For more information about our credit facilities, see Note 6: Debt and ~~no borrowings outstanding under our revolver.~~

~~Our wholly owned subsidiary~~Credit Facilities in ~~Puerto Rico maintains a $52 unsecured borrowing facility to support our expansion into that market. The facility expires in~~ ~~Fall 2018~~ and borrowings on this facility incur interest based upon the LIBOR plus 1.275% per annum and also incurred a fee based on any unused commitment. As of February 3, 2018, we had $48 outstanding on this facility.

~~We maintain trade and standby letters of credit to facilitate our international payments. As of~~ ~~February 3, 2018, we have $8 available and none outstanding under the trade letter of credit and $15 available and $2 outstanding under the standby letter of credit.~~

Plans for our Nordstrom NYC store, which we currently expect to open in 2019, ultimately include owning a condominium interest in a mixed-use tower and leasing certain nearby properties. As of February 3, 2018, we had approximately $289 of fee interest in land, which is expected to convert to the condominium interest once the store is constructed. We have committed to make future installment payments based on the developer meeting pre-established construction and development milestones. In the event that this project is not completed, the opening may be delayed and we may be subject to future losses or capital commitments in order to complete construction or to monetize our investment in the land.

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Item 8.

Impact of Credit Ratings and Revolver Covenants

~~Under~~Changes in our credit ratings may impact our costs to borrow, whether our personal property secures our Revolver and whether and to what extent we are permitted to pay dividends or conduct share repurchases.

For our Revolver, the ~~terms of our revolver,~~interest rate applicable to any borrowings we may enter into will accrue interest for Euro-Dollar Rate Loans at a floating base rate tied to LIBOR, for Canadian Dealer Offer Rate Loans at a floating rate tied to CDOR, and for Base Rate Loans at the highest of: (i) the Euro-Dollar rate plus 100 basis points, (ii) the federal funds rate plus 50 basis points and (iii) the prime rate.

~~The rate~~ depends upon the type of borrowing incurred plus ~~in each case~~ an applicable ~~margin. This applicable~~ margin, ~~varies depending upon the~~which is determined based on our credit ~~ratings assigned to our long-term unsecured debt.~~ratings. At the time of this report, our ~~long-term unsecured debt~~credit ratings ~~outlook~~ and ~~resulting applicable margin~~outlook were as follows:


		Credit Ratings		Outlook
Moody’s		Ba1				Negative
S&P Global Ratings		~~Credit Ratings~~BB+			~~Outlook~~	Negative
~~Moody’s~~Fitch Ratings		~~Baa1~~BB+			Stable
~~Standard & Poor’s~~		~~BBB+~~			~~Negative~~

	~~Base Interest~~ ~~Rate~~	~~Applicable~~ ~~Margin~~
~~Euro-Dollar Rate Loan~~	~~LIBOR~~	~~1.02~~	%
~~Canadian Dealer Offer Rate Loan~~	~~CDOR~~	~~1.02~~	%
~~Base Rate Loan~~	~~various~~	—

Should the ratings assigned to our long-term ~~unsecured~~ debt improve, the applicable margin associated with any ~~such~~ borrowings under the Revolver may decrease, resulting in a lower borrowing cost under this facility. ~~Should~~Conversely, should the ratings assigned to our long-term ~~unsecured~~ debt worsen, the applicable margin associated with ~~our~~any borrowings under the Revolver may increase, resulting in a higher borrowing cost under this facility.

~~Debt Covenants~~

The revolver requires that we maintain an adjusted debt to earnings before interest, income taxes, depreciation, amortization and rent (“EBITDAR”) leverage ratio of no more than four times (see the following additional discussion of Adjusted Debt to EBITDAR). As of February 3, ~~2018~~,2024, we were in compliance with ~~this covenant.~~

all covenants. We have certain limitations with respect to the payment of dividends and share repurchases under our Revolver agreement. On March 1, 2023, we amended our Revolver agreement. For more information about our Revolver covenants, see Note 6: Debt and Credit Facilities in Item 8.

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Adjusted Debt to EBITDAR (Non-GAAP financial measure)

Adjusted ~~Debt~~debt to EBITDAR is one of our key financial metrics and we believe that our debt levels are best analyzed using this ~~measure.~~measure, as it provides a reflection of our creditworthiness which could impact our credit ratings and borrowing costs. This metric is calculated in accordance with the updates in our Revolver covenant and is a key component in assessing whether our revolving credit facility is secured or unsecured, as well as our ability to make dividend payments and share repurchases. Our goal is to manage debt levels to achieve and maintain an investment-grade credit ~~rating and operate~~ratings while operating with an efficient capital structure. ~~In evaluating~~For more information regarding our ~~debt levels, this measure provides a reflection of our credit worthiness that could impact our credit rating~~Revolver, see Note 6: Debt and ~~borrowing costs. We also have a~~Credit Facilities in Item 8.

Adjusted debt ~~covenant that requires an adjusted debt to EBITDAR leverage ratio of no more than four times. As of February 3, 2018, our Adjusted Debt to EBITDAR was 2.6, and as of January 28, 2017, it was 2.4.~~

~~Adjusted Debt~~ to EBITDAR is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, debt to net earnings, net earnings, debt or other GAAP financial ~~measures prepared in accordance with GAAP.~~measures. Our method of ~~determining~~calculating a non-GAAP financial ~~measures~~measure may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The financial measure calculated under GAAP which is most directly comparable to Adjusted ~~Debt~~debt to EBITDAR is debt to net earnings. The following ~~is a reconciliation of~~shows the components ~~of Adjusted Debt~~ to ~~EBITDAR and~~reconcile the debt to net ~~earnings:~~earnings calculation to Adjusted debt to EBITDAR:


			February 3, 2024
Debt			$2,862
Operating lease liabilities			1,617
Adjusted debt			$4,479

Four Quarters Ended February 3, 2024
Net earnings			$134
Income tax expense			13
Interest expense, net			104
Earnings before interest and income taxes			251

Depreciation and amortization expenses			586
Operating Lease Cost			278
Amortization of developer reimbursements1			69
Canada wind-down costs			284
Supply chain asset impairment and related charge			32
Other Revolver covenant adjustments2			36
Adjusted EBITDAR			$1,536

Debt to Net Earnings			21.4
Adjusted debt to EBITDAR			2.9

2017¹

2016¹

Debt
$2,737

$2,774
Add: estimated capitalized operating lease liability²
2,001
1,616
Less: fair value hedge adjustment included in long-term debt —
(12 )
Adjusted Debt
$4,738

$4,378

Net earnings 437
354
Add: income tax expense 353
330
Add: interest expense, net 136
121
Earnings before interest and income taxes 926
805

Add: depreciation and amortization expenses 666
645
Add: rent expense 250
202
Add: non-cash acquisition-related charges³
1
198
EBITDAR
$1,843

$1,850

Debt to Net Earnings⁴
6.3
7.8
Adjusted Debt to EBITDAR 2.6
2.4
1 Amortization of developer reimbursements is a non-cash reduction of Operating Lease Cost and is therefore added back to Operating Lease Cost for purposes of our Revolver covenant calculation.

¹~~The components of~~2 Other adjusting items to reconcile net earnings to Adjusted ~~Debt are~~EBITDAR as ~~of February 3, 2018~~defined by our Revolver covenant include interest income, certain non-cash charges and ~~January 28, 2017, while~~other gains and losses where relevant. For the ~~components of EBITDAR are for the 12 months~~four quarters ended February 3, ~~2018 and January 28, 2017.~~

²Based upon the estimated lease liability as of the end of the period, calculated as the trailing 12 months of rent expense multiplied by eight. The multiple of eight times rent expense is a commonly used method of estimating the debt we would record for our leases that are classified as operating if they had met the criteria for a capital lease or we had purchased the property.

³~~Non-cash acquisition-related charges for the 12 months ended January 28, 2017~~2024, other Revolver covenant adjustments primarily included ~~the goodwill impairment charge of $197 related to Trunk Club.~~

⁴~~Results for the period ended January 28, 2017 include the $197 impact of the Trunk Club goodwill impairment charge, which approximates 280 basis points.~~

interest income.

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~~Contractual Obligations~~

The following table summarizes our contractual obligations and the expected effect on our liquidity and cash flows as of February 3, 2018. We expect to fund these commitments primarily with operating cash flows generated in the normal course of business and credit available to us under existing and potential future facilities.

Total

Less than
1 year

1 – 3 years
3 – 5 years

More than
5 years

Long-term debt
$4,563

$167

$711

$644

$3,041
Operating leases 2,740
309
605
516
1,310
Purchase obligations 1,462
1,251
188
23
—
Other long-term liabilities 383
64
59
42
218
Total
$9,148

$1,791

$1,563

$1,225

$4,569

~~Included in the required debt repayments disclosed above are estimated total interest payments of $1,732 as of February 3, 2018, payable over the remaining life of the debt.~~

The operating lease obligations in the table above do not include payments for operating expenses that are required by most of our lease agreements. Such expenses, which include common area charges, real estate taxes and other executory costs, totaled $121 in 2017, $112 in 2016 and $97 in 2015. In addition, some of our leases require additional rental payments based on a percentage of our sales, referred to as “percentage rent.” Percentage rent, which is also excluded from the obligations in the table above, was $11 in 2017, $12 in 2016 and $13 in 2015.

Purchase obligations primarily consist of purchase orders for unreceived goods or services and capital expenditure commitments. Capital expenditure commitments include our Nordstrom Men’s Store NYC and Nordstrom NYC.

Other long-term liabilities consist of workers’ compensation and other liability insurance reserves and postretirement benefits. The payment amounts presented above were estimated based on historical payment trends. Other long-term liabilities not requiring cash payments, such as deferred property incentives and deferred revenue, were excluded from the table above. Also excluded from the table above are unrecognized tax benefits of $34, as we are unable to reasonably estimate the timing of future cash payments, if any, for these liabilities.

~~Off-Balance Sheet Arrangements~~

In October 2015, we completed the sale of a substantial majority of our U.S. Visa and private label credit card portfolio to TD. In November 2017, we sold the remaining balances which consisted of employee credit card receivables for the U.S. Visa and Nordstrom private label credit cards to TD (see Note 2: Credit Card Receivable Transaction in Item 8). Pursuant to the program agreement with TD, we offer and administer our Nordstrom Rewards loyalty program and perform other account servicing functions. Credit card receivables serviced under this contract are $3,098 as of February 3, 2018.

Other than items noted in the paragraph above, in addition to operating leases entered into in the normal course of business and the development of our Nordstrom Men’s Store NYC and Nordstrom NYC, we had no material off-balance sheet arrangements during 2017.

CRITICAL ACCOUNTING ESTIMATES

The preparation of ~~our~~ financial statements in conformity with GAAP requires that we make estimates, judgments and ~~judgments~~assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and ~~liabilities. We base our~~liabilities during the reporting period. Uncertainties regarding such estimates ~~on historical experience~~ and ~~other~~ assumptions ~~that we believe to be reasonable under~~are inherent in the ~~circumstances.~~preparation of financial statements. Actual results may differ from these ~~estimates.~~estimates and assumptions. The following discussion highlights the estimates we believe are critical and should be read in conjunction with the Notes to Consolidated Financial Statements in Item 8. Our management has discussed the development and selection of these critical accounting estimates with the Audit and Finance Committee of our Board of Directors, and the Audit and Finance Committee has reviewed our disclosures that follow.

~~Revenue Recognition~~Sales Return Reserve

We recognize sales revenue net of estimated returns and excluding sales taxes. Revenue from sales to customers shipped directly from our stores and fulfillment centers, which includes shipping revenue when applicable, is recognized upon estimated receipt by the customer. We estimate customer merchandise returns based on historical return patterns and reduce sales and cost of sales ~~accordingly.~~

~~Although we believe we have sufficient~~by an estimate of future customer merchandise returns, which is calculated based on historical and expected return patterns, and record a sales return reserve and an estimated returns asset. We record the impact of the sales return reserve separately in both our Nordstrom and Nordstrom Rack banners. The majority of our returns from both digital and physical sales come through our stores. Estimating future returns requires substantial judgment based on current and historical ~~knowledge to record reasonable estimates of sales returns,~~trends and actual returns ~~could differ~~may vary from ~~recorded amounts. In the past three years, there were no significant changes in customer return behavior and we have made no material changes to~~ our ~~estimates included in the calculations of our sales return reserve.~~estimates. A 10% change in the sales return reserve, net of the estimated returns asset, would ~~have had a $10~~ impact on our ~~net earnings~~EBIT by approximately $20 for the year ended February 3, ~~2018.~~2024.

The Nordy Club Loyalty Program and Gift Cards

~~Table of Contents~~

We record breakage revenue for The Nordy Club, including unused points and unredeemed Nordstrom Notes, and gift cards based on historical and expected redemption trends. We have experienced a decrease in redemption rates, leading to increased breakage rates for The Nordy Club. A one percentage point change in our gift card breakage rate would impact our EBIT by approximately $43 for the year ended February 3, 2024.

Merchandise Inventories

Merchandise inventories are ~~generally~~ stated at the lower of cost or market value using the retail inventory method. Under the retail method, the valuation of inventories is determined by applying a calculated cost-to-retail ratio to the retail value of ending inventory. ~~The value of our inventory on~~ Inherent in the ~~balance sheet is then reduced by a charge to cost of sales for~~ retail inventory ~~markdowns taken on~~method are certain management judgments that may affect the ~~selling floor.~~ ending inventory valuation, as well as gross profit. To determine if the retail value of our inventory should be marked down, we consider current and anticipated demand, customer preferences, age of the merchandise and fashion trends. ~~Inherent in the retail~~We record reserves for excess and obsolete inventory ~~method are certain management judgments that may affect the ending inventory valuation as well as gross profit.~~

~~We reserve for obsolescence~~ based on historical trends and specific identification. ~~Our obsolescence reserve contains uncertainties as~~

We take physical inventory counts at our stores and Supply Chain Network locations and adjust for differences between recorded amounts and counted amounts. Following each physical inventory cycle and using the ~~calculations require management to make assumptions~~most recent physical inventory count and ~~to apply judgment regarding a number of factors, including market conditions, the selling environment,~~ historical results, ~~and current inventory trends.~~

~~We do not believe that the assumptions used in these estimates will change significantly~~we record an estimate for shrink based on ~~prior experience. In~~a percentage of sales until the past three years, we have made no material changes to our estimates included in the calculations of the obsolescence reserve. A 10% change in the obsolescence reserve would have had a $1 impact on our net earnings for the year ended February 3, 2018.

~~Goodwill~~

We review our goodwill annually for impairment or when circumstances indicate that the carrying value may exceed the fair value. We perform this evaluation at the reporting unit level, comprised of the principal business units within our Retail segment, through the application of a two-step fair value test. The first step compares the carrying value of the reporting unit to its estimated fair value, which is based on the expected present value of future cash flows (income approach), comparable public companies and acquisitions (market approach) or a combination of both. If fair value is lower than the carrying value, then a second step is performed to quantify the amount of the impairment.

As part of our impairment testing, we utilize certain assumptions and apply judgment regarding a number of factors. Significant estimates in the market approach include identifying similar companies and acquisitions with comparable business factors such as size, growth, profitability, risk and return of investment, and assessing comparable earnings or revenue multiples in estimating the fair value of the reporting unit. Assumptions in the income approach include future cash flows for the business, future growth rates and discount rates. Estimates of cash flows may differ from actual cash flows due to, among other things, economic conditions, changes to the business model or changes in operating performance. For Nordstrom.com, Jeffrey and HauteLook, the fair values substantially exceeded carrying values and therefore we had no material goodwill impairment in 2017, 2016 or 2015. A 10% change in the fair value of any of these reporting units would not have had an impact on our net earnings for the year ended February 3, 2018.

There were no goodwill impairment charges related to Trunk Club in 2017 or 2015. In 2016, we recognized a goodwill impairment charge of $197 resulting from changes to the long-term operating plan that reflected lower expectations for growth and profitability than previous expectations~~(see Note 1: Nature of Operations and Summary of Significant Accounting Policies and Note 8: Fair Value Measurements in Item 8).~~next physical inventory count.

Impairment of Long-Lived Assets

When facts and circumstances indicate ~~that~~ the carrying values of ~~long-lived assets, including~~ buildings, equipment and ~~amortizable intangible~~ROU assets may be impaired, we ~~perform an evaluation of recoverability by comparing~~compare the carrying ~~values of~~value to the ~~net assets to their~~ related projected ~~undiscounted~~ future cash flows, ~~in addition to~~among other quantitative and qualitative analyses.

~~Land, property and equipment are grouped at the lowest level at which there are identifiable cash flows when assessing impairment.~~ Cash flows for our retail store assets are identified at the individual store level, while our intangible assets associated with HauteLook and Trunk Club are identified at their respective reporting unit levels. The assets recorded in connection with the credit card receivable transaction are individually evaluated against the anticipated cash flows under the program agreement (see Note 2: Credit Card Receivable Transaction in Item 8).

~~Our estimates are subject to uncertainties and may be impacted by various external~~flow analysis requires judgment regarding many factors, such as ~~economic conditions~~revenues, growth rates, expenses, capital expenditures and ~~market competition.~~sublease income.

These projections are inherently subject to uncertainties. While we believe the inputs and assumptions utilized in our ~~analyses of~~ future cash flows are reasonable, ~~events or circumstances~~our estimates may change ~~which could cause us to revise these estimates.~~

~~Stock-Based Compensation Expense~~

We grant stock-based awards under our 2010 Equity Incentive Plan (“2010 Plan”), 2002 Nonemployee Director Stock Incentive Plan (“2002 Plan”) and Trunk Club Value Creation Plan (“VCP”), and employees may purchase our stock at a discount under our Employee Stock Purchase Plan (“ESPP”). We predominantly recognize stock-based compensation expense related to stock-based awards at their estimated grant date fair value, recorded on a straight-line basis overin the requisite service period. Compensation expense for certain award holders is accelerated based upon age and years of service. The total compensation expense is reduced by actual forfeitures as they occur over the vesting period of the awards.

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~~Table of Contents~~

~~We estimate the grant date fair value of stock options using the Binomial Lattice option valuation model. Stock-based compensation expense related to the VCP is~~near term based on ~~the grant date fair value of the payout scenario we believe is probable using the Black-Scholes valuation model~~our current and is recognized on an accelerated basis due to performance criteria and graded vesting features of the plan. The fair value of restricted stock is determined based on the number of shares granted and the quoted price of our common stock on the date of grant, less the estimated present value of dividends over the vesting period. Performance share units granted prior to 2016 are classified as liabilities and revalued using the quoted price of our common stock as of each reporting date. Performance share units granted in 2016 and beyond are classified as equity and the fair value is determined using the Monte-Carlo valuation model.

Calculating the grant date fair value of stock-based awards is based on certain assumptions and requires judgment, including estimating stock price volatility, forfeiture rates, expected life and performance criteria. A 10% change in stock-based compensation expense would have had a $4 impact on our net earnings for the year ended February 3, 2018.future performance.

Income Taxes

We ~~use~~pay income taxes based on the ~~asset~~tax statutes, regulations and ~~liability method~~case law of ~~accounting for~~the various jurisdictions in which we operate. Our income ~~taxes. Using this method,~~tax expense and deferred tax assets and liabilities reflect our best estimate of current and future taxes to be paid. Income tax expense may be affected by numerous items, such as changes in tax law, changes in business operations, the results of tax audits and changes to our forecasts of income and loss due to economic and other conditions. Significant judgments and estimates are ~~recorded based on~~required in determining consolidated income tax expense.

Deferred tax assets and liabilities arise from differences between the financial reporting and tax basis of assets and liabilities and for operating loss and tax credit carryforwards. The deferred tax assets and liabilities are calculated using the enacted tax rates and laws ~~that are~~ expected to be in effect when the differences are expected to reverse. ~~We routinely evaluate~~In evaluating the likelihood of realizing the benefit of our deferred tax assets, ~~and may record a valuation allowance if, based on~~we consider all available evidence, ~~it is determined that some portion~~including historical results and projected future taxable income. The assumptions about future taxable income require the use of significant judgment and are consistent with the ~~tax benefit will not be realized.~~plans and estimates we are using to manage the underlying business.

~~We regularly evaluate the likelihood~~

Table of ~~realizing the benefit for income~~Contents

The benefits of uncertain tax positions ~~we have taken~~are recorded in ~~various federal, state and foreign filings by considering all relevant facts, circumstances and information available. If we believe~~our financial statements only after determining it is more likely than not the uncertain tax positions would sustain challenge by taxing authorities. We are periodically audited by federal, state and foreign tax authorities related to our tax filing positions and allocation of income among various tax jurisdictions. Although we believe our liabilities for uncertain tax positions are reasonable, because of the complexity of some of these uncertainties, the ultimate resolution may result in an outcome that is materially different from our ~~position~~current estimated liability. Furthermore, we are unable to reasonably estimate the timing of related future cash payments. Any differences will be ~~sustained,~~reflected as increases or decreases to income tax expense in the period of resolution.

Canada Wind-down

To assess the estimated fair value of our Nordstrom Canada investment and our related-party receivables, we ~~recognize~~estimated the assets available for distribution in relation to expected claims. At the time of filing for CCAA protection on March 2, 2023, the estimated amount of Nordstrom Canada’s liabilities exceeded the estimated fair value of assets available for distribution to creditors, and we believed we would not recover a ~~benefit at the largest amount that we believe is cumulatively greater than 50% likely to be realized. Our unrecognized tax benefit~~significant portion of our receivables. As a result, our fair value was ~~$31~~recorded as zero in our Condensed Consolidated Balance Sheets as of April 29, 2023. As of February 3, ~~2018, and $32~~2024, we adjusted our receivables by an immaterial amount based on currently available information.

As of February 3, 2024, we recorded the amount we believe probable of receipt as part of ~~January 28, 2017. Interest and penalties~~the claims process. This includes receipts related to ~~income tax matters are classified as a component~~the rights to the former landlords’ distributions, reimbursement of ~~income tax expense.~~

~~Income taxes require significant management judgment regarding applicable statutes~~employee trust contributions and ~~their related interpretation,~~other receivables existing at the ~~status~~time of ~~various income tax audits~~deconsolidation. The receivable and our ~~particular facts and circumstances. Also, as audits~~other estimates are completed or statutes of limitations lapse, it may be necessary to record adjustments to our taxes payable, deferred taxes, tax reserves or income tax expense. Such adjustments did not materially impact our effective income tax rate in 2017 or 2016.

~~In December 2017,~~dependent on the ~~Tax Act was signed into law. As we complete our analysis~~outcome of the ~~Tax Act~~Nordstrom Canada wind-down process, including the amount of third-party and ~~interpret any additional guidance issued~~Nordstrom claims asserted and recognized in the claims process, the amount of assets available for distribution and the approval of the CCAA plan of arrangement by the ~~U.S. Treasury Department,~~Ontario Superior Court of Justice, which we expect to have updated information on in the ~~IRS~~first quarter of 2024. We continue to work through the wind-down process and ~~other standard-setting bodies, we~~our estimates of net losses are based on currently available information, our assessment of the validity of certain expected claims and our assessment of the recoverability of amounts receivable from Nordstrom Canada. These estimates may ~~make adjustments to the provisional amounts, which~~change as new information becomes available and it is reasonably possible that they may materially ~~impact~~change from the estimated amounts. Increases in estimated costs to settle claims and decreases in estimated assets available for distribution may result in additional material charges. At the same time, any future decreases in estimated costs to settle claims or increases in estimated assets available for distribution may result in a gain, which would reduce our ~~provision for income taxes in the period in which the adjustments are recorded (see~~estimated charges.

See Note ~~13: Income Taxes~~2: Canada Wind-down in Item 8 for additional ~~information).~~information.

RECENT ACCOUNTING PRONOUNCEMENTS

~~See Note 1: Nature~~In March 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of ~~Operations and Summary of Significant Accounting Policies in Item 8~~Climate-Related Disclosures for Investors, which requires new disclosures regarding information about a ~~discussion of recent accounting pronouncements and the impact these standards~~registrant’s climate-related risks that have materially impacted, or are ~~anticipated~~reasonably likely to have a material impact on, ~~our~~its business strategy, results of operations, ~~liquidity~~ or ~~capital resources.~~

financial condition. In addition, certain disclosures related to severe weather events and other natural conditions will also be required in a registrant’s audited financial statements. Annual disclosure requirements will be effective for us in the fourth quarter of 2025. We are currently evaluating the impact of this final rule on our disclosures.

34Nordstrom, Inc. and subsidiaries41

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

(Dollars in ~~millions~~millions)

INTEREST RATE RISK

For our long-term debt of ~~$2,737,~~$2,862, our exposure to interest rate risk is primarily limited to changes in fair value. As our debt is primarily fixed-rate, changes in interest rates do not ~~significantly~~materially impact our cash flows. However, changes in interest rates increase or decrease the fair value of our debt, depending on whether market rates are lower or higher than our fixed rates. As of February 3, ~~2018,~~2024, the fair value of our long-term debt was ~~$2,827. See~~$2,441 (see Note 7:6: Debt and Credit Facilities and Note 8:7: Fair Value Measurements in Item ~~8 for additional information.~~8).

We are exposed to interest rate risk primarily from changes in short-term interest rates. Interest rate fluctuations can affect our interest income and interest expense. As of February 3, ~~2018,~~2024, we had cash and cash equivalents of ~~$1,181~~$628, which generate interest income at variable ~~rates.~~rates and no borrowings outstanding under our Revolver, for which we pay interest at a variable rate.

FOREIGN CURRENCY EXCHANGE RISK

The majority of our revenues, expenses and capital expenditures are transacted in U.S. Dollars. Our U.S. ~~operation~~operations periodically ~~enters~~enter into merchandise purchase orders denominated in British Pounds or Euros. From time to time, we may use forward contracts to hedge against fluctuations in foreign currency prices. As of February 3, ~~2018~~,2024, our outstanding forward contracts did not have a material impact on our Consolidated Financial Statements.

~~We have six full-line stores in Canada and have announced plans to open the first six Nordstrom Rack stores in Canada in 2018. The functional currency~~On March 2, 2023, as part of our ~~Canadian operation is~~initiatives to drive long-term profitable growth and enhance shareholder value, and after careful consideration of all reasonably available options, we announced the Canadian Dollar. We translate assets and liabilities into U.S. Dollars using the exchange rate in effect at the balance sheet date, while we translate revenues and expenses using a weighted-average exchange ratedecision to discontinue support for ~~the period. We record these translation adjustments as a component of accumulated other comprehensive loss on the Consolidated Balance Sheets~~Nordstrom Canada’s operations. See Note 2: Canada Wind-down in Item ~~8. Our Canadian operation enters into merchandise purchase orders denominated in U.S. Dollars~~8 for ~~approximately one fourth of its inventory. As sales in Canada are denominated in the Canadian Dollar, gross profit for our Canadian operation can be impacted by foreign currency fluctuations.~~more information.

In addition, our U.S. operation incurs certain expenditures denominated in Canadian Dollars and our Canadian operation incurs certain expenditures denominated in U.S. Dollars. This activity results in transaction gains and losses that arise from exchange rate fluctuations, which are recorded as gains or losses in the Consolidated Statements of Earnings in Item 8. As of February 3, ~~2018~~,2024, activities associated with foreign currency exchange risk have not had a material impact on our Consolidated Financial ~~Statements.~~Statements (see Note 1: Nature of Operations and Summary of Significant Accounting Policies in Item 8).

There have been no material changes in our primary risk exposures or management of market risks since the prior year.

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Item 8: Financial Statements and Supplementary Data.


Report of Independent Registered Public Accounting Firm			44
Consolidated Statements of Earnings			46
Consolidated Statements of Comprehensive Earnings			46
Consolidated Balance Sheets			47
Consolidated Statements of Shareholders’ Equity			48
Consolidated Statements of Cash Flows			49
Notes to Consolidated Financial Statements
Note 1: Nature of Operations and Summary of Significant Accounting Policies			50
Note 2: Canada Wind-down			57
Note 3: Revenue			59
Note 4: Land, Property and Equipment			60
Note 5: Leases			60
Note 6: Debt and Credit Facilities			61
Note 7: Fair Value Measurements			63
Note 8: Self-Insurance			63
Note 9: Supplemental Executive Retirement Plan			64
Note 10: Stock-based Compensation			65
Note 11: Shareholders’ Equity			68
Note 12: Income Taxes			68
Note 13: Commitments and Contingencies			70
Note 14: Earnings Per Share			70
Note 15: Segment Reporting			71

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Nordstrom, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Nordstrom, Inc. and subsidiaries (the “Company”) as of February 3, ~~2018~~2024 and January 28, ~~2017,~~2023 and the related consolidated statements of earnings, comprehensive earnings, shareholders’ equity, and cash flows, for each of the three years in the period ended February 3, ~~2018,~~2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 3, ~~2018~~2024, and January 28, ~~2017,~~2023, and the results of its operations and its cash flows for each of the three years in the period ended February 3, ~~2018,~~2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of February 3, ~~2018,~~2024, based on the criteria established in Internal ~~Control-Integrated~~Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 19, ~~2018,~~2024, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the ~~Company~~’sCompany’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below arose from the current-period audit of the financial statements that was communicated or required to be communicated to the Audit and Finance Committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Merchandise Inventories—Refer to Note 1 to the financial statements

Critical Audit Matter Description

The Company’s merchandise inventories are stated at the lower of cost or market using the retail inventory method (“RIM”). Under the RIM, the valuation of inventories is determined by applying a calculated cost-to-retail ratio to the retail value of ending inventory. The value of the Company’s inventory on the balance sheet is then reduced by a charge to cost of sales for retail inventory markdowns taken on the selling price. To determine if the retail value of its inventory should be marked down, the Company considers many factors, including current and anticipated demand, customer preferences, age of the merchandise and fashion trends. Recorded markdowns represent one of the most significant inputs into the RIM calculation due to their impact on inventory valuation. Accordingly, the Company’s process of recording markdowns is subjective, particularly as it relates to timing of markdowns.

Given the management judgments necessary to identify and record markdowns in a timely manner, performing audit procedures to evaluate the timeliness of markdowns required a high degree of auditor judgment.

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How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the timing of markdowns taken, included the following, among others:

•We tested the effectiveness of controls designed to ensure that markdowns are recorded timely.

•We evaluated the reasonableness of the timing of markdowns recorded by performing analytical procedures to compare current period trends to historical trends at varying levels of disaggregation (i.e., total company, operating segment, and business unit level) across multiple fiscal periods, including, but not limited to, metrics such as markdowns relative to sales trends, inventory turnover, and inventory aging.

•We evaluated management’s ability to identify triggering events and accurately forecast markdown activity by:

▪Comparing actual markdowns recorded to management’s historical forecasts

▪Reading information included in Company press releases

▪Reading internal communications to management and the Board of Directors

•We performed a retrospective review of markdowns recorded in periods subsequent to fiscal year-end to assess whether any unusual trends occurred that would indicate untimely markdowns.

/s/ Deloitte & Touche LLP

Seattle, Washington

March 19, ~~2018~~2024

We have served as the ~~Company~~’sCompany’s auditor since ~~1970~~

1970.

36Nordstrom, Inc. and subsidiaries45

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Nordstrom, Inc.

Consolidated Statements of Earnings

(In millions except per share ~~amounts~~

Fiscal year 2017

2016

2015
Net sales
$15,137

$14,498

$14,095
Credit card revenues, net 341
259
342
Total revenues 15,478
14,757
14,437
Cost of sales and related buying and occupancy costs (9,890 ) (9,440 ) (9,168 )
Selling, general and administrative expenses (4,662 ) (4,315 ) (4,168 )
Goodwill impairment —
(197 ) —
Earnings before interest and income taxes 926
805
1,101
Interest expense, net (136 ) (121 ) (125 )
Earnings before income taxes 790
684

976
Income tax expense (353 ) (330 ) (376 )
Net earnings
$437

$354

$600

Earnings per share:
Basic
$2.62

$2.05

$3.22
Diluted
$2.59

$2.02

$3.15

Weighted-average shares outstanding:
Basic 166.8
173.2
186.3
Diluted 168.9
175.6
190.1
amounts)


Fiscal year	2023	2022	2021
Net sales	$14,219	$15,092	$14,402
Credit card revenues, net	474	438	387
Total revenues	14,693	15,530	14,789
Cost of sales and related buying and occupancy costs	(9,303)	(10,019)	(9,344)
Selling, general and administrative expenses	(4,855)	(5,046)	(4,953)
Canada wind-down costs	(284)	—	—
Earnings before interest and income taxes	251	465	492
Interest expense, net	(104)	(128)	(246)
Earnings before income taxes	147	337	246
Income tax expense	(13)	(92)	(68)
Net earnings	$134	$245	$178

Earnings per share:
Basic	$0.83	$1.53	$1.12
Diluted	$0.82	$1.51	$1.10

Weighted-average shares outstanding:
Basic	161.8	160.1	159.0
Diluted	163.4	162.1	162.5

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

Nordstrom, Inc.

Consolidated Statements of Comprehensive Earnings

(In ~~millions~~

Fiscal year 2017
2016
2015
Net earnings
$437

$354

$600
Postretirement plan adjustments, net of tax of $2, ($1) and ($15) (6 ) 1
24
Foreign currency translation adjustment 20
14
(18 )
Comprehensive net earnings
$451

$369

$606
millions)


Fiscal year	2023	2022	2021
Net earnings	$134	$245	$178
Postretirement plan adjustments, net of tax of ($2), ($12) and ($6)	5	32	18
Foreign currency translation adjustment	(4)	(8)	2
Comprehensive net earnings	$135	$269	$198

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

~~Nordstrom, Inc. and subsidiaries~~37

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Nordstrom, Inc.

Consolidated Balance Sheets

(In ~~millions~~

February 3, 2018
January 28, 2017
Assets
Current assets:
Cash and cash equivalents
$1,181

$1,007
Accounts receivable, net 145
199
Merchandise inventories 2,027
1,896
Prepaid expenses and other 150
140
Total current assets 3,503
3,242

Land, property and equipment, net 3,939
3,897
Goodwill 238
238
Other assets 435
481
Total assets
$8,115

$7,858

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable
$1,409

$1,340
Accrued salaries, wages and related benefits 578
455
Other current liabilities 1,246
1,223
Current portion of long-term debt 56
11
Total current liabilities 3,289
3,029

Long-term debt, net 2,681
2,763
Deferred property incentives, net 495
521
Other liabilities 673
675

Commitments and contingencies (Note 10)

Shareholders’ equity:
Common stock, no par value: 1,000 shares authorized; 167.0 and 170.0 shares issued and outstanding 2,816
2,707
Accumulated deficit (1,810 ) (1,794 )
Accumulated other comprehensive loss (29 ) (43 )
Total shareholders’ equity 977
870
Total liabilities and shareholders’ equity
$8,115

$7,858
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	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 (Note 13)

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

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

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Nordstrom, Inc.

Consolidated Statements of Shareholders’ Equity

(In millions except per share ~~amounts~~

amounts)


					Retained			Accumulated
					Earnings			Other
	Common Stock				(Accumulated			Comprehensive
	Shares		Amount		Deficit)			Loss			Total
Balance at January 31, 2015	190.1			$2,338		$166			($64	)		$2,440
Net earnings	—		—		600			—			600
Other comprehensive earnings	—		—		—			6			6
Dividends ($1.48 per share)	—		—		(280		)	—			(280		)
Special dividend related to the sale of credit card receivables ($4.85 per share)	—		—		(905		)	—			(905		)
Issuance of common stock for Trunk Club acquisition	0.3		23		—			—			23
Fiscal year ended														Fiscal year ended	February 3, 2024	January 28, 2023	January 29, 2022
Common stock
Balance, beginning of year
Balance, beginning of year
Balance, beginning of year
Issuance of common stock under stock compensation plans	2.0		108		—			—			108
Stock-based compensation	0.2		70		—			—			70
Balance, end of year

Accumulated deficit
Accumulated deficit
Accumulated deficit
Balance, beginning of year
Balance, beginning of year
Balance, beginning of year

Net earnings
Net earnings
Net earnings
Dividends
Repurchase of common stock	(19.1	)	—		(1,191		)	—			(1,191		)
Balance at January 30, 2016	173.5		2,539		(1,610		)	(58		)	871
Net earnings	—		—		354			—			354
Balance, end of year

Accumulated other comprehensive gain (loss)
Accumulated other comprehensive gain (loss)
Accumulated other comprehensive gain (loss)
Balance, beginning of year
Balance, beginning of year
Balance, beginning of year
Accumulated translation loss reclassified to earnings
Other comprehensive earnings	—		—		—			15			15
Dividends ($1.48 per share)	—		—		(256		)	—			(256		)
Issuance of common stock under stock compensation plans	2.1		83		—			—			83
Stock-based compensation	0.3		85		—			—			85
Repurchase of common stock	(5.9	)	—		(282		)	—			(282		)
Balance at January 28, 2017	170.0		2,707		(1,794		)	(43		)	870
Net earnings	—		—		437			—			437
Other comprehensive earnings	—		—		—			14			14
Dividends ($1.48 per share)	—		—		(247		)	—			(247		)
Issuance of common stock under stock compensation plans	1.1		39		—			—			39
Stock-based compensation	0.5		70		—			—			70
Repurchase of common stock	(4.6	)	—		(206		)	—			(206		)
Balance at February 3, 2018	167.0			$2,816		($1,810	)		($29	)		$977
Balance, end of year

Total
Total
Total

Dividends per share
Dividends per share
Dividends per share

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

~~Nordstrom, Inc. and subsidiaries~~39

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Nordstrom, Inc.

Consolidated Statements of Cash Flows

(In ~~millions~~

Fiscal year 2017
2016
2015
Operating Activities
Net earnings
$437

$354

$600
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization expenses 666
645
576
Goodwill impairment —
197
—
Amortization of deferred property incentives and other, net (82 ) (76 ) (64 )
Deferred income taxes, net 11
(15 ) 142
Stock-based compensation expense 77
91
70
Bad debt expense —
—
26
Change in operating assets and liabilities:
Accounts receivable 1
(3 ) (56 )
Proceeds from sale of credit card receivables originated at Nordstrom 39
—
1,297
Merchandise inventories (62 ) 31
(203 )
Prepaid expenses and other assets (21 ) 100
(126 )
Accounts payable 77
16
(2 )
Accrued salaries, wages and related benefits 121
38
2
Other current liabilities 48
181
50
Deferred property incentives 64
65
156
Other liabilities 24
34
2
Net cash provided by operating activities 1,400
1,658

2,470

Investing Activities
Capital expenditures (731 ) (846 ) (1,082 )
Change in credit card receivables originated at third parties —
—
34
Proceeds from sale of credit card receivables originated at third parties 16

—
890
Other, net 31
55
14
Net cash used in investing activities (684 ) (791 ) (144 )

Financing Activities
Proceeds from long-term borrowings, net of discounts 635
—
16
Principal payments on long-term borrowings (661 ) (10 ) (8 )
Defeasance of long-term debt —
—
(339 )
(Decrease) increase in cash book overdrafts (55 ) 4
23
Cash dividends paid (247 ) (256 ) (1,185 )
Payments for repurchase of common stock (211 ) (277 ) (1,192 )
Proceeds from issuances under stock compensation plans 39
83
94
Tax withholding on share-based awards (7 ) (5 ) (4 )
Other, net (35 ) 6
37
Net cash used in financing activities (542 ) (455 ) (2,558 )

Net increase (decrease) in cash and cash equivalents 174
412
(232 )
Cash and cash equivalents at beginning of year 1,007
595
827
Cash and cash equivalents at end of year
$1,181

$1,007

$595

Supplemental Cash Flow Information
Cash paid during the year for:
Income taxes, net of refunds
$363

$112

$383
Interest, net of capitalized interest 143
134
136

Non-cash investing and financing activities:
Beneficial interest asset acquired from the sale of credit card receivables —
—
62
Issuance of common stock for Trunk Club acquisition —
—
23
millions)


Fiscal year	2023	2022	2021
Operating Activities
Net earnings	$134	$245	$178
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization expenses	586	604	615
Canada wind-down costs	207	—	—
Asset impairment	30	80	—
Right-of-use asset amortization	184	185	175
Deferred income taxes, net	(60)	(83)	(11)
Stock-based compensation expense	52	59	79
Other, net	(71)	(46)	81
Change in operating assets and liabilities:
Merchandise inventories	(61)	265	(383)
Other current and noncurrent assets	(39)	(1)	532
Accounts payable	40	(190)	(400)
Accrued salaries, wages and related benefits	(42)	(94)	31

Lease liabilities	(272)	(269)	(284)
Other current and noncurrent liabilities	(67)	191	92
Net cash provided by operating activities	621	946	705

Investing Activities
Capital expenditures	(569)	(473)	(506)

Decrease in cash and cash equivalents resulting from Canada deconsolidation	(33)	—	—
Proceeds from the sale of assets and other, net	31	80	(15)
Net cash used in investing activities	(571)	(393)	(521)

Financing Activities
Proceeds from revolving line of credit	—	100	400
Payments on revolving line of credit	—	(100)	(400)
Proceeds from long-term borrowings	—	—	675
Principal payments on long-term borrowings	—	—	(1,100)

Change in cash book overdrafts	2	(14)	(32)
Cash dividends paid	(123)	(119)	—
Payments for repurchase of common stock	(1)	(62)	—
Proceeds from issuances under stock compensation plans	20	29	14
Other, net	(7)	(20)	(101)
Net cash used in financing activities	(109)	(186)	(544)

Effect of exchange rate changes on cash and cash equivalents	—	(2)	1
Net (decrease) increase in cash and cash equivalents	(59)	365	(359)
Cash and cash equivalents at beginning of year	687	322	681
Cash and cash equivalents at end of year	$628	$687	$322

Supplemental Cash Flow Information
Income taxes paid, net of refunds received	$53	$211	($485)
Interest paid, net of capitalized interest	143	136	164

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit ~~amounts~~amounts)

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Founded in 1901 as a retail shoe business in Seattle, Washington, ~~Nordstrom, Inc.~~our Company is ~~now~~ a leading fashion retailer that offers ~~customers a well-edited~~an extensive selection of high-quality ~~fashion brands focused on apparel, shoes, cosmetics~~brand-name and ~~accessories~~private-label merchandise for women, men, young adults and ~~children.~~children, with a focus on apparel, shoes, beauty, accessories and home goods. This breadth of merchandise allows us to serve a wide range of customers who appreciate quality fashion and a superior shopping ~~experience. We offer an extensive selection of high-quality brand-name~~experience, across our digital and ~~private label merchandise through multiple retail channels, including 117~~physical assets and in both our Nordstrom ~~U.S. full-line stores, including Nordstrom Local~~ and ~~Nordstrom.com, six Canada full-line stores, 232 off-price~~ Nordstrom Rack ~~stores, Nordstromrack.com/HauteLook, seven Trunk Club clubhouses~~banners. Our facilities and ~~TrunkClub.com, two Jeffrey boutiques and two Last Chance clearance stores. Our~~ stores are located in 40 states ~~throughout the U.S and in three provinces in Canada.~~

~~Through our Credit segment, our customers can access a variety of payment products and services, including a selection of Nordstrom-branded Visa® credit cards~~ in the U.S.

As of February 3, 2024, Nordstrom includes:

•93 Nordstrom stores

•Nordstrom.com website and ~~Canada, as well as a Nordstrom-branded private label credit card~~mobile application

•six Nordstrom Locals

As of February 3, 2024, Nordstrom Rack includes:

•258 Nordstrom Rack stores

•NordstromRack.com website and a debit card for Nordstrom purchases. When customers use a Nordstrom-branded credit or debit card, they also participate in our loyalty program that provides benefits based on their level of spending. Although the primary purposes of our Credit segment are to foster greater customer loyalty and drive more sales, we also receive credit card revenue through our program agreement with ~~TD Bank, N.A. (“TD”) (see Note 2: Credit Card Receivable Transaction).~~mobile application

•two Last Chance clearance stores

Fiscal Year

We operate on a 52/53-week fiscal year ending on the Saturday closest to January 31st. References to ~~2017~~2023 relate to the 53-week fiscal year ~~ended~~ending February 3, ~~2018.~~2024. References to any other years included within this document are based on a 52-week fiscal year.

Principles of Consolidation

The Consolidated Financial Statements include the balances of Nordstrom, Inc. and its ~~subsidiaries.~~subsidiaries and are presented in U.S. dollars. All intercompany transactions and balances are eliminated in consolidation.

On March 2, 2023, Nordstrom Canada commenced a wind-down of its business operations (see Note 2: Canada Wind-down) and as of this date, Nordstrom Canada was deconsolidated from Nordstrom, Inc.’s financial statements. Nordstrom Canada results prior to March 2, 2023 are included in the Company’s Consolidated Financial Statements.

Use of Estimates

The preparation of financial statements in conformity with ~~accounting principles generally accepted in the U.S.~~GAAP requires ~~management to~~that we make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities during the reporting period. Uncertainties regarding such estimates and assumptions are inherent in the preparation of financial ~~statements and actual~~statements. Actual results may differ from these estimates and assumptions. Our most significant accounting judgments and estimates include revenue recognition, inventory valuation, long-lived ~~assets, goodwill, stock-based compensation~~asset recoverability, income taxes and ~~income taxes.~~contingent liabilities, including assumptions related to our Canada wind-down, all of which involve assumptions about future events.

Revenue

Net Sales

We recognize sales revenue net of estimated returns and excluding sales taxes. Revenue from sales shipped to customers ~~shipped~~from our Supply Chain Network facilities, stores and directly from our ~~stores and fulfillment centers,~~vendors, which includes shipping revenue when applicable, is recognized ~~upon estimated receipt by~~at shipping point, the point in time where control has transferred to the customer. Costs to ship orders to customers are expensed as a fulfillment activity at shipping point, commissions from sales at our Nordstrom stores are expensed at the point of sale and both are recorded in SG&A expenses.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

We ~~estimate customer merchandise returns based on historical return patterns and~~ reduce sales and cost of sales ~~accordingly. Activity~~by an estimate of future customer merchandise returns, which is calculated based on historical and expected return patterns, and record a sales return reserve and an estimated returns asset. Our sales return reserve is classified in other current liabilities and our estimated returns asset, calculated based on the cost of merchandise sold, is classified in prepaid expenses and other on the Consolidated Balance Sheets. As of February 3, 2024 and January 28, 2023, our sales return reserve was $377 and $415, and our estimated returns asset was $164 and $179. Due to the seasonality of our business, these balances typically increase when higher sales occur in the ~~allowance for sales returns, net, for~~last month of a period, such as during the ~~past three fiscal years is as follows:~~

Fiscal year 2017
2016
2015
Allowance at beginning of year
$187

$170

$160
Charged to costs and expenses 3,307
3,023
2,720
Deductions¹
(3,310 ) (3,006 ) (2,710 )
Allowance at end of year
$184

$187

$170

¹~~Deductions consist of actual returns, net~~Anniversary Sale, which usually occurs at the end of the ~~value~~second quarter, and decrease in the following period. We record the impact of the ~~merchandise returned~~sales return reserve separately in both our Nordstrom and Nordstrom Rack banners. The majority of our returns from both digital and physical sales come through our stores.

Loyalty Program

As our customers earn points and Nordstrom Notes in The Nordy Club, a portion of underlying sales revenue is deferred based on an estimated stand-alone selling price of points, Nordstrom Notes and other loyalty benefits, such as alterations. We recognize the revenue and related cost of sale when the Nordstrom Notes are ultimately redeemed and reduce our contract liability. We include the deferred revenue in other current liabilities on the Consolidated Balance Sheets. We record breakage revenue of unused points and unredeemed Nordstrom Notes based on expected customer redemption. We estimate, based on historical and expected usage, that approximately 8% of Nordstrom Notes and points will be unredeemed. Estimating future breakage rates requires judgment based on current and historical trends, and actual breakage rates may vary from our estimates. Other benefits of the loyalty program, including shopping and fashion events, are recorded in SG&A expenses as these are not a material right of the program.

As of both February 3, 2024 and January 28, 2023, our outstanding performance obligation for The Nordy Club, which consists primarily of unredeemed points and Nordstrom Notes at retail value, was $115. Almost all Nordstrom Notes redemptions occur within eleven months of issuance.

Gift Cards

We record deferred revenue from the sale of gift cards at the time of purchase. As gift cards are redeemed, we recognize revenue and reduce our contract liability. Although our gift cards do not have an expiration date, we include this deferred revenue in other current liabilities on the Consolidated Balance Sheets as customers can redeem gift cards at any ~~sales commission.~~time. We record breakage revenue on unused gift cards based on expected customer redemption. We estimate, based on historical usage, that 4% of gift cards will be unredeemed and recognized as revenue. Estimating future breakage rates requires judgment based on current and historical trends and actual breakage rates may vary from our estimates. Breakage income was $52, $40 and $39 in 2023, 2022 and 2021.

As of February 3, 2024 and January 28, 2023, our outstanding performance obligation for unredeemed gift cards was $343 and $370. Almost all gift card redemptions occur within two years of issuance.

Credit Card Revenues, net

~~In October 2015,~~Although the primary purpose of offering our credit cards is to foster greater customer loyalty and drive more sales, we ~~completed the sale of a substantial majority of our U.S. Visa and private label~~also receive credit card ~~portfolio to~~revenue through our program agreement with TD. ~~In November 2017, we sold~~Under that agreement, which was amended in the ~~remaining balances which consisted~~fourth quarter of ~~employee credit card receivables for~~2022 and runs through September 2026, TD is the ~~U.S. Visa and Nordstrom private label~~exclusive issuer of Nordstrom-branded consumer credit cards ~~to TD (see Note 2:~~and we perform account servicing functions for those cards. Credit ~~Card Receivable Transaction). Credit program~~card revenues, net include our portion of the ongoing credit card revenue, net of credit losses, ~~from both sold and newly generated credit card receivables~~ pursuant to our program agreement with TD. ~~Asset amortization and~~ In connection with the amendment, we recorded deferred revenue, ~~recognition associated with~~which will be recognized in full over the ~~assets and liabilities recorded as part~~term of the ~~transaction are also recorded~~agreement as we perform account servicing functions. Our outstanding performance obligation for the TD agreement is included in ~~credit program revenues, net.~~

other current liabilities and other liabilities on our Consolidated Balance Sheets and the amortization is included in other operating, net on the Consolidated Statements of Cash Flows.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit ~~amounts~~amounts)

Cost of Sales

Cost of sales primarily includes the purchase ~~cost~~and manufacturing costs of inventory sold, ~~(net~~net of vendor ~~allowances),~~allowances, and in-bound freight and ~~certain costs of our loyalty program benefits.~~

~~Loyalty Program~~

In 2016, our Nordstrom Rewards loyalty program, which allows customers to accumulate points based on their level of spending, was expanded to enable any customer interested in participating to earn benefits regardless of how they choose to pay. Prior to 2016, our loyalty program was only offered to Nordstrom cardholders. Upon reaching certain point thresholds, customers receive Nordstrom Notes (“Notes”), which can be redeemed for goods or services offered at Nordstrom full-line stores, Nordstrom.com, Nordstrom Rack and Nordstromrack.com/HauteLook. Nordstrom cardholders can also earn rewards at Trunk Club. Customers who participate in our loyalty program through our credit and debit cards receive additional benefits including reimbursements for alterations, Personal Triple Points days, shopping and fashion events and early access to the Anniversary Sale. Nordstrom Rewards loyalty program liabilities of $69 and $62 were included in other current liabilities at the end of 2017 and 2016.

We estimate the net cost of Notes that will be issued and redeemed and record this cost as rewards points are accumulated. These costs, as well as reimbursed alterations, are recorded in cost of sales as we provide customers with products and services for these rewards. Other benefits of our Nordstrom Rewards loyalty program, including shopping and fashion events, are recorded in selling, general and administrative expenses. Total costs related to the Nordstrom Rewards loyalty program were $175, $162 and $164 in 2017, 2016 and 2015.duty expense.

Buying and Occupancy Costs

Buying costs consist primarily of compensation and other costs incurred by our merchandising and product development groups. Occupancy costs include rent, depreciation, property taxes and facility operating costs of our ~~retail, corporate center, fulfillment~~stores, office facilities and ~~distribution operations.~~

~~Rent~~

We recognize minimum rent expense, net of developer reimbursements, on a straight-line basis over the minimum lease term from the time that we control the leased property. For scheduled rent escalation clauses during the lease terms, we record minimum rent expense on a straight-line basis over the terms of the leases, with the adjustments accrued as current and noncurrent deferred rent and included in other current liabilities and other liabilities on our Consolidated Balance Sheet for the year ended February 3, 2018. Contingent rental payments, typically based on a percentage of sales, are recognized in rent expense when payment of the contingent rent is probable.

We receive incentives from developers to construct stores in certain developments. At the end of 2017 and 2016, liabilities of $485 and $507 were recorded within deferred property incentives, net on the Consolidated Balance Sheets and were recognized as a reduction of rent expense on a straight-line basis over the lease terms.Supply Chain Network facilities.

Selling, General and Administrative Expenses

~~Selling, general and administrative~~SG&A expenses consist primarily of compensation and ~~benefit costs,~~benefits, marketing, outbound supply chain and technology costs.

Shipping and ~~prior~~Fulfillment Costs

Our shipping and fulfillment costs include payments to third-party shippers and costs to hold, move and prepare merchandise for shipment. These costs do not include in-bound freight to our ~~credit card receivable transactions~~Supply Chain Network facilities, which we include in ~~October 2015~~the cost of our inventory. Shipping and ~~November 2017, bad debt expense related to our credit card operations.~~fulfillment costs of $712, $885 and $993 in 2023, 2022 and 2021 were included in SG&A expenses.

Advertising

Advertising production costs for internet, magazines, store events and other media are expensed the first time the advertisement is run. Online marketing costs are expensed when incurred. Total advertising expenses, net of vendor allowances, of ~~$261, $241~~$313, $309 and ~~$227~~$300 in ~~2017, 2016~~2023, 2022 and ~~2015~~2021 were included in ~~selling, general and administrative~~SG&A expenses.

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~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

Vendor Allowances

We receive allowances from merchandise vendors for ~~cosmetic expenses,~~ purchase price adjustments, ~~cooperative~~beauty expenses, advertising programs and various other expenses. ~~Allowances for cosmetic expenses are recorded in selling, general and administrative expenses as a reduction of the related costs when incurred.~~ Purchase price adjustments are recorded as a reduction of cost of sales at the point they have been earned and the related merchandise has been marked down or sold. Allowances for ~~cooperative~~beauty expenses, advertising programs and other expenses are recorded in ~~selling, general and administrative~~SG&A expenses as a reduction of the related costs when incurred. ~~Any~~

Vendor allowances earned are as follows:


Fiscal year	2023	2022	2021
Purchase price adjustments	$94	$120	$108
Beauty expenses	114	111	103
Advertising	87	112	110
Other	6	2	3
Total vendor allowances	$301	$345	$324

Advertising includes NMN, where vendors pay a fee for use of our first-party data. Funds received from vendors are recorded as a reduction of the campaign cost in ~~excess of actual costs incurred that are included in selling, general~~SG&A expenses and ~~administrative expenses~~media fees are recorded as a reduction of cost of sales. ~~Vendor allowances earned~~

401(k) Plan

We provide a 401(k) plan for our employees that allows for employee elective contributions and our matching contributions. Employee elective contributions are ~~as follows:~~

Fiscal year 2017
2016
2015
Cosmetic expenses
$159

$166

$161
Purchase price adjustments 184
179
178
Cooperative advertising 107
114
109
Other 7
6
7
Total vendor allowances
$457

$465

$455

~~Shipping~~funded through voluntary payroll deductions. Total expenses related to Company contributions were $71 in 2023 and ~~Handling Costs~~

~~Our shipping~~2022 and ~~handling costs include payments to third-party shippers~~$67 in 2021, and costs to hold, move and prepare merchandise for shipment. These costs do not include in-bound freight to our distribution centers, which we include in the cost of our inventory. Shipping and handling costs of $523, $453 and $428 in 2017, 2016 and 2015 were included in ~~selling, general~~both buying and ~~administrative expenses.~~occupancy costs and SG&A expenses on our Consolidated Statements of Earnings.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Stock-Based Compensation

The 2019 Plan authorizes the grant of stock options, PSUs, RSUs, stock appreciation rights and both restricted and unrestricted shares of common stock to employees and nonemployee directors. We grant stock-based awards under our ~~2010 Equity Incentive~~2019 Plan ~~(“2010 Plan”), 2002 Nonemployee Director Stock Incentive Plan (“2002 Plan”) and Trunk Club Value Creation Plan (“VCP”),~~ and employees may purchase our stock at a discount under our ~~Employee Stock Purchase Plan (“ESPP”).~~ESPP. We predominantly recognize stock-based compensation expense related to stock-based awards at their estimated grant date fair value, recorded on a straight-line basis over the requisite service period. Compensation expense for certain award holders is accelerated based upon age and years of service. Compensation expense for PSUs is adjusted based on the payout percentage of the PSU grant subject to achieving specific performance measures. The total compensation expense is reduced by actual forfeitures as they ~~occur over the vesting period of the awards.~~occur.

We primarily estimate the grant date fair value of stock options using the Binomial ~~Lattice option~~Lattice-based valuation ~~model. Stock-based compensation expense related to the VCP is based on~~model, but for our price-hurdle grants in 2021, we estimate the grant date fair value ~~of the payout scenario we believe is probable~~ using the ~~Black-Scholes~~Monte Carlo simulation valuation ~~model and is recognized on an accelerated basis due to performance criteria and graded vesting features of the plan.~~model. The grant date fair value of ~~restricted stock~~RSUs and PSUs is determined based on the number of ~~shares~~RSUs or PSUs granted and the quoted price of our common stock on the date of grant, less the estimated present value of dividends over the vesting period. ~~Performance share units~~PSUs granted ~~prior to 2016~~ are classified as ~~liabilities~~equity.

Amounts included on the following line items of our Consolidated Statements of Shareholders’ Equity and ~~revalued using~~our Consolidated Statements of Cash Flows are as follows:

•Issuance of common stock under stock compensation plans — includes common stock option exercises and purchases of shares under the ~~quoted price of~~ESPP

•Stock-based compensation — primarily includes stock-based compensation expense for our common stock ~~as of each reporting date. Performance share units granted in 2016~~options, RSUs and ~~beyond are classified as equity~~PSUs, partially offset by shares withheld for taxes on RSUs and ~~the fair value is determined using the Monte-Carlo valuation model.~~PSUs

New Store Opening Costs

Non-capital expenditures associated with opening new stores, including marketing expenses, relocation expenses and occupancy costs, are charged to expense as incurred. These costs are included in both buying and occupancy costs and ~~selling, general and administrative~~SG&A expenses, according to their nature as disclosed above.

~~Gift Cards~~

We recognize revenue from the sale of gift cards when the gift card is redeemed by the customer, or we recognize breakage income when the likelihood of redemption, based on historical experience, is deemed to be remote. Based on an analysis of our program since its inception in 1999, we determined that balances remaining on cards issued beyond five years are unlikely to be redeemed and therefore are recognized as income. Breakage income was $16, $12 and $11 in 2017, 2016 and 2015. To date, our breakage rate is approximately 2% of the amount initially issued as gift cards. Gift card breakage income is included in selling, general and administrative expenses. We had outstanding gift card liabilities of $425 and $389 at the end of 2017 and 2016, which are included in other current liabilities.

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~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

Income Taxes

We use the asset and liability method of accounting for income taxes. Using this method, deferred tax assets and liabilities are recorded based on differences between the financial reporting and tax basis of assets and liabilities and for operating loss and tax credit carryforwards. The deferred tax assets and liabilities are calculated using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if, based on all available evidence, it is determined that some portion of the tax benefit will not be realized.

We regularly evaluate the likelihood of realizing the benefit for income tax positions we have taken in various federal, state and foreign filings by considering all relevant facts, circumstances and information available. If we believe it is more likely than not that our position will be sustained, we recognize a benefit at the largest amount ~~that~~ we believe is cumulatively greater than 50% likely to be realized. Interest and penalties related to income tax matters are classified as a component of income tax expense.

Income taxes require significant management judgment regarding applicable statutes and their related interpretation, the status of various income tax audits and our particular facts and circumstances. Also, as audits are completed or statutes of limitations lapse, it may be necessary to record adjustments to our taxes payable, deferred taxes, tax reserves or income tax expense.

~~In December 2017,~~

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Earnings Per Share

Earnings per basic share is computed using the ~~Tax Cuts~~weighted-average number of common shares outstanding during the year. Earnings per diluted share uses the weighted-average number of common shares outstanding during the year plus dilutive common stock equivalents, primarily RSUs and ~~Jobs Act (the “Tax Act”) was signed into law. Among numerous other provisions,~~stock options. Dilutive common stock is calculated using the ~~Tax Act significantly revises~~treasury stock method and includes outstanding RSUs and options that would reduce the ~~U.S. federal corporate income tax by reducing the statutory rate from 35% to 21%. Net~~amount of earnings ~~included $42 related to the Tax Act,~~for which includes a provisional one-time, non-cash charge of $51 related to the revaluation of our net deferred tax assets for the change in statutory tax rate and for the impacts associated with the future limitations on executive compensation, partially offset by cash tax savings from a lower federal tax rate. As we complete our analysis of the Tax Act and interpret any additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service (“IRS”)each share is entitled. Anti-dilutive shares (including stock options and other ~~standard-setting bodies, we may make adjustments to~~shares) are excluded from the ~~provisional amounts, which may materially~~calculation of diluted shares and earnings per diluted share because their impact ~~our provision for income taxes in the period in which the adjustments are recorded (see Note 13: Income Taxes).~~could increase earnings per diluted share.

Comprehensive Net Earnings

Comprehensive net earnings consist of net earnings and other gains and losses affecting equity that are excluded from net earnings. These consist of postretirement plan adjustments, net of related income tax effects, and foreign currency translation adjustments.

Cash Equivalents

Cash equivalents are short-term investments with aan original maturity of three months or less from the date of purchase and are carried at cost, which approximates fair value. At the end of ~~2017~~2023 and ~~2016,~~2022, checks not yet presented for payment drawn in excess of our bank deposit balances were ~~$101 and $156 and~~$62 and $60. Amounts are included ~~within~~in accounts payable on our Consolidated Balance ~~Sheets.~~Sheets and in change in cash book overdrafts as a financing activity in our Consolidated Statements of Cash Flows.

Accounts Receivable

Accounts receivable, net primarily includes receivables from TD related to our program agreement, non-Nordstrom-branded credit and debit cards and ~~prior~~developer reimbursements. As of February 3, 2024, accounts receivable, net also includes the amount we believe probable of receipt as part of the claims process related to ~~our credit card receivable sale transaction in November 2017, employee credit card receivables.~~the wind-down of Canada (see Note 2: Canada Wind-down).

Merchandise Inventories

Merchandise inventories are ~~generally~~ stated at the lower of cost or market value using the retail inventory method. Under the retail method, the valuation of inventories is determined by applying a calculated cost-to-retail ratio to the retail value of ending inventory. The value of our inventory on the balance sheet is ~~then~~also reduced by a charge to cost of sales for retail inventory markdowns taken on the selling ~~floor.~~price. To determine if the retail value of our inventory should be marked down, we consider current and anticipated demand, customer preferences, age of the merchandise and fashion trends. We ~~reserve~~record reserves for ~~obsolescence~~excess and obsolete inventory based on historical trends and specific identification.

~~Physical inventories are taken~~We take physical inventory counts at our stores and Supply Chain Network locations and adjust for differences between recorded amounts and counted amounts. Following each physical inventory ~~records are adjusted accordingly. We evaluate~~cycle and ~~determine our shrinkage rate~~ using the most recent physical inventory count and historical results, ~~as the basis~~we record an estimate for ~~the shrinkage reserve following each physical inventory cycle and reporting date. The shrinkage reserve is~~shrink based on a percentage of ~~sales.~~sales until the next physical inventory count.

Leases

We record leases, which consist primarily of operating leases, on the Consolidated Balance Sheets as operating lease ROU assets and operating lease liabilities, both of which include current and noncurrent portions. Operating lease liabilities are initially recognized based on the net present value of the fixed portion of our lease and common area maintenance payments from lease commencement through the lease term. To calculate the net present value, we apply an incremental borrowing rate. The incremental borrowing rate is determined using a portfolio approach based on the rate of interest we would pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. We use quoted interest rates obtained from financial institutions as an input to derive our incremental borrowing rate as the discount rate for the lease. We recognize ROU assets based on operating lease liabilities reduced by property incentives received from landlords. We test ROU assets for impairment in the same manner as long-lived assets and exclude the related operating lease liability and operating lease payments in our analysis.

We lease the land, buildings, or land and buildings for many of our stores, office facilities and Supply Chain Network facilities.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Land, Property and Equipment

Land is recorded at historical cost, while property and equipment are recorded at cost less accumulated depreciation and amortization. Capitalized software includes the costs of developing or obtaining internal-use software, including external direct costs of materials and services and internal payroll costs related to the software project.

We capitalize interest on construction in progress and software projects during the period in which expenditures have been made, activities are in progress to prepare the asset for its intended use and actual interest costs are being incurred.

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~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

Depreciation and amortization are computed using the straight-line method over the asset’s estimated useful life, which is determined by asset category as follows:


Asset
~~Asset~~	Life (in years)
Buildings and improvements		5 – 40
Store fixtures and equipment		3 – 15
Leasehold improvements		5 – 40
Capitalized software		32 – 7

Leasehold improvements and leased property and equipment that are purchased at the inception of the lease, or during the lease term, are amortized over the shorter of the lease term or the asset life. Lease terms include the fixed, ~~non-cancellable~~non-cancelable term of a lease, plus any renewal periods determined to be reasonably assured.

~~We receive contributions from vendors for~~Long-Lived Assets

When facts and circumstances indicate the ~~construction~~carrying values of ~~certain fixtures~~buildings, equipment and ROU assets may be impaired, we compare the carrying value to the related projected future cash flows, among other quantitative and qualitative analyses. Cash flow analysis requires judgment regarding many factors, such as revenues, growth rates, expenses, capital expenditures and sublease income. These projections are inherently subject to uncertainties. While we believe the inputs and assumptions utilized in our ~~stores.~~future cash flows are reasonable, our estimates may change in the near term based on our current and future performance. Land, property and equipment are grouped at the lowest level at which there are identifiable cash flows when assessing impairment, while cash flows for our retail store assets are identified at the individual store level.

The following table provides details related to asset impairment charges for each fiscal year:


	2023	2022
	Supply Chain	Supply Chain	Trunk Club
Long-lived asset impairment1	$9	$58	$10
Operating lease ROU asset impairment1	21	12	—
Asset impairment	$30	$70	$10

1 After impairment, the carrying values of the remaining long-lived tangible and ROU assets were not material.

Supply Chain Impairments

During the fourth quarter of 2023 and the third quarter of 2022, as part of our supply chain optimization initiatives, we incurred a non-cash impairment charge to adjust the carrying values to their estimated fair values for certain supply chain assets. These ~~contributions offset~~charges are included in our Corporate/Other SG&A expense on the Consolidated Statement of Earnings and in asset impairment on the Consolidated Statement of Cash Flows. We evaluated the assets for impairment by comparing the carrying values to the related ~~capital expenditures.~~projected future cash flows, among other quantitative and qualitative analyses. After impairment, the carrying values of the remaining long-lived tangible and ROU assets were not material.

Trunk Club Wind-down

During the first quarter of 2022, in conjunction with the decision to sunset the Trunk Club brand, we incurred non-cash impairment charges related to a Trunk Club property to adjust the carrying values to their estimated fair value. These charges are included in our Retail segment SG&A expense on the Consolidated Statement of Earnings and in asset impairment on the Consolidated Statement of Cash Flows.

During the second quarter of 2022, we also incurred additional costs of $8 associated with the wind-down of Trunk Club. These expenses are primarily included in our Retail segment cost of sales and related buying and occupancy costs on the Consolidated Statement of Earnings. All charges are classified as operating on the Consolidated Statement of Cash Flows.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Goodwill

Goodwill represents the excess of acquisition cost over the fair value of the related net assets acquired and is not subject to amortization. We review our goodwill annually for impairment, as of the first day of the fourth quarter, or when circumstances indicate that the carrying value may exceed the fair value. We perform this evaluation at the reporting unit level, ~~comprised~~all in our Retail segment. Our goodwill is allocated to two reporting units, Nordstrom and NordstromRack.com. When evaluating these assets for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If we determine that it is more likely than not that the carrying value exceeds the fair value of the ~~principal business units within our Retail segment, through the application of~~reporting unit, we perform a ~~two-step~~quantitative fair value test. ~~The first step compares~~We may also choose to bypass this qualitative assessment and perform the quantitative assessment.

As of February 3, 2024 and January 28, 2023, we had goodwill of $249. To determine fair value, we compare the carrying value of the reporting unit to its estimated fair value, which is based on the expected present value of future cash flows (income approach), comparable public companies ~~and acquisitions~~ (market approach) or a combination of both. Determining fair value using these approaches requires management assumptions, estimations and judgments regarding factors like overall economic conditions, prospective financial information, growth rates, terminal value, discount rates and market multiples. If fair value is lower than the carrying value, ~~then a second step~~an impairment charge is ~~performed~~recognized in an amount equal to ~~quantify~~that excess, limited to the total amount of goodwill allocated to that reporting unit. Based on the ~~impairment. The following summarizes~~results of our ~~goodwill activity for the past three fiscal years:~~

Trunk Club
HauteLook

Other¹

Total
Balance at January 31, 2015
$261

$121

$53

$435
Additions —
—
—
—
Balance at January 30, 2016 261
121
53
435
Impairment (197 ) —
—
(197 )
Balance at January 28, 2017 64
121
53
238
Additions —
—
—
—
Balance at February 3, 2018
$64

$121

$53

$238

¹ ~~Other includes Nordstrom.com~~tests, fair value exceeded carrying value, and ~~Jeffrey goodwill.~~

~~The~~we therefore had no goodwill impairment ~~charge~~in 2023, 2022 or 2021.

Investments

From time to time, we invest in financial interests of ~~$197 for~~certain private companies and venture capital funds that align with our business and omni-channel strategies, which are recorded in other assets in the ~~year ended~~Consolidated Balance Sheets and proceeds from the sale of assets and other, net on the Consolidated Statements of Cash Flows.

As of February 3, 2024 and January 28, ~~2017 related to Trunk Club resulted from changes to~~2023, we held $41 and $42 of equity interests in certain venture capital funds, which are recorded at fair value using the ~~long-term operating plan that reflected lower expectations for growth and profitability than previous expectations(see Note 8: Fair Value Measurements).~~practical expedient estimate of NAV or its equivalent.

~~Long-Lived Assets~~

~~When facts and circumstances indicate that~~During the ~~carrying values~~first quarter of long-lived assets, including buildings, equipment and amortizable intangible assets, may be impaired, we perform an evaluation of recoverability by comparing the carrying values of the net assets to their related projected undiscounted future cash flows, in addition to other quantitative and qualitative analyses.

Land, property and equipment are grouped at the lowest level at which there are identifiable cash flows when assessing impairment. Cash flows for our retail store assets are identified at the individual store level, while our intangible assets associated with HauteLook and Trunk Club are identified at their respective reporting unit levels. The assets recorded2022, in connection with the ~~credit card receivable transaction are individually evaluated against~~sale of a limited partnership interest in a corporate office building, we recognized a gain of $51 in our Corporate/Other SG&A expense in the ~~anticipated cash flows under~~Consolidated Statement of Earnings and $73 in proceeds from the ~~program agreement (see Note 2: Credit Card Receivable Transaction).~~

~~We did not record any material impairment losses for long-lived tangible or amortizable intangible~~sale of assets ~~in 2017 or 2016. In 2015, our cash flow analyses resulted in retail store impairment charges of $24~~ and other, ~~various impairment losses~~net on the Consolidated Statement of ~~$23. The 2015 retail store impairment of $24 related to our full-line store in Puerto Rico and was primarily driven by a challenging retail market in this territory.~~

Amortization expense for acquired intangibles was $11, $14 and $16 in 2017, 2016 and 2015. Future amortization expense of acquired intangible assets as of February 3, 2018, are expected to be $7 in 2018 and $7 in 2019.

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~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

Cash Flows.

Self-Insurance

We retain a portion of the risk for certain losses related to employee health and welfare, workers’ compensation and other liability claims. Liabilities associated with these losses include undiscounted estimates of both losses reported and losses incurred but not yet reported. We estimate our ultimate cost using an actuarially-based analysis of claims experience, regulatory changes and other relevant factors.

Foreign Currency

~~We have six full-line stores in~~On March 2, 2023, Nordstrom Canada ~~and have announced plans to open the first six Nordstrom Rack stores in Canada in 2018.~~commenced a wind-down of its business operations. The functional currency of our Canadian ~~operation is~~operations was the Canadian Dollar. ~~We translate~~Prior to deconsolidation, we translated assets and liabilities into U.S. Dollars using the exchange rate in effect at the balance sheet date, while we ~~translate~~translated revenues and expenses using ~~a weighted-average~~an average exchange rate for the period. We ~~record~~recorded these translation adjustments as a component of accumulated other comprehensive loss on the Consolidated Balance Sheets. In the first quarter of 2023, we recognized a charge of $33 related to the derecognition of the accumulated comprehensive loss on foreign currency translation (see Note 2: Canada Wind-down).

~~In addition,~~Reclassification

We reclassified amounts in our ~~U.S. operation incurs certain expenditures denominated in Canadian Dollars~~fiscal 2022 and our Canadian operation incurs certain expenditures denominated in U.S. Dollars. This activity results in transaction gains and losses that arise from exchange rate fluctuations, which are recorded as gains or losses in the2021 Consolidated Statements of ~~Earnings.~~Cash Flows to conform with current period presentation. As ~~of February 3, 2018, activities associated~~a result, we aggregated:

•Accounts receivable, net with ~~foreign currency exchange risk have not~~prepaid expenses and other assets into other current and noncurrent assets

•Other current liabilities with other liabilities into other current and noncurrent liabilities

•Tax withholding on share-based awards with other financing, net

These reclassifications had ~~a material~~no impact on ~~our Consolidated Financial Statements.~~cash flows from operations, cash flows from investing or cash flows from financing.

Recent Accounting Pronouncements

In ~~May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,~~ ~~Revenue from Contracts with Customers~~, which was subsequently modified in August 2015 by ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date. The core principle of ASU No. 2014-09 is that companies should recognize revenue when the transfer of promised goods or services to customers occurs in an amount that reflects what the company expects to receive. It requires additional disclosures to describe the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers. In 2016,November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires additional ~~ASUs which clarify~~quarterly and annual reportable segment disclosures, primarily around significant segment expenses. Annual disclosure requirements will be effective for us for the ~~implementation guidance on principal versus agent considerations, on identifying performance obligations~~fourth quarter of 2024, and ~~licensing, on the revenue recognition criteria and other technical corrections. We plan to adopt this ASU~~quarterly disclosure requirements will be effective for us in the first quarter of ~~2018 using the modified retrospective~~2025, with early adoption method. In our ongoing evaluation of this ASU, we have determined that the new standard will result in a net cumulative effect adjustment to decrease beginning accumulated deficit by approximately $55, as well as the following impacts:

Gift card breakage will be recorded in sales, rather than selling, general, and administrative expenses. It will be estimated based on expected customer redemption periods, rather than when redemption is considered remote.

Loyalty sales attributable to our Nordstrom Rewards loyalty program benefits (for example, Notes, alterations) will be deferred rather than recording the loyalty program expenses as an increase to cost of sales.

Remaining unamortized balances of deferred revenue and investment in contract asset related to the sale of our receivables to TD will be written off as a cumulative-effect adjustment reducing accumulated deficit.

~~Revenue related to our online sales will be recognized at the shipping point rather than upon receipt by the customer.~~

~~Estimated costs of returns will be recorded as a current asset rather than netted with our sales return reserve.~~

~~We do not expect the provisions of this ASU to have a material impact on our Consolidated Financial Statements beyond our initial adoption.~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases~~. This ASU increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as right-of-use assets and lease liabilities. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification dictates whether lease expense is to be recognized based on an effective interest method or on a straight-line basis over the term of the lease. Additional qualitative and quantitative disclosures will be required to give financial statement users information on the amount, timing and judgments related to a reporting entity’s cash flows arising from leases. This ASU is effective for Nordstrom beginning in the first quarter of 2019.permitted. We are currently evaluating the impact of ~~the standard, which will require recognizing and measuring leases at the beginning of the earliest period presented using a modified retrospective approach. We expect adoption of~~ this ~~standard will have a material impact~~ASU on our ~~Consolidated Financial Statements.~~

disclosures.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit ~~amounts~~amounts)

In ~~March 2016,~~December 2023, the FASB issued ASU ~~No. 2016-09,~~ ~~Compensation — Stock Compensation —~~2023-09, Income Taxes (Topic 740): Improvements to ~~Employee Share-Based Payment Accounting~~Income Tax Disclosures, which ~~simplifies several aspects~~requires disclosure of additional income tax information, primarily related to the ~~accounting~~rate reconciliation and income taxes paid. Annual disclosure requirements will be effective for ~~share-based payments and presentation within~~us for the ~~financial statements.~~fourth quarter of 2025, with early adoption permitted. We ~~adopted ASU No. 2016-09 with an effective date of January 29, 2017. The~~are currently evaluating the impact of this ASU on our disclosures.

NOTE 2: CANADA WIND-DOWN

Background

On March 2, 2023, as part of our initiatives to drive long-term profitable growth and enhance shareholder value, and after careful consideration of all reasonably available options, we announced the ~~adoption resulted~~decision to discontinue support for Nordstrom Canada’s operations. Accordingly, Nordstrom Canada commenced a wind-down of its business operations, obtaining an Initial Order from the Ontario Superior Court of Justice under the CCAA on March 2, 2023 to facilitate the wind-down in an orderly fashion. Nordstrom Canada’s e-commerce platform ceased operations on March 2, 2023 and the closure of six Nordstrom and seven Nordstrom Rack stores was completed in June 2023. Significant developments in the ~~following:~~case, including a creditor vote to approve a Plan of Compromise and Arrangement and a court hearing to sanction that plan and authorize its implementation are scheduled to occur in the first quarter of 2024. Distributions to creditors, including distributions to Nordstrom, Inc. as a creditor of Nordstrom Canada, are expected to be substantially complete by the end of 2024.

~~Excess tax benefits~~The Ontario Superior Court of Justice has appointed a monitor to oversee the wind-down process. Subsequent to the CCAA filing, Nordstrom has been providing limited support to Nordstrom Canada for the purpose of supporting an orderly wind-down, including providing shared services and ~~deficiencies resulting from stock-based compensation arrangements~~temporary use of intellectual property.

Wind-down Charges and Deconsolidation of Nordstrom Canada

The following table details the pre-tax charges associated with the wind-down of operations in Canada:


Fiscal year			2023
Loss on Canada write-off1			$176
Accumulated translation loss reclassified to earnings1			33
Contingent liabilities			70
Other exit costs2			5
Total pre-tax charges			$284

1 Non-cash amounts are ~~now recorded within income tax expense~~included in Canada wind-down costs on the Consolidated Statement of ~~Earnings when the awards vest or~~Cash Flows.

2 Other exit costs include funding an employee trust, net of expected recoveries, and professional fees.

These charges are ~~settled, rather than within equity. Additionally, excess tax benefits are now excluded from assumed future proceeds~~primarily included in ~~our calculation of diluted shares for purposes of determining diluted earnings per share.~~Corporate/Other in Note 15: Segment Reporting. The prospective adoption of this provision did not have a material effect on the Consolidated Financial Statements for the year ended February 3, 2018. We had no previously unrecognized excess tax benefits that would have resulted in a cumulative-effect adjustment to beginning retained earnings.

Forfeitures on share-based awards are recorded as they occur, rather than our historical method of estimating forfeitures at the grant date. In evaluating the impact of this change, the adjustment to adopt on a modified retrospective basis was immaterial, therefore, no adjustment has been made to beginning retained earnings.

Excess tax benefits from stock-based compensation arrangements are classified as cash flows from operations, rather than as cash flows from financing activities. We adopted this change retrospectively, which resulted in an increase to net cash provided by operating activities and an increasedecrease in cash ~~flows used~~due to the deconsolidation of Nordstrom Canada is included in financing activities of $5 for 2016 and $15 for 2015. Additionally, cash flows related to withholding shares for tax purposes on net-settled awards are classified as financing activities, rather than operating activities. This classification change was also adopted retrospectively, resulting in an increase of $5 for 2016 and $4 for 2015 to net cash provided by operating activities with an offsetting increase to net cash used in financinginvesting activities on the Consolidated Statement of Cash Flows ~~for 2016~~ and ~~2015.~~all other impacts are included in operating cash flows.

Loss on Canada Write-off and Accumulated Translation Loss

While Nordstrom continues to own 100% of the shares of Nordstrom Canada, as of March 2, 2023, the date of the CCAA filing, we no longer have a controlling interest under GAAP and have deconsolidated Nordstrom Canada. We hold a variable interest in the Nordstrom Canada entities, which are considered variable interest entities, but are not consolidated, as we are no longer the primary beneficiary.

For the year ended February 3, 2024, we recorded a pre-tax loss on Canada write-off of $176 that included the derecognition of Nordstrom Canada’s assets and liabilities and the write-down of both our Nordstrom Canada investment and related-party receivables to estimated fair value. In ~~January 2017,~~addition, we recognized a charge of $33 related to the ~~FASB issued ASU No. 2017-04,~~ ~~Intangibles — Goodwill and Other: Simplifying~~derecognition of the ~~Test for Goodwill Impairment, which simplifies~~accumulated comprehensive loss on foreign currency translation.

To assess the ~~accounting for goodwill impairment by eliminating step two from the goodwill impairment test. Under this new guidance, if the carrying amount of a reporting unit exceeds its~~ estimated fair value ~~an impairment charge shall be recognized~~of our Nordstrom Canada investment and our related-party receivables, we estimated the assets available for distribution in ~~an amount equal~~relation to ~~that excess, limited to~~expected claims. At the ~~total~~time of filing for CCAA protection on March 2, 2023, the estimated amount of ~~goodwill allocated~~Nordstrom Canada’s liabilities exceeded the estimated fair value of assets available for distribution to ~~that reporting unit. The ASU is effective prospectively for fiscal years~~creditors, and interim periods within those years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact this guidancewe believed we would ~~have on our Consolidated Financial Statements.~~

In December 2017, the Securities and Exchange Commission (“SEC”) released Staff Accounting Bulletin No. 118 (the “Bulletin”), which provides accounting guidance regarding accounting for income taxes for the reporting period that includes the enactment of the Tax Act. The Bulletin provides guidance in those situations where the accounting for certain income tax effects of the Tax Act will be incomplete by the time financial statements are issued for the reporting period that includes the enactment date. For those elements of the Tax Act that cannot be reasonably estimated, no effect will be recorded.

~~The SEC has provided in the Bulletin that in situations where the accounting is incomplete for certain effects of the Tax Act,~~not recover a measurement period which begins in the reporting period that includes the enactment of the Tax Act and ends when the entity has obtained, prepared and analyzed the information is needed in order to complete the accounting requirements. The measurement period shall not exceed one year from enactment. In accordance with SAB 118, we have recorded provisional tax expense associated with the impacts of the Tax Act (see Note 13: Income Taxes for additional information).

~~In February 2018, the FASB issued ASU No. 2018-02,~~ ~~Income Statement — Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.~~ This new guidance will allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. The ASU is effective for us beginning in the first quarter of 2019, with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our Consolidated Financial Statements.

~~NOTE 2: CREDIT CARD RECEIVABLE TRANSACTION~~

~~In October 2015, we completed the sale of a substantial majority~~significant portion of our ~~U.S. Visa and private label credit card portfolio to TD. In November 2017,~~receivables. As a result, our fair value was recorded as zero in our Condensed Consolidated Balance Sheets as of April 29, 2023. As of February 3, 2024, we ~~sold the remaining balances which consisted of employee credit card~~adjusted our receivables ~~for the U.S. Visa and Nordstrom private label credit cards to TD for~~by an immaterial amount equal to the gross value of the outstanding receivables. Additionally, we entered into an amended long-term program agreement under which TD is the exclusive issuer of our U.S. consumer credit cards and we perform account servicing functions.

based on currently available information.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit ~~amounts~~amounts)

Prior to deconsolidation, Nordstrom made loans to the Canadian subsidiaries and incurred liabilities related to certain intercompany charges. These were considered intercompany transactions and were eliminated in consolidation of Nordstrom. Subsequent to deconsolidation, these liabilities and receivables were no longer eliminated through consolidation, are considered related-party transactions and are recorded in our Consolidated Balance Sheets at estimated fair value. As of February 3, 2024, Nordstrom had a net outstanding liability to Nordstrom Canada of $52 related to certain intercompany charges incurred prior to deconsolidation.

Contingent Liabilities and Guarantees

In the third quarter of 2023, Nordstrom, Inc. reached a settlement with former landlords related to guarantees of certain lease obligations of Nordstrom Canada. As part of the agreements, we made cash payments to the former landlords in exchange for a release of substantially all our guarantee obligations, as well as the right to these landlords’ distributions from Nordstrom Canada as part of the CCAA proceedings.

Employee Trust

In connection with the ~~close~~filing, Nordstrom contributed $11 to establish an employee trust to fund termination and severance payments to employees of Nordstrom Canada. As of February 3, 2024, the trust has been terminated.

Debtor-in-Possession Financing

If needed, Nordstrom has agreed to provide Nordstrom Canada debtor-in-possession financing up to $11. However, we believe Nordstrom Canada has sufficient liquidity to sustain operations through the wind-down period and therefore it is not likely that any amounts would need to be borrowed from Nordstrom. As of February 3, 2024, there were no outstanding borrowings.

Estimates

As of February 3, 2024, we recorded $71 in accounts receivable, net on the Consolidated Balance Sheets to reflect the amount we believe probable of receipt as part of the ~~credit card~~claims process. This includes receipts related to the rights to the former landlords’ distributions, reimbursement of employee trust contributions and other receivables existing at the time of deconsolidation. The receivable ~~transaction in October 2015, we defeased $325 in secured Series 2011-1 Class A Notes in order to provide~~and our other estimates are dependent on the ~~credit card receivables to TD free and clear.At close, we received $2.2 billion in cash consideration reflecting the par value~~outcome of the ~~receivables sold,~~Nordstrom Canada wind-down process, including the amount of third-party and ~~incurred $32~~Nordstrom claims asserted and recognized in ~~transaction-related expenses during~~ the ~~third~~claims process, the amount of assets available for distribution and the approval of the CCAA plan of arrangement by the Ontario Superior Court of Justice, which we expect to have updated information on in the first quarter of ~~2015.Pursuant~~2024. We continue to work through the wind-down process and our estimates of net losses are based on currently available information, our assessment of the validity of certain expected claims and our assessment of the recoverability of amounts receivable from Nordstrom Canada. These estimates may change as new information becomes available and it is reasonably possible that they may materially change from the estimated amounts. Increases in estimated costs to settle claims and decreases in estimated assets available for distribution may result in additional material charges. At the same time, any future decreases in estimated costs to settle claims or increases in estimated assets available for distribution may result in a gain, which would reduce our estimated charges.

Income Taxes

For the year ended February 3, 2024, we recognized net tax benefits of $95 primarily related to the ~~agreement, we are obligated to offer and administer~~write-off of our ~~Nordstrom Rewards loyalty program and perform other account servicing functions. In return, we receive a portion of the ongoing credit card revenue,~~investment in Canada, net of ~~credit losses, from both the sold~~tax expense related to an increase in valuation allowance for Canada deferred tax assets.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and ~~newly generated credit card receivables. At close of the November 2017 transaction, we received $55~~share amounts in ~~cash consideration reflecting the par value of the employee receivables sold.~~millions except per share, per option and per unit amounts)

~~In October 2015, we recorded certain assets~~

NOTE 3: REVENUE

Contract Liabilities

Contract liabilities represent our obligation to transfer goods or services to customers and include deferred revenue for The Nordy Club (including points and Nordstrom Notes), gift cards and our amended 2022 TD program agreement. Our contract liabilities ~~associated with the arrangement. The beneficial interest asset is amortized over approximately four years based primarily~~are classified on the ~~payment rate~~Consolidated Balance Sheets as follows:


	Other current liabilities	Other liabilities
Balance as of January 29, 2022	$478	$—
Balance as of January 28, 2023	536	136
Balance as of February 3, 2024	508	85

Contract liabilities increased during 2022 primarily as a result of ~~the associated receivables. The~~ deferred revenue recorded in connection with our amended 2022 TD program agreement. Revenues recognized from our beginning contract liability balance were $316 and ~~investment in contract asset are recognized/amortized over seven~~$265 for the years ~~on a straight-line basis,~~ended February 3, 2024 and January 28, 2023.

Disaggregation of Revenue

The following table summarizes our disaggregated net sales:


Fiscal year	2023	2022	2021
Nordstrom	$9,436	$10,279	$9,640
Nordstrom Rack	4,783	4,813	4,762
Total net sales	$14,219	$15,092	$14,402

Digital sales as a % of total net sales	36%	38%	42%

The following table summarizes the ~~delivery~~percent of ~~the contract obligations~~net sales by merchandise category:


Fiscal year	2023		2022		2021
Women’s Apparel	27%		28%		28%
Shoes	26%		26%		25%
Men’s Apparel	15%		15%		14%
Beauty	13%		12%		12%
Accessories	12%		13%		14%
Kids’ Apparel	4%		3%		4%
Other	3%		3%		3%
Total net sales	100	%	100	%	100	%

Nordstrom, Inc. and ~~expected life~~subsidiaries59

Table of ~~the agreement. We record each of these items in credit card revenue, net in our Consolidated Statements of Earnings.~~

~~Cash Flows Presentation~~Contents

Nordstrom, ~~private label credit~~Inc.

Notes to Consolidated Financial Statements

(Dollar and debit cards can be used at a majority of our U.S. retail businesses, while Nordstrom Visa credit cards also may be used for purchases outside of Nordstrom. Prior to the completion of the credit card receivable transactionsshare amounts in ~~October 2015~~millions except per share, per option and November 2017, cash flows from the use of both the private label and Nordstrom Visa credit cards for sales originating at our stores and our digital channels were treated as an operating activity within the Consolidated Statements of Cash Flows, as they related to sales at Nordstrom. Additionally, cash flows arising from the use of Nordstrom Visa credit cards outside of our stores were treated as an investing activity within the Consolidated Statements of Cash Flows, as they represented loans made to our customers for purchases at third parties.per unit amounts)

NOTE 3:4: LAND, PROPERTY AND EQUIPMENT

Land, property and equipment consist of the following:


	February 3, 2024	January 28, 2023
Land and land improvements	$283	$288
Buildings and building improvements	1,365	1,352
Leasehold improvements	3,103	3,389
Store fixtures and equipment	3,873	4,138
Capitalized software	2,439	2,151
Construction in progress	365	322
Land, property and equipment	11,428	11,640
Accumulated depreciation and amortization	(8,251)	(8,289)
Land, property and equipment, net	$3,177	$3,351

NOTE 5: LEASES

February 3, 2018
January 28, 2017
Land and land improvements
$111

$107
Buildings and building improvements 1,246
1,198
Leasehold improvements 3,099
2,938
Store fixtures and equipment 3,724
3,513
Capitalized software 1,280
1,183
Construction in progress 584
554
Land, property and equipment 10,044
9,493
Less: accumulated depreciation and amortization (6,105 ) (5,596 )
Land, property and equipment, net
$3,939

$3,897

We lease the land, buildings, or land and buildings for many of our stores, office facilities and Supply Chain Network facilities, as well as equipment. The total cost of property and equipment held under capital lease obligations was $26 at the end of 2017 and 2016, with related accumulated amortization of $25 in 2017 and 2016. Depreciation and amortization expense was $655, $631 and $560 in 2017, ~~2016~~ ~~and 2015.~~

~~NOTE 4: SELF-INSURANCE~~

~~Our self-insurance reserves are summarized as follows:~~

February 3, 2018
January 28, 2017
Workers’ compensation
$71

$69
Employee health and welfare 26
29
Other liability 18
16
Total self-insurance reserve
$115

$114

~~Our workers’ compensation policies have a retention per claim of $1 or less and no policy limits.~~

~~We are self-insured for~~following table summarizes the majority of our ~~employee health~~fixed, non-cancelable lease terms:


Property Type			Lease Term (in years)
Nordstrom stores			15 – 30
Nordstrom Rack stores			Approximately 10
Office and Supply Chain Network facilities			5 – 20

Many of our leases include options that allow us to extend the lease term beyond the initial commitment period.At the commencement of a lease, we generally include only the initial lease term as we have determined that options to extend are not reasonably certain to occur. The exercise of lease renewal options is generally at our sole discretion. At the renewal of an expiring lease, we reassess our options in the agreement and ~~welfare coverage~~include all reasonably certain extensions in the measurement of our lease term.

Most of our leases also require us to pay certain expenses, such as common area maintenance charges, real estate taxes and other executory costs, the fixed portion of which is included in Operating Lease Cost, as we combine lease and non-lease components. We recognize Operating Lease Cost, which is primarily included in occupancy costs, on a straight-line basis over the lease term. Variable lease cost includes payments for variable common area maintenance charges and additional payments based on a percentage of sales, which are recognized when probable. Our lease agreements do not ~~use stop-loss coverage. Participants contribute to~~contain any material residual value guarantees or material restrictive covenants.

The following table summarizes the components of lease cost:


Fiscal year	2023	2022	2021
Operating Lease Cost	$278	$280	$265
Variable lease cost1	93	97	100
Sublease income	(25)	(19)	(20)
Total lease cost, net	$346	$358	$345

1 Variable lease cost ~~of their coverage through premiums~~includes short-term lease cost, which was immaterial in 2023, 2022 and ~~out-of-pocket expenses for deductibles, co-pays and co-insurance.~~

Our liability policies, encompassing an employment practices liability, with a policy limit up to $30, and a commercial general liability, with a policy limit up to $151, have a retention per claim of $3 or less.

2021.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit ~~amounts~~amounts)

The following table summarizes future lease payments as of February 3, 2024:


Fiscal year									Operating Leases
2024									$321
2025									324
2026									273
2027									224
2028									182
Thereafter									708
Total lease payments1									2,032

Amount representing interest									(415)
Present value of net lease payments2									$1,617

~~NOTE 5: 401(K) PLAN~~1 Total lease payments do not include payments for variable lease costs that are required by most of our lease agreements.

~~We provide a 401(k) plan~~2 Net lease payments exclude $139 of lease payments for ~~our employees~~operating leases that allows for employee elective contributions and discretionary Company contributions. Employee elective contributions are funded through voluntary payroll deductions. Our discretionary Company contribution is funded in an amount determined by our Board of Directors each year. Total expenses related to Company contributions of $110, $92 and ~~$62~~ in ~~2017~~, ~~2016~~ ~~and~~ ~~2015~~were included in both buying and occupancy costs and selling, general and administrative expenses on our Consolidated Statements of Earnings. The $110 in 2017 included $94 of matching contributions and $16 for a one-time discretionary profit-sharing contribution.

~~NOTE 6: POSTRETIREMENT BENEFITS~~

We have an unfunded defined benefit Supplemental Executive Retirement Plan (“SERP”), which provides retirement benefits to certain officers and select employees. The SERP has different benefit levels depending on the participant’s role in the Company. At the end of 2017, we had 57 participants in the plan, including 16 officers and select employees eligible for SERP benefits, 40 retirees and one beneficiary. This plan is non-qualified and does not have a minimum funding requirement.

~~Benefit Obligations and Funded Status~~

~~Our benefit obligation and funded status is as follows:~~

February 3, 2018
January 28, 2017
Change in benefit obligation:
Benefit obligation at beginning of year
$188

$181
Participant service cost 3
3
Interest cost 7
7
Benefits paid (8 ) (7 )
Actuarial gain 10
4
Benefit obligation at end of year 200
188
Change in plan assets:
Fair value of plan assets at beginning of year —
—
Employer contribution 8
7
Benefits paid (8 ) (7 )
Fair value of plan assets at end of year —
—
Underfunded status at end of year
($200 )
($188 )

~~The accumulated benefit obligation, which is the present value of benefits, assuming no future compensation changes, was $197 and $184 at the end of 2017 and 2016.~~

~~Amounts recognized as liabilities in the Consolidated Balance Sheets consist of the following:~~

February 3, 2018
January 28, 2017
Accrued salaries, wages and related benefits
$9

$8
Other liabilities (noncurrent) 191
180
Net amount recognized
$200

$188

~~Components of SERP Expense~~

~~The components of SERP expense recognized in the Consolidated Statements of Earnings are as follows:~~

Fiscal year 2017
2016
2015
Participant service cost
$3

$3

$3
Interest cost 7
7
7
Amortization of net loss and other 3
3
11
Total SERP expense
$13

$13

$21

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~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

~~Amounts~~signed but not yet ~~reflected in SERP expense and included in accumulated other comprehensive loss (pre-tax) consist~~commenced as of ~~the following:~~

February 3, 2018
January 28, 2017
Accumulated loss
($46 )
($41 )
Prior service credit 2
4
Total accumulated other comprehensive loss
($44 )
($37 )

In ~~2018, we expect $4 of costs currently in accumulated other comprehensive loss to be recognized as components of SERP expense.~~

~~Assumptions~~

~~Weighted-average assumptions used to determine our benefit obligation and SERP expense are as follows:~~

Fiscal year 2017
2016
2015
Assumptions used to determine benefit obligation:
Discount rate 3.95 % 4.31 % 4.55 %
Rate of compensation increase 3.00 % 3.00 % 3.00 %
Assumptions used to determine SERP expense:
Discount rate 4.31 % 4.55 % 3.70 %
Rate of compensation increase 3.00 % 3.00 % 3.00 %

~~Future Benefit Payments and Contributions~~

~~As of~~ February 3, ~~2018, the expected future benefit payments based upon the assumptions described above and including benefits attributable to estimated future employee service are as follows:~~2024.

The following table includes supplemental information:


Fiscal year	2023	2022		2021
Cash paid related to operating lease liabilities	$358	$354		$371
Operating lease interest	86	85		87
Operating lease liabilities arising from lease agreements	242	260		137

		February 3, 2024		January 28, 2023
Weighted-average remaining lease term		8 years		8 years
Weighted-average discount rate		5.5	%	4.9	%

Fiscal year
2018
$9
2019 10
2020 11
2021 11
2022 11
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~~Nordstrom, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

NOTE 7:6: DEBT AND CREDIT FACILITIES

Debt

A summary of our long-term debt ~~including capital leases,~~ is as follows:


	February 3, 2024	January 28, 2023






Long-term debt, net of unamortized discount:

Senior notes, 2.30%, due April 2024	$250	$250
Senior notes, 4.00%, due March 2027	349	349
Senior debentures, 6.95%, due March 2028	300	300
Senior notes, 4.375%, due April 2030	500	500
Senior notes, 4.25%, due August 2031	425	425
Senior notes, 7.00%, due January 2038	147	147
Senior notes, 5.00%, due January 20441	909	905
Deferred bond issuance costs	(18)	(20)
Total long-term debt	$2,862	$2,856

Current portion of debt	(250)	—
Total due beyond one year	$2,612	$2,856

February 3, 2018
January 28, 2017
Secured
Mortgage payable, 7.68%, due April 2020
$17

$24
Other 1
3
Total secured debt 18
27
Unsecured
Net of unamortized discount:
Senior notes, 6.25%, due January 2018 —
650
Senior notes, 4.75%, due May 2020 500
499
Senior notes, 4.00%, due October 2021 500
500
Senior notes, 4.00%, due March 2027 349
—
Senior debentures, 6.95%, due March 2028 300
300
Senior notes, 7.00%, due January 2038 146
146
Senior notes, 5.00%, due January 2044 892
602
Other¹
32
50
Total unsecured debt 2,719
2,747

Total long-term debt 2,737
2,774
Less: current portion (56 ) (11 )
Total due beyond one year
$2,681

$2,763

¹~~Other unsecured debt includes our Puerto Rico unsecured borrowing facility partially offset by deferred bond issue costs.~~

~~Our mortgage payable is secured by an office building that had a net book value~~ The unamortized discount on these notes was $57 and $61 as of ~~$56 at the end of 2017.~~

~~Required principal payments on long-term debt, excluding capital lease obligations, are as follows:~~

Fiscal year
2018
$56
2019 8
2020 502
2021 500
2022 —
Thereafter 1,764

~~During 2017, we issued $350 aggregate principal amount of 4.00% senior unsecured notes due March 2027~~February 3, 2024 and ~~$300 aggregate principal amount of 5.00% senior unsecured notes due~~ January 2044. With the proceeds of these new notes, we retired our $650 senior unsecured notes that were due January 2018. We incurred $18 of net interest expense related to the refinancing, which included the write-off of unamortized balances associated with the debt discount, issue costs and fair value hedge adjustment resulting from the sale of our interest rate swap agreements in 2012. It also included a one-time payment of $24 to 2018 Senior Note holders under a make-whole provision, which represents the net present value of the expected coupon payments had the notes been outstanding through the original maturity date.

28, 2023.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit ~~amounts~~amounts)

Required principal payments on long-term debt are as follows:


Fiscal year1
2024			$250
2025			—
2026			—
2027			350
2028			300
Thereafter			2,039

1 Required principal payments exclude estimated future interest payments of $1,519 as of February 3, 2024, with $136 payable within one year.

During the first quarter of 2021, we issued $250 aggregate principal amount of 2.30% senior notes due April 2024 and $425 aggregate principal amount of 4.25% senior notes due August 2031. With the net proceeds of these new notes, together with cash on hand, we retired our $600 Secured Notes. We recorded $88 related to the redemption in interest expense, net, which primarily consisted of a one-time payment of $78 for a “make-whole” premium, and the write-off of unamortized balances associated with the debt discount and issuance costs. The “make-whole” premium payment was not included in cash paid during the period for interest, net of capitalized interest in the Supplemental Cash Flow Information.

Interest Expense

The components of interest expense, net are as follows:

Fiscal year 2017
2016
2015
Interest on long-term debt and short-term borrowings
$168

$147

$153
Less:
Interest income (5 ) (1 ) —
Capitalized interest (27 ) (25 ) (28 )
Interest expense, net
$136

$121

$125


Fiscal year	2023	2022	2021
Interest on long-term debt and short-term borrowings	$150	$150	$258

Interest income	(33)	(10)	(1)
Capitalized interest	(13)	(12)	(11)
Interest expense, net	$104	$128	$246

Credit Facilities

On March 1, 2023, we amended our Revolver originally dated May 6, 2022. Prior to this amendment, Nordstrom Canada Retail, Inc. was a loan party under the Revolver and the obligations under the Revolver were secured, in part, by the assets of this subsidiary. As a result of this amendment, Nordstrom Canada Retail, Inc. was removed as a loan party and obligations under the Revolver are no longer secured by these assets. In addition, this amendment excludes as subsidiaries or affiliates all Nordstrom Canada entities and carves out certain CCAA-related expenses and obligations from financial covenants under the Revolver.

As of February 3, ~~2018,~~2024 and January 28, 2023, we had ~~total~~no outstanding borrowings under the Revolver that expires in May 2027. Our short-term borrowing capacity was reduced by $30 to $770 as a result of ~~$800~~issuing a standby letter of credit in the fourth quarter of 2023. Provided that we obtain written consent from the lenders, we have the option to increase the Revolver by up to $200, to a total of $1,000, and two options to extend the Revolver for additional one-year terms.

Any outstanding borrowings under the Revolver are secured by substantially all our ~~senior unsecured revolving credit facility (“revolver”) that expires in April 2020.~~personal and intellectual property assets and are guaranteed by certain of our subsidiaries. Under the Revolver, our obligation to secure any outstanding borrowings will be eliminated if no default exists and we either have an unsecured investment-grade debt rating from two of three specified ratings agencies, or we have one investment-grade rating and achieve two consecutive fiscal quarters with a Leverage Ratio of less than 2.5 times.

Under the Revolver, we have two financial covenant tests that need to be met on a quarterly basis: a Leverage Ratio that is less than or equal to 4 times and a fixed charge coverage ratio that is greater than or equal to 1.25 times. As of February 3, 2024, we were in compliance with all covenants.

The Revolver contains customary representations, warranties, covenants and terms, ~~of our revolver, we pay~~including paying a variable rate of interest and a ~~commitment~~facility fee based on our debt ~~rating. The revolver~~rating, and is available for working capital, capital expenditures and general corporate purposes. ~~We have~~The Revolver allows us to issue dividends and repurchase shares provided we are not in default and no default would arise as a result of such payments. If the pro-forma Leverage Ratio after such payments is less than 3 times, then such payments are unlimited. If the pro-forma Leverage Ratio is greater than or equal to 3 times but less than 3.5 times, then we are limited to $100 per fiscal quarter and if the pro-forma Leverage Ratio is greater than or equal to 3.5 times, then the limit is $60 per fiscal quarter.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option ~~to increase the revolving commitment by up to $200, to a total of $1,000, provided that we obtain written consent from the lenders.~~and per unit amounts)

The revolver requires that we maintain an adjusted debt to earnings before interest, income taxes, depreciation, amortization and rent (“EBITDAR”) leverage ratio of no more than four times. As of February 3, 2018 and ~~January 28, 2017, we were in compliance with this covenant.~~

Our $800 commercial paper program allows us to use the proceeds to fund operating cash requirements. Under the terms of the commercial paper agreement, we pay a rate of interest based on, among other factors, the maturity of the issuance and market conditions. The issuance of commercial paper has the effect ~~while it is outstanding,~~ of reducing available liquidity under the ~~revolver~~Revolver by an amount equal to the principal amount of commercial ~~paper.~~

paper outstanding. Conversely, borrowings under our Revolver have the effect of reducing the available capacity of our commercial paper program by an amount equal to the amount outstanding. As of February 3, ~~2018~~2024 and January 28, ~~2017,~~2023, we had no issuances outstanding under our commercial paper ~~program and no borrowings outstanding under our revolver.~~program.

~~Our wholly owned subsidiary in Puerto Rico maintains a~~ ~~$52~~ ~~unsecured borrowing facility to support our expansion into that market. The facility expires in~~ ~~Fall 2018~~ and borrowings on this facility incur interest based upon the LIBOR plus 1.275% per annum and also incurred a fee based on any unused commitment. As of February 3, 2018 and January 28, 2017, we had $48 and $50 outstanding on this facility, which is included as a component in other unsecured debt and the current portion of debt.

NOTE 8:7: FAIR VALUE MEASUREMENTS

We disclose our financial assets and liabilities that are measured at fair value in our Consolidated Balance Sheets by level within the fair value hierarchy as defined by applicable accounting standards:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Other observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3: Unobservable inputs that cannot be corroborated by market data that reflect the reporting entity’s own assumptions

Financial ~~Instruments Not Measured at Fair Value~~

~~Financial~~ instruments ~~not~~ measured at ~~fair~~carrying value on a recurring basis include cash and cash equivalents, accounts receivable, accounts payable and ~~certificates of deposit,~~our Revolver, which approximate fair value due to their short-term ~~nature, and~~nature.

Long-term debt is recorded at carrying value. If long-term ~~debt.~~

~~We estimate the~~debt was measured at fair value, ~~of long-term debt using~~we would use quoted market prices of the same or similar issues, ~~and, as such, this~~which is considered a Level 2 fair value measurement. The following table summarizes the carrying value and fair value estimate of our long-term debt, including current maturities:

February 3, 2018
January 28, 2017
Carrying value of long-term debt
$2,737

$2,774
Fair value of long-term debt 2,827
2,949

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~~Nordstrom, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

~~Non-financial Assets Measured at Fair Value on a Nonrecurring Basis~~


	February 3, 2024	January 28, 2023
Carrying value of long-term debt	$2,862	$2,856
Fair value of long-term debt	2,441	2,278

We ~~also~~ measure certain ~~non-financial assets~~items at fair value on a nonrecurring basis, primarily goodwill, ~~investment in contract asset~~ and long-lived tangible and ~~intangible~~ROU assets, in connection with periodic evaluations for potential impairment. We estimate the fair value of these assets using primarily unobservable inputs and, as such, these are considered Level 3 fair value measurements. ~~There were no material impairment charges for these assets for fiscal year 2017.~~

~~In the third quarter of 2016, the long-term operating plan for Trunk Club was updated to reflect current expectations for future growth~~For more information regarding long-lived tangible and profitability, which were lower than previous expectations. Due to lowered expectations, we tested Trunk Club goodwill for impairment one quarter prior to the annual evaluation. Step 1 test results indicated that the estimated fair value of the reporting unit was less than the carrying value.

In our Step 2 analysis, we used a combination of the expected present value of future cash flows (income approach) and comparable public companies (market approach) to determine the fair value of the reporting unit. These approaches use primarily unobservable inputs, including discount, sales growth and profit margin rates, which are considered Level 3 fair value measurements. The fair value analysis took into account recent and expected operating performance as well as the overall decline in the retail industry. Within our Retail Segment, we recognized a goodwill impairment charge of $197 in 2016, reducing Trunk Club goodwill to $64 as of January 28, 2017, from $261 as of January 30, 2016.

~~In 2015, we recorded~~ROU asset impairment charges, ~~of $59, which are included in our Retail Business selling, general and administrative expenses. For additional information related to goodwill, intangible assets, long-lived assets and impairments,~~ see Note 1: Nature of Operations and Summary of Significant Accounting Policies.

During the year ended February 3, 2024, we measured our investment in Nordstrom Canada, our related-party receivables and related lease guarantees at fair value (see Note 2: Canada Wind-down).

Investments Measured at NAV

We have certain investments that are measured at fair value using the NAV per share, or its equivalent, as a practical expedient. This class of investments consists of partnership interests that mainly invest in venture capital strategies with a focus on privately held consumer and technology companies. The NAV is based on the fair value of the underlying net assets owned by the fund and the relative interest of each participating investor in the fair value of the underlying assets. Our interest in these partnerships is generally not redeemable and is subject to significant restrictions regarding transfers. Distributions from each fund will be received as the underlying assets of the funds are liquidated. Liquidation is triggered by clauses within the partnership agreements or at the funds’ stated end date. The contractual terms of the partnership interests range from six to ten years. For more information regarding investments measured at NAV, see Note 1: Nature of Operations and Summary of Significant Accounting Policies.

NOTE ~~9: LEASES~~8: SELF-INSURANCE

Our self-insurance reserves are summarized as follows:


	February 3, 2024	January 28, 2023
Workers’ compensation	$73	$78
Employee health and welfare	28	26
Other liability	18	12
Total self-insurance reserves	$119	$116

We ~~lease~~are self-insured for the land or the land and buildings at many of our stores. Additionally, we lease office facilities, warehouses and equipment. Most of these leases are classified as operating leases and they expire at various dates through 2080. The majority of our ~~fixed, non-cancellable lease terms are 15 to 30 years for Nordstrom full-line stores~~workers’ compensation programs, employee health and 10 to 15 years for Nordstrom Rack stores. Many of our leases include options that allow us to extend the lease term beyond the initial commitment period, subject to terms agreed to at lease inception. Most of our leases also provide for payment of operating expenses, such as common area charges, real estate taxeswelfare coverage and other ~~executory costs, and some leases require additional payments based on sales, referred to as “percentage rent.”~~

~~Future minimum lease payments as of February 3, 2018 are as follows:~~

Fiscal year Operating leases
2018
$309
2019 312
2020 293
2021 269
2022 247
Thereafter 1,310
Total minimum lease payments
$2,740

~~Rent expense for 2017, 2016 and 2015 was as follows:~~

Fiscal year 2017
2016
2015
Minimum rent:
Store locations
$274

$230

$204
Offices, warehouses and equipment 44
40
41
Percentage rent 11
12
13
Property incentives (79 ) (80 ) (82 )
Total rent expense
$250

$202

$176

~~The rent expense above does not include common area charges, real estate taxes and other executory costs, which were $121 in~~ ~~2017~~, ~~$112~~ in ~~2016~~ ~~and~~ ~~$97~~ in ~~2015~~.

liability.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit ~~amounts~~amounts)

~~NOTE 10: COMMITMENTS AND CONTINGENCIES~~

Our ~~estimated total purchase~~workers’ compensation policies have a retention per claim of $1 or less and no policy limits. Approximately 30% of our workers’ compensation obligations ~~capital expenditure contractual commitments~~are payable within one year. In connection with our workers’ compensation programs, we have a standby letter of credit issued on our behalf with $13 available and ~~inventory purchase orders were $1,462~~$2 outstanding as of February 3, ~~2018. In connection with the purchase of foreign merchandise, we have no outstanding trade letters~~2024. This letter of credit is not reflected in our Consolidated Balance Sheets.

Our employee health and welfare programs do not use stop-loss coverage and participants contribute to the cost of their coverage through premiums and out-of-pocket expenses for deductibles, copays and coinsurance.

Other liability primarily includes commercial general liability obligations. Our commercial general liability policy, with a limit up to $111, has a retention per claim of $1 or less. Approximately 50% of our other liability reserve obligations are payable within one year.

NOTE 9: SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

We have a SERP, which provides retirement benefits to certain officers and select employees. The SERP has different benefit levels depending on the participant’s role. At the end of 2023, we had 57 participants in the plan, including five officers and select employees eligible for SERP benefits, 47 retirees and five beneficiaries. This plan is nonqualified and does not have a minimum funding requirement. We selected the measurement date of January 31, the calendar month end closest to our fiscal year end, to value our SERP.

Benefit Obligation and Funded Status

Our benefit obligation and funded status is as follows:


	February 3, 2024	January 28, 2023
Change in benefit obligation:
Benefit obligation at beginning of year	$176	$212
Participant service cost	1	2
Interest cost	9	6
Benefits paid	(11)	(10)
Actuarial gain	(7)	(34)

Benefit obligation at end of year	168	176
Change in plan assets:
Fair value of plan assets at beginning of year	—	—
Employer contribution	11	10
Benefits paid	(11)	(10)
Fair value of plan assets at end of year	—	—
Underfunded status at end of year	($168)	($176)

The accumulated benefit obligation, which is the present value of ~~February 3, 2018.~~benefits, assuming no future compensation changes, was $168 and $175 at the end of 2023 and 2022. Amounts recognized as liabilities in the Consolidated Balance Sheets consist of the following:


	February 3, 2024	January 28, 2023
Accrued salaries, wages and related benefits	$12	$11
Other liabilities (noncurrent)	156	165
Net amount recognized	$168	$176

~~Plans for~~Components of SERP Expense

The components of SERP expense recognized in SG&A expense on the Consolidated Statements of Earnings are as follows:


Fiscal year	2023	2022	2021
Participant service cost	$1	$2	$2
Interest cost	9	6	5
Amortization of net loss and other	—	4	8
Total SERP expense	$10	$12	$15

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Accumulated Other Comprehensive Gain (Loss)

Amounts recognized in accumulated other comprehensive gain (loss) (pre-tax) consist of the following:


Fiscal year	2023	2022	2021
Actuarial gain	($7)	($34)	($14)
Amortization of net loss and other	—	(4)	(8)
Amounts recognized in accumulated other comprehensive gain (loss)	($7)	($38)	($22)

Assumptions

Weighted-average assumptions used to determine our ~~Nordstrom NYC store, which we currently expect to open in 2019, ultimately include owning a condominium interest in a mixed-use tower~~benefit obligation and ~~leasing certain nearby properties.~~ SERP expense are as follows:


Fiscal year	2023		2022		2021
Assumptions used to determine benefit obligation:
Discount rate	5.27	%	4.95	%	3.19	%
Rate of compensation increase	2.50	%	2.50	%	2.50	%
Assumptions used to determine SERP expense:
Discount rate	4.95	%	3.19	%	2.62	%
Rate of compensation increase	2.50	%	2.50	%	2.50	%

Future Benefit Payments and Contributions

As of February 3, ~~2018,~~2024, the expected future benefit payments based upon the assumptions described above and including benefits attributable to estimated future employee service are as follows:


Fiscal year
2024			$12
2025			12
2026			13
2027			13
2028			13
2029 – 2033			61
Thereafter			44

NOTE 10: STOCK-BASED COMPENSATION

Under our deferred and stock-based compensation plan arrangements, we issued 2.4, 3.4 and 1.6 shares of common stock in 2023, 2022 and 2021. On June 6, 2023, our shareholders approved an amendment to the 2019 Equity Incentive Plan. The amendment increases common stock available for issuance by 15.0 shares.Under the 2019 Plan, the aggregate number of shares to be issued may not exceed 39.5 plus any shares currently outstanding under the 2010 Plan that are forfeited or expire during the term of the 2019 Plan. As of February 3, 2024, we had ~~approximately $289~~39.5 shares authorized, 14.8 shares issued and outstanding and 23.9 shares remaining available for future grants under the 2019 Plan.

Under the ESPP, employees may make payroll deductions of ~~fee interest~~up to 15% of their base compensation for the purchase of Nordstrom common stock. At the end of each six-month offering period, participants apply their accumulated payroll deductions toward the purchase of shares of our common stock at 90% of the fair market value on the last day of the offer period. On June 6, 2023, our shareholders approved an amendment under the ESPP. The amendment increases common stock available for purchase by 3.5 shares. As of February 3, 2024, we had 19.6 shares authorized and 4.9 shares available for issuance under the ESPP. We issued 1.0, 0.9 and 0.5 shares under the ESPP during 2023, 2022 and 2021. At the end of 2023 and 2022, we had current liabilities of $5 and $6 for future purchases of shares under the ESPP.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in ~~land,~~millions except per share, per option and per unit amounts)

The following table summarizes our stock-based compensation expense:


Fiscal year	2023	2022	2021
RSUs	$40	$41	$52
Stock options	6	11	22
Other1	6	7	5
Total stock-based compensation expense, before income tax benefit	52	59	79
Income tax benefit	(13)	(15)	(20)
Total stock-based compensation expense, net of income tax benefit	$39	$44	$59

1 Other stock-based compensation expense includes PSUs, ESPP and nonemployee director stock awards.

The stock-based compensation expense before income tax benefit was recorded in our Consolidated Statements of Earnings as follows:


Fiscal year	2023	2022	2021
Cost of sales and related buying and occupancy costs	$10	$9	$15
SG&A expenses	42	50	64
Total stock-based compensation expense, before income tax benefit	$52	$59	$79

Restricted Stock

Our Compensation, People and Culture Committee of our Board of Directors approves grants of restricted stock units to employees. The number of units granted to an individual are determined based upon award amounts and the fair value of the restricted stock units at the time of grant. Restricted stock units typically vest over four years.

A summary of restricted stock unit activity for 2023 is presented below:


Fiscal year	2023
	Shares	Weighted-average grant date fair value per unit
Outstanding, beginning of year	4.6	$32
Granted	3.6	16
Vested	(1.3)	26
Forfeited or canceled	(0.7)	21
Outstanding, end of year	6.2	$19

The aggregate fair value of restricted stock units vested during 2023, 2022 and 2021 was $33, $62 and $50. As of February 3, 2024, the total unrecognized stock-based compensation expense related to nonvested restricted stock units was $69, which is expected to ~~convert~~be recognized over a weighted-average period of 24 months.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Stock Options

Our Compensation, People and Culture Committee of our Board of Directors approves grants of nonqualified stock options to employees. The number of awards granted to an individual are determined based upon award amounts and the ~~condominium interest once~~fair value of stock options at the ~~store~~time of grant. Our options primarily vest equally over a four-year period or at the end of two years, and expire ten years after the date of grant. We used the following assumptions to estimate the fair value for stock options at each grant date:


Fiscal year		2023		2022		20211
Assumptions
	Risk-free interest rate2	3.98% – 5.05%		1.18% – 1.95%		0.11% – 1.51%
	Weighted-average volatility3	52.3	%	52.4	%	52.2	%
	Weighted-average expected dividend yield4	3.8	%	3.4	%	3.4	%
	Expected life in years5	8.2		8.3		8.3

Grant Date Information
	Date of grant	March 6, 2023		March 3, 2022		March 4, 2021
	Weighted-average fair value per option	$8		$10		$13
	Exercise price per option	$20		$26		$36

1 The options granted on March 4, 2021 include market performance-based stock options with a contractual term of ten years that were awarded to certain members of senior management as well as time-based options. The price-hurdle options contain a market condition that requires the closing price of our stock to meet or exceed certain price thresholds for 20 consecutive trading days in order for shares to vest.

2 Represents the yield on U.S. Treasury securities that mature over the 10-year life of the stock options.

3 Based on a combination of the historical volatility of our common stock and the implied volatility of exchange-traded options for our common stock.

4 Our forecasted dividend yield for the next 10 years.

5 Derived from the output of the binomial lattice model and represents the estimated period of time until option exercise. The expected term of options granted is ~~constructed. We have committed to make future installment payments~~ based on our historical exercise behavior, taking into consideration the ~~developer meeting pre-established construction~~contractual term of the option and ~~development milestones. In~~our employees’ expected exercise and post-vesting employment termination behavior.

A summary of stock option activity for 2023 is presented below:


Fiscal year	2023
	Shares	Weighted- average exercise price	Weighted-average remaining contractual life (years)	Aggregate intrinsic value1
Outstanding, beginning of year	8.5	$38
Granted	1.1	20
Exercised	(0.3)	16
Forfeited or canceled	(1.7)	44
Outstanding, end of year	7.6	$35	5	$5
Exercisable, end of year	4.8	$40	4	$5

Fiscal year		2023	2022	2021
Aggregate intrinsic value of options exercised		$1	$4	$—
Fair value of stock options vested		$4	$27	$2

1 The aggregate intrinsic value represents the ~~event that this project~~amount realized if all in-the-money options were exercised on the final business day before February 3, 2024.

As of February 3, 2024, the total unrecognized stock-based compensation expense related to nonvested stock options was $6, which is ~~not completed, the opening may~~expected to be ~~delayed~~recognized over a weighted-average period of 10 months.

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Notes to ~~future losses or capital commitments~~Consolidated Financial Statements

(Dollar and share amounts in ~~order to complete construction or to monetize our investment in the land.~~millions except per share, per option and per unit amounts)

NOTE 11: SHAREHOLDERS’ EQUITY

We have certain limitations with respect to the payment of dividends and share repurchases under our Revolver agreement (see Note 6: Debt and Credit Facilities).

Changes in the number of issued and outstanding shares of our common stock in2023, 2022 and 2021 are the result of share repurchases and compensation plan issuances (see Note 10: Stock-based Compensation).

Share Repurchases

In May 2022, our Board of Directors authorized a new program to repurchase up to $500 of our outstanding common stock, with no expiration date, which replaced the August 2018 program. The following is a summary of the activity related to our share repurchase ~~programs in~~ ~~2015~~, ~~2016~~ ~~and~~ ~~2017~~:

programs:


	Shares	Average price per share	Amount
Capacity at January 30, 2021			$707

Shares repurchased	—	—	—

Capacity at January 29, 2022			707
August 2018 program termination			(707)
May 2022 program authorization (no expiration)			500
Shares repurchased	2.8	$22	(62)
Capacity at January 28, 2023			438
Shares repurchased1	0.03	$19	(1)
Capacity at February 3, 20241			$438

Shares

Average price
per share

Amount
Capacity at January 31, 2015
$1,075
October 2015 authorization (ended March 1, 2017) 1,000
Shares repurchased 19.1

$63
(1,191 )
Expiration of unused capacity in March 2015¹
(73 )
Capacity at January 30, 2016 811
Shares repurchased 5.9

$48
(282 )
Capacity at January 28, 2017 529
February 2017 authorization (ending August 31, 2018) 500
Shares repurchased 4.6

$45
(206 )
Expiration of unused October 2015 authorization capacity in March 2017 (409 )
Capacity at February 3, 2018
$414
1 Subtotal of ending share repurchase capacity may not foot due to rounding.

¹~~Expiration relates to the February 2013 program.~~

~~The actual timing, price, manner and amounts of future share repurchases, if any, will be subject to market and economic conditions and applicable SEC rules.~~Dividends

We paid dividends of ~~$1.48~~$0.76 per share in ~~2017~~2023 and ~~2016~~in 2022 and ~~$6.33 per share~~none in 2015. Dividends paid in 2015 included a special cash dividend of $905, or $4.85 per share of outstanding common stock, in addition to our quarterly dividends totaling $1.48 per share. The special dividend was authorized by our Board of Directors on October 1, 2015, and was paid using proceeds from the sale of our credit card receivables (see Note 2: Credit Card Receivable Transaction).

2021. In February ~~2018,~~2024, subsequent to year end, we declared a quarterly dividend of ~~$0.37~~$0.19 per share, which will be paid on March ~~20, 2018.~~27, 2024 to shareholders of record as of March 12, 2024.

Rights Plan

~~NOTE 12: STOCK-BASED COMPENSATION~~

~~We currently grant stock-based awards under~~In September 2022, our ~~2010~~Board of Directors approved a shareholder rights agreement and declared a dividend of one right for each outstanding share of Nordstrom common stock to shareholders of record on September 30, 2022. In June 2023, shareholders approved an advisory vote on the extension of our Rights Plan ~~2002 Plan~~at our 2023 Annual Meeting, and ~~Trunk Club VCP, and employees may~~in August 2023, the Board of Directors extended the expiration date to September 19, 2025, unless redeemed, exchanged or terminated earlier by our Board. Each right entitles holders to purchase ~~our~~one newly issued share of Nordstrom common stock at ~~a discount under~~an exercise price of $94 per right, subject to adjustment. Initially, the rights are not exercisable and trade with our ~~employee stock purchase plan (“ESPP”).~~

In 2010, our shareholders approved the adoption of the 2010 Plan, which replaced the 2004 Equity Incentive Plan (“2004 Plan”). The 2010 Plan authorizes the grant of stock options, restricted stock, performance share units, stock appreciation rights and unrestricted shares of common stock.

In general, the rights become exercisable following a public announcement that a person acquires 10% or more of the outstanding shares of Nordstrom common stock. If the rights are exercised, each holder (except the acquiring person) will have the right to receive common stock equal to ~~employees. On May 16, 2017, our shareholders approved an amendment~~two times the exercise price of the right. The Company may redeem the rights for $0.001 per right anytime prior to the ~~2010 Equity Incentive Plan.~~rights becoming exercisable. The ~~amendment increases common stock available~~agreement also provides for ~~issuance by 6.2. The aggregate number of shares to be issued under the 2010 Plan may not exceed 30.4 plus any shares~~exceptions and additional terms for other certain situations and circumstances. There is currently outstanding under the 2004 Plan that are forfeited or expire during the term of the 2010 Plan. No future grants will be made under the 2004 Plan. As of February 3, 2018, we have 77.5 shares authorized, 52.8 shares issued and outstanding and 8.7 shares remaining available for future grants under the 2010 Plan.

~~The 2002 Plan authorizes the grant of stock awards~~no impact to our ~~nonemployee directors. These awards may be deferred or issued in the form~~Consolidated Financial Statements.

NOTE 12: INCOME TAXES

U.S. and foreign components of restricted or unrestricted stock, non-qualified stock options or stock appreciation rights. As of February 3, 2018, we had 0.9 shares authorized and 0.4 shares available for issuance under this plan. In 2017, total expense on deferred shares was less than $1.

earnings before income taxes were as follows:


Fiscal year	2023	2022	2021
U.S.	$143	$316	$241
Foreign	4	21	5
Earnings before income taxes	$147	$337	$246

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit ~~amounts~~amounts)

The Trunk Club VCP is a performance-based plan that provides for three payout scenarios based on the results of Trunk Club’s business meeting minimum or exceeding maximum 2018 sales and earnings metrics. As of February 3, 2018, we granted 0.6 of the 1.0 units available for grant. There is no unrecognized stock-based compensation expense related to nonvested VCP units as no payout is expected. If at any time it becomes probable that another outcome will be achieved, compensation expense will be cumulatively adjusted based on the grant date fair value associated with that payout scenario.

Under the ESPP, employees may make payroll deductions of up to 10% of their base and bonus compensation for the purchase of Nordstrom common stock. At the end of each six-month offering period, participants apply their accumulated payroll deductions toward the purchase of shares of our common stock at 90% of the fair market value on the last day of the offer period. As of February 3, 2018, we had 12.6 shares authorized and 2.2 shares available for issuance under the ESPP. We issued 0.4 shares under the ESPP during 2017 and 2016. At the end of 2017 and 2016, we had current liabilities of $6 for future purchases of shares under the ESPP.

~~The following table summarizes our stock-based compensation expense:~~

Fiscal year 2017
2016
2015
Stock options
$18

$36

$33
Restricted stock units 51
34
18
Acquisition-related stock compensation 1
15
17
Performance share units 2
1
(3 )
Other 5
5
5
Total stock-based compensation expense, before income tax benefit 77
91
70
Income tax benefit (20 ) (28 ) (21 )
Total stock-based compensation expense, net of income tax benefit
$57

$63

$49

~~The stock-based compensation expense before income tax benefit was recorded in our Consolidated Statements of Earnings as follows:~~

Fiscal year 2017
2016
2015
Cost of sales and related buying and occupancy costs
$25

$25

$20
Selling, general and administrative expenses 52
66
50
Total stock-based compensation expense, before income tax benefit
$77

$91

$70

The benefit of tax deductions in excess of the compensation cost recognized for stock-based awards is classified as operating cash inflows and is reflected as excess tax benefit from stock-based compensation in the Consolidated Statements of Cash Flows.

~~Special Dividend Adjustment~~

In connection with the closing of our credit card receivable transaction on October 1, 2015, our Board of Directors authorized a special cash dividend of $4.85 per share (see Note 11: Shareholders’ Equity). As required by our equity incentive plan’s non-discretionary anti-dilutive provisions, an adjustment was made to outstanding awards to prevent dilution of their value resulting from the special cash dividend. These adjustments did not result in incremental stock-based compensation expense as the fair value measure of the awards were the same immediately before and after the adjustment. The adjustments to awards included increasing the number of outstanding restricted stock units, stock options and performance shares, as well as reducing the exercise prices of outstanding stock options.

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~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

~~Stock Options~~

Our Compensation Committee of our Board of Directors approves annual grants of nonqualified stock options to employees. We used the following assumptions to estimate the fair value for stock options at each grant date (excluding options granted in connection with the Trunk Club acquisition):

Fiscal Year 2017
2016
2015
Assumptions

Risk-free interest rate: Represents the yield on U.S. Treasury zero-coupon securities that mature over the 10-year life of the stock options.
1.0% – 2.5%
0.7% – 1.9%
0.2% – 2.1%

Weighted-average volatility: Based on a combination of the historical volatility of our common stock and the implied volatility of exchange-traded options for our common stock.
40.1 % 36.8 % 29.4 %

Weighted-average expected dividend yield: Our forecasted dividend yield for the next 10 years.
2.4 % 2.2 % 1.8 %

Expected life in years: Represents the estimated period of time until option exercise. The expected term of options granted was derived from the output of the Binomial Lattice option valuation model and was based on our historical exercise behavior, taking into consideration the contractual term of the option and our employees’ expected exercise and post-vesting employment termination behavior.
7.1
6.9
6.7

Grant Date Information
Date of grant February 28, 2017
February 29, 2016
February 24, 2015
Weighted-average fair value per option
$16

$16

$21
Exercise price per option
$47

$51

$81

Supplemental nonqualified stock options were also granted to certain company leaders on June 7, 2016, at an exercise price per option of $41. The assumptions used to estimate the fair value for the supplemental stock options were similar to the 2016 annual grant assumptions. The weighted-average fair value per option at the grant date was $13. In 2016, we also granted stock options to certain qualified employees outside of the annual and supplemental grant dates, which were insignificant in aggregate. The number of awards granted to an individual are determined based upon a percentage of the recipient’s base salary and the fair value of the stock options. Options typically vest over four years, and expire 10 years after the date of grant.

~~A summary of stock option activity for 2017, which includes awards issued as part of the Trunk Club acquisition in 2014, is presented below:~~

Fiscal year 2017
Shares

Weighted-
average
exercise price

Weighted-average
remaining
contractual
life (years)

Aggregate
intrinsic
value

Outstanding, beginning of year 13.5

$48

Granted 0.3
47

Exercised (0.7 ) 30

Forfeited or cancelled (0.8 ) 54

Outstanding, end of year 12.3

$49
5

$52
Exercisable, end of year 9.1

$47
4

$49
Vested or expected to vest, end of year 11.8

$49
5

$52

Fiscal year 2017
2016
2015
Aggregate intrinsic value of options exercised
$13

$30

$62
Fair value of stock options vested
$34

$40

$44

~~As of~~ ~~February 3, 2018, the total unrecognized stock-based compensation expense related to nonvested stock options was $22, which is expected to be recognized over a weighted-average period of 21 months.~~

~~Table of Contents~~

~~Nordstrom, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

~~Restricted Stock~~

Our Compensation Committee of our Board of Directors approves grants of restricted stock units to employees. The number of units granted to an individual are determined based upon a percentage of the recipient’s base salary and the fair value of the restricted stock. Restricted stock units typically vest over four years.

~~A summary of restricted stock unit activity for~~ ~~2017~~ ~~is presented below:~~

Fiscal year 2017
Shares
Weighted-average grant date fair value per unit
Outstanding, beginning of year 2.3

$49
Granted 1.9
42
Vested (0.5 ) 56
Forfeited or cancelled (0.4 ) 63
Outstanding, end of year 3.3

$45

The aggregate fair value of restricted stock units vested during 2017, 2016 and 2015 was $26, $17 and $11. As of February 3, 2018, the total unrecognized stock-based compensation expense related to nonvested restricted stock units was $83, which is expected to be recognized over a weighted-average period of 28 months.

~~Performance Share Units~~

~~We grant performance share units to executive officers as one of the ways to align compensation with shareholder interests. Performance share units are earned after a~~ ~~three~~-year performance cycle only when our total shareholder return (reflecting daily stock price appreciation and compounded reinvestment of dividends) outperforms companies in a defined peer group determined by the Compensation Committee of our Board of Directors. The percentage of units that are earned depends on our relative position at the end of the performance cycle and can range from 0% ~~to 175% of the number of units granted.~~

Beginning in 2016, performance share units are payable only in Company stock and are classified as equity awards. We record compensation cost based upon the value of the underlying stock at the date of grant. The provisions of the performance share units are considered a market condition, and therefore the effect of that market condition is reflected in the grant date fair value of the award. We used a Monte-Carlo simulation to account for the market condition in the fair value of the award. Compensation cost is recognized regardless of whether the market condition is actually satisfied; however, the compensation cost is reversed if an employee terminates prior to satisfying the requisite service period. Dividends are not paid during the performance period.

Our 2015 performance share units are liability-based awards due to our ability to settle them in cash or stock as elected by the employee. As liability-based awards, they are remeasured, with a corresponding adjustment to earnings, at each fiscal quarter-end during the performance cycle. The performance share unit liability is remeasured using the estimated percentage of units earned multiplied by the closing market price of our common stock on the current period-end date and is pro-rated based on the amount of time that has passed in the vesting period. The price used to determine the amount of cash or stock settled for the performance share units upon vesting is the closing market price of our common stock on the last day of the performance cycle.

~~The following is a summary of performance share unit activity, which assumes performance share units vest at 100% of the number of units granted:~~



~~Fiscal year~~	~~2017~~
~~Outstanding units, beginning of year~~	~~0.2~~
~~Granted~~	~~0.1~~
~~Vested~~	—
~~Forfeited or cancelled~~	~~(0.1~~	)
~~Outstanding units, end of year~~	~~0.2~~

~~No performance share units were earned nor vested in~~ ~~2017. In both 2016 and 2015, performance share units earned and vested at 75%, there was a stock and cash settlement of $3 and performance share units earned were less than 0.1.~~

~~Nordstrom, Inc. and subsidiaries~~57

~~Table of Contents~~

~~Nordstrom, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

As of February 3, 2018, there were no liabilities recorded for performance share units and there was $4 in remaining unrecognized stock-based compensation expense for unvested performance share units.

~~NOTE 13: INCOME TAXES~~

In December 2017, the Tax Act was signed into law. Among numerous other provisions, the Tax Act significantly revises the U.S. federal corporate income tax by reducing the statutory rate from 35% to 21%, imposing a mandatory one-time transition tax on accumulated unrepatriated earnings of foreign subsidiaries and enhancing and extending the option to claim accelerated depreciation on qualified property. The Tax Act also revises tax laws that will affect 2018, including, but not limited to, eliminating certain deductions for executive compensation and limiting the deduction for interest. We have reasonably estimated the effects of the Tax Act and recorded provisional amounts in our Consolidated Financial Statements as of February 3, 2018. Net earnings included $42 related to the Tax Act, which includes a provisional one-time, non-cash charge of $51 related to the revaluation of our net deferred tax assets for the change in statutory tax rate and for the impacts associated with the future limitations on executive compensation, partially offset by cash tax savings from a lower federal tax rate. As we complete our analysis of the Tax Act and interpret any additional guidance issued by the U.S. Treasury Department, the IRS and other standard-setting bodies, we may make adjustments to the provisional amounts, which may materially impact our provision for income taxes in the period in which the adjustments are recorded.

~~U.S. and foreign components of earnings before income taxes were as follows:~~

Fiscal year 2017
2016
2015
U.S.
$803

$687

$996
Foreign (13 ) (3 ) (20 )
Earnings before income taxes
$790

$684

$976

Income tax expense consists of the following:


Fiscal year	2023	2022	2021
Current income taxes:
Federal	$55	$149	$61
State and local	18	27	18
Foreign	—	(1)	—
Total current income tax expense	73	175	79
Deferred income taxes:
Federal	(59)	(86)	(10)
State and local	(10)	(2)	(5)
Foreign	9	5	4
Total deferred income tax benefit	(60)	(83)	(11)
Total income tax expense	$13	$92	$68

Fiscal year 2017
2016
2015
Current income taxes:
Federal
$291

$290

$202
State and local 51
54
32
Foreign —
1
—
Total current income tax expense 342
345
234
Deferred income taxes:
Federal 10
(17 ) 123
State and local 1
(5 ) 23
Foreign —
7
(4 )
Total deferred income tax (benefit) expense 11
(15 ) 142
Total income tax expense
$353

$330

$376

A reconciliation of the statutory federal income tax rate to the effective tax rate on earnings before income taxes is as follows:


Fiscal year	2023		2022		2021
Statutory rate	21.0	%	21.0	%	21.0	%
CARES Act impact	—		—		(0.9	%)
State and local income taxes, net of federal income taxes	4.0	%	5.9	%	3.4	%
Federal credits	(4.7	%)	(3.8	%)	(4.0	%)
Non-deductible expenses	2.9	%	1.2	%	2.7	%
Stock-based compensation	5.1	%	1.8	%	2.0	%
Valuation allowance	6.6	%	0.4	%	1.8	%
Taxes on foreign operations	1.5	%	1.6	%	1.3	%
Excess tax over book loss on Canada wind-down	(18.2	%)	—		—
Resolution of prior period tax matters	(11.2	%)	—		—
Other, net	1.6	%	(0.9	%)	0.2	%
Effective tax rate	8.6	%	27.2	%	27.5	%

¹The ~~statutory rate in 2017 is reduced due to~~components of deferred tax ~~reform.~~

assets and liabilities are as follows:


	February 3, 2024	January 28, 2023
Deferred tax assets:
Lease liabilities	$425	$463
Compensation and benefits accruals	104	111
Sales return reserve	56	61
Accrued expenses	31	28
Merchandise inventories	36	33
Gift cards	39	43
The Nordy Club loyalty program	2	8
Net operating losses	38	52
Other	36	25
Total deferred tax assets	767	824
Valuation allowance	(1)	(28)
Total deferred tax assets, net of valuation allowance	766	796
Deferred tax liabilities:
ROU assets	(310)	(331)
Land, property and equipment	(164)	(230)
Debt exchange premium	(11)	(12)
Total deferred tax liabilities	(485)	(573)
Net deferred tax assets	$281	$223

58Nordstrom, Inc. and subsidiaries69

Table of Contents

Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit ~~amounts~~amounts)

The ~~components of deferred tax assets and liabilities are as follows:~~

February 3, 2018
January 28, 2017
Compensation and benefits accruals
$148

$209
Allowance for sales returns 50
76
Credit card receivable transaction 8
13
Accrued expenses 27
39
Merchandise inventories 12
43
Gift cards 27
33
Federal benefit of state taxes 16
18
Net operating losses 22
12
(Loss) Gain on sale of interest rate swap (1 ) 4
Other 3
18
Total deferred tax assets 312
465
Valuation allowance (51 ) (37 )
Total net deferred tax assets 261
428
Land, property and equipment basis and depreciation differences (109 ) (258 )
Debt exchange premium (14 ) (23 )
Total deferred tax liabilities (123 ) (281 )
Net deferred tax assets
$138

$147

~~As of February 3, 2018, our state and foreign~~following sets forth information on approximate net operating loss carryforwards for income tax ~~purposes were approximately $11 and $64. As of January 28, 2017, our state and foreign net operating loss carryforwards for income tax purposes were approximately $11 and $37.~~ purposes:


	February 3, 2024	January 28, 2023
State	$621	$756
Foreign	—	26

The net operating loss carryforwards are subject to certain statutory limitations of ~~the Internal Revenue Code,~~ applicable state ~~laws and applicable foreign~~ laws. If not utilized, a portion of our state ~~and foreign~~ net operating loss carryforwards will begin to expire in ~~2031~~2024.

As of February 3, 2024 and ~~2033. Management believes it is more likely than not that certain~~January 28, 2023, the valuation allowance for deferred tax assets was $1 and $28. As a result of the wind-down of our Canada operations in 2023, the valuation allowance for foreign deferred tax assets increased $9 and upon deconsolidation was written off to zero. The write-off of the deferred tax assets and corresponding valuation allowance for Canada was included in the Canada wind-down costs. In 2023, a valuation allowance of $1 was recorded for state ~~and foreign~~ net operating loss carryforwards ~~and deferred tax assets of foreign subsidiaries~~that will not be realized in the foreseeable future. ~~As such, a~~There was no change to the valuation allowance ~~of $51 and $37 have been recorded as of February 3, 2018 and January 28, 2017.~~in 2022.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


Fiscal year	2023	2022	2021
Unrecognized tax benefit at beginning of year	$48	$47	$32
Gross increase to tax positions in prior periods	1	1	11
Gross decrease to tax positions in prior periods	(4)	(6)	—
Gross increase to tax positions in current period	6	7	6

Settlements	(27)	(1)	(2)
Unrecognized tax benefit at end of year	$24	$48	$47

Fiscal year 2017
2016
2015
Unrecognized tax benefit at beginning of year
$32

$19

$15
Gross increase to tax positions in prior periods 2
16
6
Gross decrease to tax positions in prior periods (7 ) —
(2 )
Gross increase to tax positions in current period 5
2
2
Lapses in statute (1 ) (5 ) (2 )
Unrecognized tax benefit at end of year
$31

$32

$19

At the end of ~~2017~~2023 and ~~2016, $18~~2022, $22 and ~~$19~~$45 of the ending gross unrecognized tax benefit related to items which, if recognized, would affect the effective tax rate.

~~Our income tax~~There was no material expense ~~included an increase to expense of $1 in 2017~~ for ~~tax-related~~ interest and ~~penalties. There were no significant changes to expense~~penalties in ~~2016~~2023, 2022 and ~~2015.~~2021. At the end of ~~2017~~2023 and ~~2016,~~2022, our liability for interest and penalties was $3 and ~~$2.~~$8.

We file income tax returns in the U.S. ~~and a limited number of foreign jurisdictions.~~ With few exceptions, we are no longer subject to federal or state and local ~~or non-U.S.~~ income tax examinations for years before ~~2013. Unrecognized~~2014. As of February 3, 2024, we believe it is reasonably possible unrecognized tax benefits related to federal, state and local tax positions may decrease by $6 by February ~~2, 2019,~~1, 2025, due to the completion of examinations and the expiration of various statutes of limitations.

NOTE 13: COMMITMENTS AND CONTINGENCIES

~~Nordstrom, Inc.~~Our estimated total purchase obligations, which primarily consist of inventory purchase orders and ~~subsidiaries~~59

capital expenditure commitments, were $2,049 as of February 3, 2024. These purchase obligations are primarily payable within one year.

~~Table of Contents~~

~~Nordstrom, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

NOTE 14: EARNINGS PER SHARE

Earnings per basic share is computed using the weighted-average number of common shares outstanding during the year. Earnings per diluted share uses the weighted-average number of common shares outstanding during the year plus dilutive common stock equivalents, primarily stock options and restricted stock. Dilutive common stock is calculated using the treasury stock method and includes unvested RSUs and outstanding options that would reduce the amount of earnings for which each share is entitled. Anti-dilutive shares (including stock options and other shares) are excluded from the calculation of diluted shares and earnings per diluted share because their impact could increase earnings per diluted share. The computation of ~~earnings~~EPS is as follows:


Fiscal year	2023	2022	2021
Net earnings	$134	$245	$178

Basic weighted-average shares outstanding	161.8	160.1	159.0
Dilutive shares	1.6	2.0	3.5
Diluted weighted-average shares outstanding	163.4	162.1	162.5

Basic EPS	$0.83	$1.53	$1.12
Diluted EPS	$0.82	$1.51	$1.10

Anti-dilutive shares	8.4	8.7	8.1

Table of Contents

Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, ~~is as follows:~~per option and per unit amounts)

Fiscal year 2017
2016
2015
Net earnings
$437

$354

$600

Basic shares 166.8
173.2
186.3
Dilutive effect of common stock equivalents 2.1
2.4
3.8
Diluted shares 168.9
175.6
190.1

Earnings per basic share
$2.62

$2.05

$3.22
Earnings per diluted share
$2.59

$2.02

$3.15

Anti-dilutive common stock equivalents 10.5
8.0
2.3

~~Net earnings in 2016 included the Trunk Club goodwill impairment charge of $197, which had an impact of $1.14 per basic share and $1.12 per diluted share.~~

NOTE 15: SEGMENT REPORTING

Segments

~~We have two reportable segments, which include~~ ~~Retail~~ ~~and~~ ~~Credit~~.

~~Our~~ ~~Retail~~ segment includes our Full-price operating segment, which is comprised of our Nordstrom U.S. full-line stores and Nordstrom.com. Both of these divisions earn revenue by offering customers a wide range of apparel, shoes, cosmetics and accessories for women, men, young adults and children. Through our multi-channel initiatives, we have integrated the operations, merchandising and technology of our Nordstrom full-line and online stores, consistent with our customers’ expectations of a seamless shopping experience regardless of channel. Internal reporting to our principal executive officer, who is also our chief operating decision maker, is consistent with these multi-channel initiatives. Our Nordstrom Rack, Nordstromrack.com/HauteLook, Nordstrom Canada, Trunk Club and Jeffrey operating segments have similar economic and qualitative characteristics, including nature of products, method of distribution and type of customer, or the segment results are not significant to the operating results of Full-price. Therefore, the results of these operating segments have been aggregated with our Full-price operating segment into the Retail reportable segment.

~~Amounts in the~~ ~~Corporate/Other~~ column include unallocated corporate expenses and assets (including unallocated assets in corporate headquarters, consisting primarily of cash, land, buildings and equipment and deferred tax assets), sales return reserves, inter-segment eliminations and other adjustments to segment results necessary for the presentation of consolidated financial results in accordance with generally accepted accounting principles.

Retail Business represents a subtotal of the Retail segment and Corporate/Other, and is consistent with our presentation in Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations. Retail Business is not a reportable segment.

~~Table of Contents~~

~~Nordstrom, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments. ~~As a result of the evolution of our operations, our~~We have one reportable ~~segments have become progressively more integrated such that we will change our reportable segments to one reportable~~“Retail” segment to align with how management ~~will view~~operates and evaluates the results of our operations. Our principal executive officer, who is our chief operating decision maker, reviews results on a total Company, Nordstrom and Nordstrom Rack basis and uses EBIT as a measure of profitability.

Our Retail reportable segment aggregates our two operating segments, Nordstrom and Nordstrom Rack. As of February 3, 2024, Nordstrom consists of Nordstrom.com, Nordstrom U.S. stores and Nordstrom Local. Nordstrom also included Canada operations prior to March 2, 2023, inclusive of Nordstrom.ca, Nordstrom Canadian stores and Nordstrom Rack Canadian stores, ASOS | Nordstrom prior to December 2023 and TrunkClub.com prior to October 2022. Nordstrom Rack consists of NordstromRack.com, Nordstrom Rack U.S. stores and Last Chance clearance stores.

Our Nordstrom and Nordstrom Rack operating segments both generate revenue by offering customers an extensive selection of high-quality brand-name and private-label merchandise for women, men, young adults and children, with a focus on apparel, shoes, beauty, accessories and home goods. We continue to focus on omni-channel initiatives by integrating the operations, merchandising and technology necessary to be consistent with our customers’ expectations of a seamless shopping experience regardless of channel or business. Nordstrom and Nordstrom Rack have historically had similar economic characteristics and financial performance over the long-term, which we expect to continue in the ~~first quarter~~future. They also have other similar qualitative characteristics, including suppliers, method of ~~2018.~~distribution, type of customer and regulatory environment. Due to their similar qualitative and economic characteristics, we have aggregated our Nordstrom and Nordstrom Rack operating segments into a single reportable segment.

Amounts in the Corporate/Other column include unallocated corporate expenses and assets (including unallocated assets in corporate headquarters, consisting primarily of cash, land, buildings, equipment and deferred tax assets), inter-segment eliminations and other adjustments to segment results necessary for the presentation of consolidated financial results in accordance with GAAP.

Accounting Policy

~~In general, we use the same measurements to compute earnings before income taxes for reportable segments as we do for the consolidated Company. However, redemptions of~~We present our Nordstrom Notes are included in net sales for our Retail segment. The sales amount in our Corporate/Other column includes an entry to eliminate these transactions from our consolidated net sales. The related Nordstrom Notes expenses are included in our Retail segment at face value. Our Corporate/Other column includes an adjustment to reduce the Nordstrom Notes expense from face value to their estimated cost. In addition, our sales return reserve and other corporate adjustments are recordedresults in the ~~Corporate/Other column. Other than as described above,~~way that management views our results internally and the accounting policies of the operating segments are the same as those described in Note 1: Nature of Operations and Summary of Significant Accounting Policies.

~~The following table sets forth information for our reportable segments:~~

Retail
Corporate/Other
Retail Business
Credit
Total
Fiscal year 2017
Net sales
$15,408

($271 )
$15,137

$—

$15,137
Credit card revenues, net —
—
—
341
341
Earnings (loss) before interest and income taxes 1,206
(454 ) 752
174
926
Interest expense, net —
(136 ) (136 ) —
(136 )
Earnings (loss) before income taxes 1,206
(590 ) 616
174
790
Capital expenditures 516
214
730
1
731
Depreciation and amortization 445
213
658
8
666
Assets 5,237
2,638
7,875
240
8,115

Fiscal year 2016
Net sales
$14,768

($270 )
$14,498

$—

$14,498
Credit card revenues, net —
—
—
259
259
Earnings (loss) before interest and income taxes 1,006
(298 ) 708
97
805
Interest expense, net —
(121 ) (121 ) —
(121 )
Earnings (loss) before income taxes 1,006
(419 ) 587
97
684
Capital expenditures 593
249
842
4
846
Depreciation and amortization 456
182
638
7
645
Assets 5,291
2,088
7,379
479
7,858

Fiscal year 2015
Net sales
$14,376

($281 )
$14,095

$—

$14,095
Credit card revenues, net —
—
—
342
342
Earnings (loss) before interest and income taxes 1,220
(302 ) 918
183
1,101
Interest expense, net —
(112 ) (112 ) (13 ) (125 )
Earnings (loss) before income taxes 1,220
(414 ) 806
170
976
Capital expenditures 837
241
1,078
4
1,082
Depreciation and amortization 428
143
571
5
576
Assets 5,460
1,720
7,180
518
7,698

Nordstrom, Inc. and subsidiaries6171

Table of Contents

Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit ~~amounts~~amounts)

The following table ~~summarizes net sales within~~sets forth information for our reportable ~~segments:~~segment:


	Retail	Corporate/Other	Total
Fiscal year 2023
Net sales	$14,219	$—	$14,219
Credit card revenues, net	—	474	474
Earnings (loss) before interest and income taxes	855	(604)	251



Capital expenditures	(244)	(325)	(569)
Canada wind-down costs	—	(284)	(284)
Depreciation and amortization	(263)	(323)	(586)
Assets	5,622	2,822	8,444

Fiscal year 2022
Net sales	$15,092	$—	$15,092
Credit card revenues, net	—	438	438
Earnings (loss) before interest and income taxes	719	(254)	465



Capital expenditures	(154)	(319)	(473)
Depreciation and amortization	(316)	(288)	(604)
Assets	5,968	2,777	8,745

Fiscal year 2021
Net sales	$14,402	$—	$14,402
Credit card revenues, net	—	387	387
Earnings (loss) before interest and income taxes	687	(195)	492



Capital expenditures	(218)	(288)	(506)
Depreciation and amortization	(350)	(265)	(615)
Assets	6,244	2,625	8,869

For information about disaggregated revenues, see Note 3: Revenue.

Fiscal year 2017
2016
2015
Nordstrom full-line stores - U.S.¹

$6,951

$7,186

$7,633
Nordstrom.com 2,887
2,519

2,300
Full-price 9,838
9,705
9,933

Nordstrom Rack 4,059
3,809
3,533
Nordstromrack.com/HauteLook 897
700
532
Off-price 4,956
4,509
4,065

Other retail²
614
554
378
Retail segment 15,408
14,768
14,376
Corporate/Other (271 ) (270 ) (281 )
Total net sales
$15,137

$14,498

$14,095

¹ ~~Nordstrom full-line stores - U.S. includes Nordstrom Local.~~

²~~Other retail includes Nordstrom Canada full-line stores, Trunk Club and Jeffrey boutiques.~~

~~The following table summarizes the percent of net sales by merchandise category:~~

Fiscal year 2017
2016
2015
Women’s Apparel 32 % 32 % 31 %
Shoes 23 % 23 % 23 %
Men’s Apparel 16 % 17 % 17 %
Women’s Accessories 11 % 11 % 12 %
Beauty 11 % 11 % 11 %
Kids’ Apparel 4 % 3 % 3 %
Other 3 % 3 % 3 %
Total net sales 100 % 100 % 100 %

Table of Contents

~~Nordstrom, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Dollar and share amounts in millions except per share, per option and per unit amounts~~

~~NOTE 16: SELECTED QUARTERLY DATA~~¹~~(UNAUDITED)~~

1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total
Fiscal year 2017
Net sales
$3,279

$3,717

$3,541

$4,600

$15,137
Comparable sales (decrease) increase²
(0.8 %) 1.7 % (0.9 %) 2.6 % 0.8 %
Credit card revenues, net 75
76
88
102
341
Gross profit 1,124
1,266
1,226
1,631
5,247
Selling, general and administrative expenses (1,048 ) (1,125 ) (1,106 ) (1,383 ) (4,662 )
Earnings before interest and income taxes 151
217
208
350
926
Net earnings 63
110
114
151
437
Earnings per basic share
$0.38

$0.66

$0.68

$0.90

$2.62
Earnings per diluted share
$0.37

$0.65

$0.67

$0.89

$2.59

Fiscal year 2016
Net sales
$3,192

$3,592

$3,472

$4,243

$14,498
Comparable sales (decrease) increase³
(1.7 %) (1.2 %) 2.4 % (0.9 %) (0.4 %)
Credit card revenues, net 57
59
70
73
259
Gross profit 1,092
1,233
1,211
1,523
5,058
Selling, general and administrative expenses (1,043 ) (1,071 ) (1,029 ) (1,172 ) (4,315 )
Goodwill impairment —
—
(197 ) —
(197 )
Earnings before interest and income taxes 106
221
55
424
805
Net earnings (loss) 46
117
(10 ) 201
354
Earnings (Loss) per basic share⁴

$0.27

$0.67

($0.06 )
$1.17

$2.05
Earnings (Loss) per diluted share^4,5

$0.26

$0.67

($0.06 )
$1.15

$2.02

¹~~Quarterly totals may not foot across due to rounding.~~

²The 53rd week is not included in comparable sales calculations (see Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information about the 53rd week).

³One week of the Anniversary Sale, historically our largest event of the year, shifted into the third quarter. Combined second and third quarter comparable sales, which removes the impact of the event shift, increased 0.4% compared with the same period last year.

⁴~~Loss per basic and diluted share included the impact of the Trunk Club goodwill impairment charge of $1.14 and $1.12 per share in the third quarter of 2016.~~

⁵Due to the anti-dilutive effect resulting from the reported net loss in the third quarter of 2016, the impact of potentially dilutive securities on the weighted-average shares outstanding has been omitted from the quarterly calculation of loss per diluted share. The impact of these potentially dilutive securities has been included in the calculation of weighted-average shares for all other periods in 2016.

~~Nordstrom, Inc. and subsidiaries~~63

~~Table of Contents~~

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

DISCLOSURE CONTROLS AND PROCEDURES

~~Blake Nordstrom, Pete Nordstrom and Erik Nordstrom serve as co-presidents of Nordstrom, Inc. (“Company”). Blake Nordstrom continues to serve as~~For the Company’s principal executive officer for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s Chief Financial Officer is the Company’s principal financial officer for purposes of the Exchange ~~Act.~~Act, our Chief Executive Officer, Erik B. Nordstrom, serves as our principal executive officer and our Chief Financial Officer, Cathy R. Smith, is our principal financial officer and principal accounting officer.

~~As of the end of the period covered by this Annual Report on Form 10-K, the Company performed an evaluation under~~Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we have performed an evaluation of the design and effectiveness of our disclosure controls and procedures ~~(as defined in rules 13a-15(e) or 15d-15(e) under~~as of the ~~Exchange Act).~~ last day of the period covered by this report.

Based upon that evaluation, our principal executive officer and principal financial officer concluded that ~~as of the end of the period covered by this Annual Report,~~ our disclosure controls and procedures were ~~effective~~effective. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) under the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed in the ~~timely~~reports that we file or submit under the Exchange Act is recorded, processed, summarized and ~~accurate recording, processing, summarizing and reporting of material financial and non-financial information~~reported within the time periods specified within the SEC’s rules and forms. ~~Our principal executive officer and principal financial officer also concluded that our disclosure~~Disclosure controls and procedures ~~were effective~~include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as is defined in the Exchange Act. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and overriding of controls. Consequently, an effective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of February 3, ~~2018.~~2024.

Deloitte & Touche LLP, an independent registered public accounting firm, was retained to audit ~~Nordstrom’s~~our Consolidated Financial Statements and the effectiveness of ~~the Company’s~~our internal control over financial reporting. They have issued an attestation report on ~~the Company’s~~our internal control over financial reporting as of February 3, ~~2018,~~2024, which is included herein.

Nordstrom, Inc. and subsidiaries73

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Nordstrom, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Nordstrom, Inc. and subsidiaries (the “Company”) as of February 3, ~~2018,~~2024, based on criteria established inInternal ~~Control -~~ Control—Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 3, ~~2018,~~2024, based on criteria established in Internal Control -— Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended February 3, ~~2018,~~2024, of the Company and our report dated March 19, ~~2018~~2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report Onon Internal Control Over Financial ~~Reporting~~.Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Seattle, Washington

March 19, ~~2018~~

2024

~~Nordstrom, Inc. and subsidiaries~~6574

Table of Contents

Item 9B. Other Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required under this item is included in the following sections of our Proxy Statement for our ~~2018~~2024 Annual Meeting of Shareholders, the sections of which are incorporated by reference herein and will be filed within 120 days after the end of our fiscal year:

Corporate Governance

Director Qualifications, Experience, and Nominating Process

Delinquent Section 16(a) ~~Beneficial Ownership Reporting Compliance~~Reports

Requirements and Deadlines for Submission of Proxy Proposals, Nomination of Directors, and ~~other~~Other Business of Shareholders

The certifications of our ~~Co-President~~Chief Executive Officer and Chief Financial Officer required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included as exhibits to this 2023 Annual Report ~~on Form 10-K~~ and were included as exhibits to each of our quarterly reports on Form 10-Q. Our ~~Co-President~~Chief Executive Officer certified to the ~~New York Stock Exchange (“NYSE”)~~NYSE on ~~May 30, 2017~~June 13, 2023, pursuant to Section 303A.12(a) of the NYSE’s listing standards, that he was not aware of any violation by the Company of the NYSE’s corporate governance listing standards as of that date.

Item 11. Executive Compensation.

Compensation of Executive Officers

Director Compensation and Stock Ownership Guidelines

Compensation Committee Interlocks and Insider Participation

Compensation, People and Culture Committee Report

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.

Security Ownership of Certain Beneficial Owners and Management

Equity Compensation Plans

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Corporate Governance

Certain Relationships and Related Transactions

Item 14. Principal ~~Accounting~~Accountant Fees and Services.

Our independent registered public accounting firm is Deloitte & Touche LLP, Seattle, Washington, Auditor ID: 34.

The information required under this item is included in the ~~following~~ Ratification of the Appointment of Independent Registered Public Accounting Firm section of our Proxy Statement for our ~~2018~~2024 Annual Meeting of Shareholders, the section of which is incorporated by reference herein and will be filed within 120 days after the end of our fiscal ~~year:~~

~~Ratification of the Appointment of Independent Registered Public Accounting Firm~~

year.

66Nordstrom, Inc. and subsidiaries75

Table of Contents

PART IV

Item 15. ~~Exhibits,~~Exhibit and Financial Statement Schedules.

The following information required under this item is filed as part of this report:

~~(a)1. FINANCIAL STATEMENTS~~


		Page
(a)1. FINANCIAL STATEMENTS
		~~Page~~
Report of Independent Registered Public Accounting Firm	3644
Consolidated Statements of Earnings		3746
Consolidated Statements of Comprehensive Earnings		3746
Consolidated Balance Sheets		3847
Consolidated Statements of Shareholders’ Equity		3948
Consolidated Statements of Cash Flows		4049
Management’s Report on Internal Control Over Financial Reporting		6473
Report of Independent Registered Public Accounting Firm		6574

(a)3. EXHIBITS
Nordstrom, Inc. and Subsidiaries Exhibit Index		77

~~(a)3. EXHIBITS~~

~~Exhibits are incorporated herein by reference or are filed with this report as set forth in the Index to Exhibits on pages 68 through 73 hereof.~~

All other schedules and exhibits are omitted because they are not applicable, not required or because the information required has been given as part of this report.

~~Nordstrom, Inc. and subsidiaries~~67

Table of Contents

Nordstrom, Inc. and Subsidiaries

Exhibit Index

Incorporated by Reference

Exhibit

Form

Exhibit

Filing Date

3.1

Articles of Incorporation as amended and restated on May 25, 2005

8-K

3.1

May 31, 2005

3.2

Bylaws, as amended and restated on September 20, 2023

8-K

3.1

September 21, 2023

4.1

Description of Nordstrom, Inc. Securities

S-3

4.4

April 30, 2001

4.2

Indenture between Registrant and Norwest Bank Colorado, N.A., as trustee, dated March 10, 1998

S-3/A

4.1

March 10, 1998

4.3

Indenture dated December 3, 2007, between the Company and Wells Fargo Bank, National Association

S-4/A

4.1

April 29, 2014

4.4

Form of 5.00% Global Note due 2044

S-4

4.2

March 28, 2014

4.5

Form of 5.00% Rule 144A Global Note due 2044

S-4

4.3

March 28, 2014

4.6

Form of 5.00% Regulation S Global Note due 2044

S-4

4.4

March 28, 2014

4.7

Form of 7.00% Note due January 2038

8-K

4.2

December 3, 2007

4.8

Form of 4.00% Note due 2027

8-K

4.1

March 9, 2017

4.9

Form of 5.00% Note due 2044

8-K

4.2

March 9, 2017

4.10

Form of 4.375% Note due 2030

8-K

4.1

November 6, 2019

4.11

Form of 2.300% Global Note due 2024

10-Q

4.2

September 3, 2021

4.12

Form of 4.250% Global Note due 2031

10-Q

4.3

September 3, 2021

4.13

Trunk Club Newco, Inc. 2010 Equity Incentive Plan

S-8

4.1

August 27, 2014

4.14

Shareholder Rights Agreement, dated as of September 19, 2022, by and between the Company and Computershare Trust Company, N.A., as rights agent (which includes the Form of Rights Certificate as Exhibit A thereto).

8-K

4.1

September 20, 2022

4.15

First Amendment to the Shareholder Rights Agreement, dated as of August 21, 2023, by and between Nordstrom, Inc. and Computershare Trust Company, N.A., as rights agent

8-K

4.1

August 21, 2023

10.1

Nordstrom, Inc. 2019 Equity Incentive Plan (2020 Amendment)

DEF 14A

Appendix B

April 7, 2020

10.2

Nordstrom, Inc. 2019 Equity Incentive Plan (2023 Amendment)

DEF 14A

Appendix B

April 28, 2023

10.3

N ordstrom, Inc. Employee Stock Pur chase Plan (2023 Amendment)

DEF 14A

Appendix C

April 28, 2023

10.4

Nordstrom 401(k) Plan (2021 Restatement)

10-Q

10.2

June 4, 2021

10.5

Amendment 2021-1 to the Nordstrom 401(k) Plan

11-K

99.3

June 10, 2022

10.6

Amended and Restated Nordstrom, Inc. Executive Management Bonus Plan

10-K

10.2

March 10, 2023

10.7

Nordstrom Deferred Compensation Plan (2022 Restatement)

10-Q

10.2

September 2, 2022

10.8

Form of 2014 Nonqualified Stock Option Grant Agreement

8-K

10.1

March 4, 2014

10.9

Form of the 2015 Nonqualified Stock Option Grant Agreement

8-K

10.1

February 19, 2015

10.10

Form of the 2016 Nonqualified Stock Option Grant Agreement

8-K

10.1

March 1, 2016

10.11

Form of 2016 Nonqualified Stock Option Grant Agreement, Supplemental Award

10-Q

10.2

August 30, 2016

10.12

Form of the 2017 Nonqualified Stock Option Grant Agreement

8-K

10.1

February 23, 2017

10.13

Form of 2019 Nonqualified Stock Option Award Agreement

8-K

10.1

March 4, 2019

10.14

Form of 2019 Nonqualified Stock Option Award Agreement, Supplemental Award

8-K

10.2

March 4, 2019

10.15

Form of 2020 Nonqualified Stock Option Award Agreement

8-K

10.1

March 3, 2020

10.16

Form of 2020 Nonqualified Stock Option Award Agreement, Supplemental Award

10-Q

10.5

June 10, 2020



	~~Exhibit~~	~~Method of Filing~~
~~1.1~~	Underwriting Agreement, dated March 6, 2017, by and between the Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC and U.S. Bancorp Investments, Inc., as representatives of the several underwriters named thereinNordstrom, Inc. and subsidiaries77	~~Incorporated by reference from the Registrant’s Form 8-K filed on March 10, 2017, Exhibit 1.1~~

~~3.1~~	~~Articles of Incorporation as amended and restated on May 25, 2005~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on May 31, 2005, Exhibit 3.1~~

~~3.2~~	~~Bylaws, as amended and restated as of June 7, 2017~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on June 8, 2017, Exhibit 3.1~~

~~4.1~~	~~Indenture between Registrant and Norwest Bank Colorado, N.A., as trustee, dated March 11, 1998~~	~~Incorporated by reference from Registration No. 333-47035, Exhibit 4.1~~

~~4.2~~	~~Amended and Restated Master Indenture, dated as of May 1, 2007, by and between Nordstrom Credit Card Master Note Trust II and Wells Fargo Bank, National Association, as indenture trustee~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on May 8, 2007, Exhibit 4.1~~

~~4.3~~	~~Series 2011-1 Indenture Supplement, dated as of November 22, 2011, by and between Nordstrom Credit Card Master Note Trust II and Wells Fargo Bank, National Association, as indenture trustee~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on November 28, 2011, Exhibit 4.2~~

~~4.4~~	~~Indenture dated December 3, 2007, between the Company and Wells Fargo Bank, National Association~~	~~Incorporated by reference from the Registrant’s Form S-4/A filed on April 29, 2014, Exhibit 4.1~~

~~4.5~~	Note Purchase Agreement, dated as of November 16, 2011, by and between Nordstrom Credit Card Receivables II LLC, Nordstrom fsb, Nordstrom Credit, Inc., RBS Securities Inc. and J.P. Morgan Securities LLC	~~Incorporated by reference from the Registrant’s Form 8-K filed on November 28, 2011, Exhibit 4.1~~

~~4.6~~	~~Form of 6.25% Note due January 2018~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on December 3, 2007, Exhibit 4.1~~

~~4.7~~	~~Form of 4.75% Note due May 1, 2020~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on April 23, 2010, Exhibit 4.1~~

~~4.8~~	~~Form of 4.00% Note due 2021~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on October 11, 2011, Exhibit 4.1~~

~~4.9~~	~~Form of 5.00% Global Note due 2044~~	~~Incorporated by reference from the Registrant’s Form S-4 filed on March 28, 2014, Exhibit 4.2~~

~~4.10~~	~~Form of 5.00% Rule 144A Global Note due 2044~~	~~Incorporated by reference from the Registrant’s Form S-4 filed on March 28, 2014, Exhibit 4.3~~

~~4.11~~	~~Form of 5.00% Regulation S Global Note due 2044~~	~~Incorporated by reference from the Registrant’s Form S-4 filed on March 28, 2014, Exhibit 4.4~~

~~4.12~~	~~Form of 4.00% Note due 2027~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on March 9, 2017, Exhibit 4.1~~

~~4.13~~	~~Form of 5.00% Note due 2044~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on March 9, 2017, Exhibit 4.2~~

~~4.14~~	~~Registration Rights Agreement, dated as of December 12, 2013~~	~~Incorporated by reference from the Registrant’s Form S-4 filed on March 28, 2014, Exhibit 4.5~~

4.15*	~~Trunk Club Newco, Inc. 2010 Equity Incentive Plan~~	~~Incorporated by reference from the Registrant’s Form S-8 filed on August 27, 2014, Exhibit 4.1~~

10.1*	~~Nordstrom 401(k) Plan & Profit Sharing, amended and restated on June 12, 2014~~	~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended May 2, 2015, Exhibit 10.2~~
*This exhibit is a management contract, compensatory plan or arrangement

Table of Contents

Incorporated by Reference

Exhibit

Form

Exhibit

Filing Date

10.17

Form of 2023 Nonqualified Stock Option Award Agreement

8-K

10.1

March 6, 2023

10.18

Nordstrom, Inc. 2010 Equity Incentive Plan

DEF 14A

Appendix A

April 8, 2010

10.19

Nordstrom, Inc. 2010 Equity Incentive Plan as amended February 27, 2013

DEF 14A

Appendix A

April 1, 2013

10.20

Nordstrom, Inc. 2010 Equity Incentive Plan as amended and restated February 26, 2014

8-K

10.4

March 4, 2014

10.21

Nordstrom, Inc. 2010 Equity Incentive Plan as amended and restated February 16, 2017

DEF 14A

Appendix A

April 5, 2017

10.22

Nordstrom, Inc. Executive Severance Plan

10-K

10.23

March 20, 2020

10.23

Form of 2022 Performance Share Unit Award Agreement

8-K

10.2

February 28, 2022

10.24

Form of 2023 Performance Share Unit Award Agreement

8-K

10.2

March 6, 2023

10.25

Form of 2024 Performance Share Unit Award Agreement

8-K

10.2

March 5, 2024

10.26

Nordstrom Supplemental Executive Retirement Plan (2020 Restatement)

10-Q

10.1

September 4, 2020

10.27

Nordstrom Directors Deferred Compensation Plan (2017 Restatement)

10-K

10.48

March 19, 2018

10.28

2010 Form of Independent Director Indemnification Agreement

10-K

10.78

March 18, 2011

10.29

2023 Form of Independent Director Indemnification Agreement

10-Q

10.1

December 1, 2023

10.30

Form of 2020 Restricted Stock Unit Award Agreement

8-K

10.2

March 3, 2020

10.31

Form of Restricted Stock Unit Award (Supplemental Award) under the 2019 Equity Incentive Plan

8-K

10.1

May 20, 2022

10.32

Form of 2023 Restricted Stock Unit Agreement – Supplemental Award under the 2019 Equity Incentive Plan

8-K

10.1

May 10, 2023

10.33

Form of 2024 Restricted Stock Unit Award Agreement

8-K

10.1

March 5, 2024

10.34

Revolving Credit Agreement dated May 6, 2022 between Registrant and each of the initial lenders named therein as lenders; Wells Fargo Bank, National Association as administrative agent; and Bank of America, N. A. and U.S. Bank, National Association as co-syndication agents

10-Q

10.2

June 3, 2022

10.35

First Amendment to Revolving Credit Agreement

10-K

10.30

March 10, 2023

10.36

Credit Card Program Agreement by and among Nordstrom, Inc., Nordstrom FSB and TD Bank USA, N.A. dated May 25, 2015

10-Q

10.1

December 1, 2015

10.37

Amendment No. 7 to the Credit Card Program Agreement by and between Nordstrom, Inc., and TD Bank USA, N.A.

10-Q

10.1

December 2, 2022

19.1

†

Amended and Restated Nordstrom Insider Trading Policy

21.1

†

Significant subsidiaries of the Registrant

23.1

Consent of Independent Registered Public Accounting Firm, filed as page 81 of this report

31.1

†

Certification of Chief Executive Officer required by Section 302(a) of the Sarbanes-Oxley Act of 2002

31.2

†

Certification of Chief Financial Officer required by Section 302(a) of the Sarbanes-Oxley Act of 2002

32.1

‡

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

97.1

†

Nordstrom, Inc. Clawback Policy

101.INS

†

Inline XBRL Instance Document

101.SCH

†

Inline XBRL Taxonomy Extension Schema Document



	~~Exhibit~~	~~Method of Filing~~
10.2*	~~Amendment 2014-4 to the Nordstrom 401(k) Plan & Profit Sharing~~78	~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended August 2, 2014, Exhibit 10.6~~

10.3*	~~Amendment 2014-5 to the Nordstrom 401(k) Plan & Profit Sharing~~	~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended November 1, 2014, Exhibit 10.2~~

10.4*	~~Amendment 2014-6 to the Nordstrom 401(k) Plan & Profit Sharing~~	~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended November 1, 2014, Exhibit 10.3~~

10.5*	~~Amended and Restated Nordstrom, Inc. Executive Management Bonus Plan~~	~~Incorporated by reference from the Registrant’s Form DEF 14A filed on March 30, 2012~~

10.6*	~~Amended and Restated Nordstrom, Inc. Executive Management Bonus Plan~~	~~Incorporated by reference from the Registrant’s Form DEF 14A filed on April 8, 2016~~

10.7*	~~Nordstrom Executive Deferred Compensation Plan (2017 Restatement)~~	~~Filed herewith electronically~~

10.8*	~~Nordstrom, Inc. Employee Stock Purchase Plan (2011 Restatement)~~	~~Incorporated by reference to Appendix A to the Registrant’s Form DEF 14A filed on March 31, 2011~~

10.9*	~~Amendment 2016-1 to the Nordstrom, Inc. Employee Stock Purchase Plan (2011 Restatement)~~	~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 30, 2016, Exhibit 10.1~~

10.10*	~~Form of Notice of 2005 Stock Option Grant and Stock Option Agreement under the Nordstrom, Inc. 2004 Equity Incentive Plan~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on March 1, 2005, Exhibit 10.1~~

10.11*	~~Form of Notice of 2006 Stock Option Grant and Stock Option Agreement under the Nordstrom, Inc. 2004 Equity Incentive Plan~~	~~Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended February 2, 2008, Exhibit 10.45~~

10.12*	~~2007 Stock Option Notice Award Agreement and Form of Notice~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on February 26, 2007, Exhibit 10.1~~

10.13*	~~2008 Stock Option Notice Award Agreement and Form of Notice~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on February 22, 2008, Exhibit 10.1~~

10.14*	~~2009 Nonqualified Stock Option Grant Agreement and Form of Notice~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on March 3, 2009, Exhibit 10.2~~

10.15*	~~2010 Stock Option Award Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on November 24, 2009, Exhibit 10.1~~

10.16*	~~Form of 2011 Stock Option Award Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on November 19, 2010, Exhibit 10.1~~

10.17*	~~Form of 2012 Nonqualified Stock Option Grant Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on November 18, 2011, Exhibit 10.1~~

10.18*	~~Form of 2013 Nonqualified Stock Option Grant Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on November 14, 2012, Exhibit 10.1~~

10.19*	~~Form of 2014 Nonqualified Stock Option Grant Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on March 4, 2014, Exhibit 10.1~~

10.20*	~~Form of the 2015 Nonqualified Stock Option Grant Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on February 19, 2015, Exhibit 10.1~~

10.21*	~~Form of the 2016 Nonqualified Stock Option Grant Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on March 1, 2016, Exhibit 10.1~~

10.22*	~~Form of 2016 Nonqualified Stock Option Grant Agreement, Supplemental Award~~	~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 30, 2016, Exhibit 10.2~~
*This exhibit is a management contract, compensatory plan or arrangement

~~Nordstrom, Inc. and subsidiaries~~69

Table of Contents

Incorporated by Reference

Exhibit

Form

Exhibit

Filing Date

101.CAL

~~Exhibit~~†

~~Method of Filing~~

10.23*

~~Form of the 2017 Nonqualified Stock Option Grant Agreement~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on February 23, 2017, Exhibit 10.1~~

10.24*

~~2004 Equity Incentive Plan~~

~~Incorporated by reference from the Registrant’s definitive proxy statement filed with the Commission on April 15, 2004~~

10.25*

~~Nordstrom, Inc. 2004 Equity Incentive Plan (2007 Amendment)~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on November 19, 2007, Exhibit 10.44~~

10.26*

~~Nordstrom, Inc. 2004 Equity Incentive Plan (2008 Amendment)~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on November 24, 2008, Exhibit 10.1~~

10.27*

~~Nordstrom, Inc. 2010 Equity Incentive Plan~~

~~Incorporated by reference to Appendix A to the Registrant’s Form DEF 14A filed on April 8, 2010~~

10.28*

~~Nordstrom, Inc. 2010 Equity Incentive Plan as amended February 27, 2013~~

~~Incorporated by reference to Appendix A to the Registrant’s Form DEF 14A filed on April 1, 2013~~

10.29*

~~Nordstrom, Inc. 2010 Equity Incentive Plan as amended and restated February 26, 2014~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on March 4, 2014, Exhibit 10.4~~

10.30*

~~Nordstrom, Inc. 2010 Equity Incentive Plan as amended and restated February 16, 2017~~

~~Incorporated by reference to Appendix A to the Registrant’s Form DEF 14A filed on April 5, 2017~~

10.31*

~~Nordstrom, Inc. Leadership Separation Plan (Effective March 1, 2005)~~

~~Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended January 29, 2005, Exhibit 10.43~~

10.32*

~~Amendment 2006-1 to the Nordstrom, Inc. Leadership Separation Plan~~

~~Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended February 2, 2008, Exhibit 10.56~~

10.33*

~~Amendment 2008-1, Nordstrom, Inc. Leadership Separation Plan~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on November 24, 2008, Exhibit 10.3~~

10.34*

~~Amendment 2011-1 to the Nordstrom Leadership Separation Plan~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on August 25, 2011, Exhibit 10.1~~

10.35*

~~Amendment 2013-1 to the Nordstrom Leadership Separation Plan~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on March 5, 2013, Exhibit 10.1~~

10.36*

~~Amendment 2016-1 to Nordstrom Leadership Separation Plan~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on March 1, 2016, Exhibit 10.4~~

10.37*

~~Form of 2011 Performance Share Unit Award Agreement~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on November 19, 2010, Exhibit 10.2~~

10.38*

~~Form of 2012 Performance Share Unit Agreement~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on November 18, 2011, Exhibit 10.2~~

10.39*

~~Form of 2013 Performance Share Unit Award Agreement~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on November 14, 2012, Exhibit 10.2~~

10.40*

~~Form of 2014 Performance Share Unit Award Agreement~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on March 4, 2014, Exhibit 10.3~~

10.41*

~~Form of the 2015 Performance Share Unit Award Agreement~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on February 19, 2015, Exhibit 10.3~~

10.42*

~~Form of the 2016 Performance Share Unit Award Agreement~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on March 1, 2016, Exhibit 10.3~~

10.43*

~~Form of the 2017 Performance Share Unit Notice and Award Agreement~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on February 23, 2017, Exhibit 10.3~~

10.44*

~~Nordstrom Supplemental Executive Retirement Plan (2008 Restatement)~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on November 24, 2008, Exhibit 10.4~~

*This exhibit is a management contract, compensatory plan or arrangement

~~Table of Contents~~



	~~Exhibit~~	~~Method of Filing~~
10.45*	~~Amendment 2009-1 to the Nordstrom Supplemental Executive Retirement Plan~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on March 3, 2009, Exhibit 10.4~~

10.46*	~~Amendment 2014-1 to the Nordstrom Supplemental Executive Retirement Plan~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on August 25, 2014, Exhibit 10.1~~

10.47*	~~Amendment 2014-2 to the Nordstrom Supplemental Executive Retirement Plan~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on August 25, 2014, Exhibit 10.2~~

~~10.48~~	~~Nordstrom Directors Deferred Compensation Plan (2017 Restatement)~~	~~Filed herewith electronically~~

~~10.49~~	~~2009 Form of Independent Director Indemnification Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on March 3, 2009, Exhibit 10.1~~

~~10.50~~	~~2010 Form of Independent Director Indemnification Agreement~~	~~Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended January 29, 2011, Exhibit 10.78~~

~~10.51~~	~~The 2002 Nonemployee Director Stock Incentive Plan~~	~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2002, Exhibit 10.1~~

~~10.52~~	~~Nordstrom, Inc. 2002 Nonemployee Director Stock Incentive Plan (2007 Amendment)~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on November 19, 2007, Exhibit 10.39~~

~~10.53~~	~~Form of Restricted Stock Award under the 2002 Nonemployee Director Stock Incentive Plan~~	~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended November 3, 2007, Exhibit 10.1~~

~~10.54~~	~~Form of 2012 Restricted Stock Unit Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on November 18, 2011, Exhibit 10.3~~

~~10.55~~	~~Form of 2013 Restricted Stock Unit Award Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on November 14, 2012, Exhibit 10.3~~

~~10.56~~	~~Form of 2014 Restricted Stock Unit Award Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on March 4, 2014, Exhibit 10.2~~

~~10.57~~	~~Form of the 2015 Restricted Stock Unit Award Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on February 19, 2015, Exhibit 10.2~~

~~10.58~~	~~Form of the 2016 Restricted Stock Unit Award Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on March 1, 2016, Exhibit 10.2~~

~~10.59~~	~~Form of 2016 Restricted Stock Unit Award Agreement, Supplemental Award~~	~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 30, 2016, Exhibit 10.3~~

~~10.60~~	~~Form of the 2017 Restricted Stock Unit Award Agreement~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on February 23, 2017, Exhibit 10.2~~

~~10.61~~	~~Form of 2017 Restricted Stock Unit Award Agreement, Supplemental Award~~	~~Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended January 28, 2017, Exhibit 10.67~~

~~10.62~~	~~Commitment of Nordstrom, Inc. to Nordstrom fsb dated June 17, 2004~~	~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2004, Exhibit 10.4~~

~~10.63~~	~~Nordstrom fsb Segregated Earmarked Deposit Agreement and Security Agreement by and between Nordstrom fsb and Nordstrom, Inc. dated July 1, 2004~~	~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2004, Exhibit 10.5~~
*This exhibit is a management contract, compensatory plan or arrangement

~~Nordstrom, Inc. and subsidiaries~~71

~~Table of Contents~~



	~~Exhibit~~	~~Method of Filing~~
~~10.64~~	Revolving Credit Agreement dated April 1, 2015, between Registrant and each of the initial lenders named therein as lenders; Bank of America, N.A. as administrative agent; Wells Fargo Bank, National Association and U.S. Bank, National Association as co-syndication agents; and Fifth Third Bank as managing agent.	~~Incorporated by reference from the Registrant’s Form 8-K filed on April 6, 2015, Exhibit 10.1~~

~~10.65~~	~~First Amendment to Revolving Credit Agreement dated March 31, 2016, between Registrant, Bank of America, N.A. as Agent and the Lenders party thereto~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on April 6, 2016, Exhibit 10.1~~

~~10.66~~	~~Performance Undertaking dated December 4, 2001 between Registrant and Bank One, N.A.~~	~~Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended January 31, 2002, Exhibit 10.38~~

~~10.67~~	~~Servicing Agreement, dated as of May 1, 2007, by and between Nordstrom fsb, and Nordstrom Credit, Inc.~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on May 8, 2007, Exhibit 99.2~~

~~10.68~~	Amended and Restated Transfer and Servicing Agreement, dated as of May 1, 2007, by and between Nordstrom Credit Card Receivables II LLC, as transferor, Nordstrom fsb, as servicer, Wells Fargo Bank, National Association, as indenture trustee, and Nordstrom Credit Card Master Note Trust II, as issuer	~~Incorporated by reference from the Registrant’s Form 8-K filed on May 8, 2007, Exhibit 99.4~~

~~10.69~~	~~Second Amended and Restated Trust Agreement, dated as of May 1, 2007, by and between Nordstrom Credit Card Receivables II LLC, as transferor, and Wilmington Trust Company, as owner trustee~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on May 8, 2007, Exhibit 99.5~~

~~10.70~~	~~Amended and Restated Administration Agreement, dated as of May 1, 2007, by and between Nordstrom Credit Card Master Note Trust II, as issuer, and Nordstrom fsb, as administrator~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on May 8, 2007, Exhibit 99.6~~

~~10.71~~	~~Amended and Restated Receivables Purchase Agreement, dated as of May 1, 2007, by and between Nordstrom Credit, Inc., as seller and Nordstrom Credit Card Receivables II LLC, as purchaser~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on May 8, 2007, Exhibit 99.3~~

~~10.72~~	~~Participation Agreement, dated as of May 1, 2007, by and between Nordstrom fsb, as seller and Nordstrom Credit, Inc., as purchaser~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on May 8, 2007, Exhibit 99.1~~

~~10.73~~	~~Confirmation of transaction between The Royal Bank of Scotland plc and Nordstrom Inc., dated as of December 22, 2009~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on December 23, 2009, Exhibit 10.1~~

~~10.74~~	~~Confirmation of transaction between Wachovia Bank N.A. and Nordstrom Inc., dated as of December 22, 2009~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on December 23, 2009, Exhibit 10.2~~

~~10.75~~	~~Press release dated February 27, 2013 announcing that its Board of Directors authorized an $800 million share repurchase program~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on February 28, 2013, Exhibit 99.1~~

~~10.76~~	~~Press release dated September 4, 2014 announcing that its Board of Directors authorized a $1,000 million share repurchase program~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on September 4, 2014, Exhibit 99.1~~

~~10.77~~	~~Press release dated October 1, 2015 announcing that its Board of Directors authorized a $1,000 million share repurchase program~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on October 2, 2015, Exhibit 99.1~~

~~10.78~~	~~Press release dated February 17, 2017 announcing that its Board of Directors authorized a $500 million share repurchase program and approved a quarterly dividend~~	~~Incorporated by reference from the Registrant’s Form 8-K filed on February 21, 2017, Exhibit 99.2~~

~~Table of Contents~~

~~Exhibit~~

~~Method of Filing~~

~~10.79~~

~~Press release dated December 3, 2013 announcing the pricing of a private offering of 2044 Notes~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on December 4, 2013, Exhibit 99.1~~

~~10.80~~

~~Press release dated December 3, 2013 announcing the commencement of a private exchange offering~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on December 4, 2013, Exhibit 99.2~~

~~10.81~~

~~Press release dated December 12, 2013 announcing the closing of the private offering of 2044 Notes~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on December 12, 2013, Exhibit 99.1~~

~~10.82~~

~~Press release dated December 17, 2013 relating to the expiration of the early participation period~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on December 17, 2013, Exhibit 99.1~~

~~10.83~~

~~Press release dated January 2, 2014 relating to the closing of the private exchange offer~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on January 2, 2014, Exhibit 99.1~~

~~10.84~~

~~Purchase and Sale Agreement by and among Nordstrom, Inc., Nordstrom Credit, Inc., Nordstrom FSB and TD Bank USA, N.A. dated May 25, 2015~~

~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended August 1, 2015, Exhibit 10.1~~

~~10.85~~

~~Credit Card Program Agreement by and among Nordstrom, Inc., Nordstrom FSB and TD Bank USA, N.A. dated May 25, 2015~~

~~Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2015, Exhibit 10.1~~

~~10.86~~

~~Letter agreement, dated June 7, 2017~~

~~Incorporated by reference from the Registrant’s Form 8-K filed on June 8, 2017, Exhibit 99.2, and the Registrant’s SC 13D filed on June 8, 2017, Exhibit 3~~

~~21.1~~

~~Significant subsidiaries of the Registrant~~

~~Filed herewith electronically~~

~~23.1~~

~~Consent of Independent Registered Public Accounting Firm~~

~~Filed as page~~ 75 ~~of this report~~

~~31.1~~

~~Certification of Co-President required by Section 302(a) of the Sarbanes-Oxley Act of 2002~~

~~Filed herewith electronically~~

~~31.2~~

~~Certification of Chief Financial Officer required by Section~~
~~302(a) of the Sarbanes-Oxley Act of 2002~~

~~Filed herewith electronically~~

~~32.1~~

~~Certification of Co-President and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

~~Furnished herewith electronically~~

~~101.INS~~

~~XBRL Instance Document~~

~~Filed herewith electronically~~

~~101.SCH~~

~~XBRL Taxonomy Extension Schema Document~~

~~Filed herewith electronically~~

~~101.CAL~~

Inline XBRL Taxonomy Extension Calculation Linkbase Document

~~Filed herewith electronically~~

101.LAB

†

Inline XBRL Taxonomy Extension Labels Linkbase Document

~~Filed herewith electronically~~

101.PRE

†

Inline XBRL Taxonomy Extension Presentation Linkbase Document

~~Filed herewith electronically~~

101.DEF

†

Inline XBRL Taxonomy Extension Definition Linkbase Document

104

†

Cover Page Interactive Data File (Inline XBRL)

* Management contract, compensatory plan or arrangement

† Filed herewith electronically

‡ Furnished herewith electronically

Nordstrom, Inc. and subsidiaries7379

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NORDSTROM, INC.

(Registrant)

/s/

Cathy R. Smith

~~NORDSTROM, INC.~~

~~(Registrant)~~

~~/s/~~

~~Anne L. Bramman~~

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

Date: March 19, ~~2018~~2024

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the ~~date~~dates indicated.

Principal Financial Officer and Principal Accounting Officer:

Principal Executive Officer:

/s/

Cathy R. Smith

/s/

Erik B. Nordstrom

~~/s/~~

Cathy R. Smith

~~Anne L. Bramman~~

~~/s/~~

~~Blake W.~~Erik B. Nordstrom

~~Anne L. Bramman~~

~~Blake W. Nordstrom~~

Chief Financial Officer

~~Co-President~~Chief Executive Officer

Date:

March 19, 2024

Date:

March 19, 2024

~~Principal Accounting Officer:~~

Directors:

/s/

Stacy Brown-Philpot

/s/

James L. Donald

Stacy Brown-Philpot

James L. Donald

~~/s/~~

Director

~~Kelley K. Hall~~

Director

Date:

~~Kelley K. Hall~~March 15, 2024

Date:

March 15, 2024

~~Senior Vice President, Chief Accounting Officer and Treasurer~~

/s/

Kirsten A. Green

/s/

Glenda G. McNeal

Kirsten A. Green

Glenda G. McNeal

~~Directors:~~

Director

Date:

March 15, 2024

Date:

March 15, 2024

~~/s/~~

~~Shellye L. Archambeau~~

~~/s/~~

~~Stacy Brown-Philpot~~

/s/

~~Shellye L. Archambeau~~

~~Stacy Brown-Philpot~~

~~Director~~

~~/s/~~

~~Tanya L. Domier~~

~~/s/~~

~~Blake W. Nordstrom~~

~~Tanya L. Domier~~

~~Blake W. Nordstrom~~

~~Director~~

~~/s/~~

Erik B. Nordstrom

/s/

~~/s/~~

Peter E. Nordstrom

Erik B. Nordstrom

Peter E. Nordstrom

Director

~~Director~~

Date:

March 19, 2024

Date:

March 19, 2024

/s/

~~Philip G. Satre~~Amie Thuener O’Toole

/s/

~~/s/~~

~~Brad D. Smith~~Guy B. Persaud

Amie Thuener O’Toole

~~Philip G. Satre~~

~~Brad D. Smith~~Guy B. Persaud

Director

Date:

March 15, 2024

Date:

March 15, 2024

/s/

Eric D. Sprunk

/s/

Bradley D. Tilden

Eric D. Sprunk

Bradley D. Tilden

Director

Chairman of the Board of Directors

~~Director~~

Date:

March 15, 2024

Date:

March 15, 2024

/s/

~~Gordon A. Smith~~Mark J. Tritton

/s/

~~/s/~~

~~Bradley D. Tilden~~Atticus N. Tysen

Mark J. Tritton

~~Gordon A. Smith~~

~~Bradley D. Tilden~~Atticus N. Tysen

Director

~~Director~~

Date:

March 15, 2024

Date:

March 15, 2024

~~/s/~~

~~B. Kevin Turner~~

~~/s/~~

~~Robert D. Walter~~

~~B. Kevin Turner~~

~~Robert D. Walter~~

~~Director~~

~~Date:~~

~~March 19, 2018~~

Table of Contents

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-239087, 333-239086, 333-239083, 333-231969, 333-225295, 333-211825, 333-207396, 333-198413, 333-189301, ~~333-174336, 333-173020,~~ 333-166961, 333-161803, ~~333-146049, 333-118756, 333-101110, 333-40066, 333-40064, 333-79791, 333-63403~~333-275859, 333-275861, 333-275864, on Form S-8 and Registration Statement No. 333-230379 on Form S-3 of our reports dated March 19, ~~2018~~,2024, relating to the financial statements of Nordstrom Inc. and subsidiaries, and the effectiveness of Nordstrom, Inc. and subsidiaries’ internal control over financial reporting, appearing in the Annual Report on Form 10-K of Nordstrom, Inc. for the year ended February 3, ~~2018.~~2024.

/s/ Deloitte & Touche LLP

Seattle, Washington

March 19, ~~2018~~

2024

Nordstrom, Inc. and subsidiaries7581



Washington		91-0515058
(State or other jurisdiction of incorporation or ~~organization)~~ organization		(I.R.S. Employer Identification No.)

~~1617 Sixth Avenue, Seattle, Washington~~	~~98101~~
~~(Address of principal executive offices)~~	~~(Zip Code)~~



Title of each class	Trading Symbol		Name of each exchange on which registered
Common stock, without par value		JWN		New York Stock Exchange
Common stock purchase rights				New York Stock Exchange


☑		Large Accelerated Filer		☐	Accelerated filer
☐
~~Large accelerated filer~~ þ	~~Accelerated filer~~ ¨
Non-accelerated filer¨ ~~(Do not check if a smaller reporting company)~~	☐		Smaller reporting company¨
				☐	Emerging growth company¨


☑
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Number of stores
	Nordstrom Full-Line Stores¹	Nordstrom Rack and Other²	% of total store square footage
Leased stores on leased land	26	242	44	%
Owned stores on leased land	63	—	37	%
Owned stores on owned land	33	1	18	%
Partly owned and partly leased store	1	—	1	%
Total	123	243	100	%



	Number of stores
Fiscal year	2017			Announced 2018
State/Province	Nordstrom Full-Line Stores¹		Nordstrom Rack and Other²	Nordstrom Full-Line Stores¹		Nordstrom Rack and Other²
Openings
U.S.
Arizona	—		—	—		1
California	1		3	—		1
Florida	—		1	—		—
Illinois	—		2	—		1
Indiana	—		1	—		—
Maryland	—		1	—		—
Minnesota	—		2	—		—
New Jersey	—		—	—		1
New York	—		1	1		—
Oregon	—		1	—		—
Pennsylvania	—		—	—		1
Tennessee	—		1	—		—
Texas	—		2	—		1
Washington	—		2	—		—
Canada
Alberta	—		—	—		2
Ontario	1		—	—		4
Total Openings	2		17	1		12

Closures
California	(1	)	—	—		—
Oregon	—		—	(1	)	—
Virginia	(1	)	—	—		—
Total Closures	(2	)	—	(1	)	—



Retail stores by channel	Nordstrom Full-Line Stores¹		Nordstrom Rack and Other²		Total
State/Province	Count	Square Footage (000’s)	Count	Square Footage (000’s)	Count	Square Footage (000’s)
U.S.
Alabama	—	—	1	35	1	35
Alaska	1	97	1	35	2	132
Arizona	2	384	8	287	10	671
California³	31	5,192	53	1,967	84	7,159
Colorado	3	559	6	213	9	772
Connecticut	1	189	1	36	2	225
Delaware	1	127	1	32	2	159
Florida	9	1,389	16	545	25	1,934
Georgia	2	383	5	165	7	548
Hawaii	1	195	2	78	3	273
Idaho	—	—	1	37	1	37
Illinois	4	947	16	590	20	1,537
Indiana	1	134	2	60	3	194
Iowa	—	—	1	35	1	35
Kansas	1	219	1	35	2	254
Kentucky	—	—	1	33	1	33
Louisiana	—	—	3	90	3	90
Maine	—	—	1	30	1	30
Maryland	4	765	5	186	9	951
Massachusetts	4	595	8	275	12	870
Michigan	3	552	5	178	8	730
Minnesota	2	380	5	173	7	553
Missouri	2	342	2	69	4	411
Nevada	1	207	3	101	4	308
New Jersey	5	991	7	248	12	1,239
New Mexico	—	—	1	34	1	34
New York	2	460	14	473	16	933
North Carolina	2	300	2	74	4	374
Ohio	3	549	6	224	9	773
Oklahoma	—	—	2	67	2	67
Oregon	4	555	6	218	10	773
Pennsylvania	2	381	6	214	8	595
Puerto Rico	1	143	—	—	1	143
Rhode Island	1	206	1	38	2	244
South Carolina	—	—	4	104	4	104
Tennessee	1	145	2	69	3	214
Texas³	9	1,562	18	604	27	2,166
Utah	2	277	4	126	6	403
Virginia	4	746	7	268	11	1,014
Washington	7	1,392	9	354	16	1,746
Washington D.C.	—	—	4	115	4	115
Wisconsin	1	150	2	67	3	217
Canada
Alberta	1	142	—	—	1	142
British Columbia	1	231	—	—	1	231
Ontario	4	750	—	—	4	750
Total	123	21,636	243	8,582	366	30,218



	Common Stock Price
	2017		2016		Dividends per Share
	High	Low	High	Low	2017	2016
1st Quarter	$48.45	$40.70	$59.37	$46.65	$0.37	$0.37
2nd Quarter	$50.32	$39.53	$51.74	$35.01	$0.37	$0.37
3rd Quarter	$49.00	$39.63	$55.23	$39.05	$0.37	$0.37
4th Quarter	$53.00	$37.79	$62.82	$42.32	$0.37	$0.37
Full Year	$53.00	$37.79	$62.82	$35.01	$1.48	$1.48



End of fiscal year	2012	2013	2014	2015	2016	2017
Nordstrom common stock	100	106	144	102	91	105
Standard & Poor’s Retail Index	100	125	154	179	211	299
Standard & Poor’s 500 Index	100	120	141	138	167	206



Quarter ended	February 3, 2018			January 28, 2017
Net sales		$4,600			$4,243
Credit card revenues, net	102			73
Gross profit	1,631			1,523
Gross profit as a % of net sales	35.5		%	35.9		%
Retail selling, general and administrative expenses	(1,337		)	(1,134		)
Retail selling, general and administrative expenses as a % of net sales	(29.1		%)	(26.7		%)
Credit expenses	(52		)	(42		)
Net earnings	151			201
EPS (diluted)		$0.89			$1.15



	12 Fiscal Months Ended
	February 3, 2018			January 28, 2017			January 30, 2016			January 31, 2015			February 1, 2014
Net earnings		$437			$354			$600			$720			$734
Add: income tax expense¹	353			330			376			465			455
Add: interest expense	141			122			125			139			162
Earnings before interest and income tax expense	931			806			1,101			1,324			1,351

Add: rent expense	250			202			176			137			125
Less: estimated depreciation on capitalized operating leases²	(133		)	(108		)	(94		)	(74		)	(67		)
Net operating profit	1,048			900			1,183			1,387			1,409

Less: estimated income tax expense	(468		)	(416		)	(456		)	(544		)	(539		)
Net operating profit after tax		$580			$484			$727			$843			$870

Average total assets		$8,055			$7,917			$9,076			$8,860			$8,398
Less: average non-interest-bearing current liabilities³	(3,261		)	(3,012		)	(2,993		)	(2,730		)	(2,430		)
Less: average deferred property incentives and deferred rent liability³	(644		)	(644		)	(548		)	(502		)	(489		)
Add: average estimated asset base of capitalized operating leases⁴	1,805			1,512			1,236			1,058			929
Average invested capital		$5,955			$5,773			$6,771			$6,686			$6,408

Return on assets⁵	5.4		%	4.5		%	6.6		%	8.1		%	8.7		%
ROIC⁵	9.7		%	8.4		%	10.7		%	12.6		%	13.6		%



	Store count						Square footage
Fiscal year	2017		2016		2015		2017		2016		2015
Total, beginning of year	349		323		292		29.8		28.6		27.1
Store openings¹:
Nordstrom full-line stores²	2		3		5		0.2		0.6		0.8
Nordstrom Rack and other stores³	17		24		27		0.5		0.8		0.9
Stores closed	(2	)	(1	)	(1	)	(0.3	)	(0.2	)	(0.2	)
Total, end of year	366		349		323		30.2		29.8		28.6

Relocations and other¹	3		3		1		—		—		—



	2017¹		2016¹
Debt		$2,737		$2,774
Add: estimated capitalized operating lease liability²	2,001		1,616
Less: fair value hedge adjustment included in long-term debt	—		(12		)
Adjusted Debt		$4,738		$4,378

Net earnings	437		354
Add: income tax expense	353		330
Add: interest expense, net	136		121
Earnings before interest and income taxes	926		805

Add: depreciation and amortization expenses	666		645
Add: rent expense	250		202
Add: non-cash acquisition-related charges³	1		198
EBITDAR		$1,843		$1,850

Debt to Net Earnings⁴	6.3		7.8
Adjusted Debt to EBITDAR	2.6		2.4



	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Long-term debt		$4,563		$167		$711		$644		$3,041
Operating leases	2,740		309		605		516		1,310
Purchase obligations	1,462		1,251		188		23		—
Other long-term liabilities	383		64		59		42		218
Total		$9,148		$1,791		$1,563		$1,225		$4,569



	Trunk Club			HauteLook		Other¹		Total
Balance at January 31, 2015		$261			$121		$53		$435
Additions	—			—		—		—
Balance at January 30, 2016	261			121		53		435
Impairment	(197		)	—		—		(197		)
Balance at January 28, 2017	64			121		53		238
Additions	—			—		—		—
Balance at February 3, 2018		$64			$121		$53		$238



	February 3, 2018			January 28, 2017
Accumulated loss		($46	)		($41	)
Prior service credit	2			4
Total accumulated other comprehensive loss		($44	)		($37	)



	February 3, 2018			January 28, 2017
Secured
Mortgage payable, 7.68%, due April 2020		$17			$24
Other	1			3
Total secured debt	18			27
Unsecured
Net of unamortized discount:
Senior notes, 6.25%, due January 2018	—			650
Senior notes, 4.75%, due May 2020	500			499
Senior notes, 4.00%, due October 2021	500			500
Senior notes, 4.00%, due March 2027	349			—
Senior debentures, 6.95%, due March 2028	300			300
Senior notes, 7.00%, due January 2038	146			146
Senior notes, 5.00%, due January 2044	892			602
Other¹	32			50
Total unsecured debt	2,719			2,747

Total long-term debt	2,737			2,774
Less: current portion	(56		)	(11		)
Total due beyond one year		$2,681			$2,763



	Retail		Corporate/Other			Retail Business			Credit			Total
Fiscal year 2017
Net sales		$15,408		($271	)		$15,137			$—			$15,137
Credit card revenues, net	—		—			—			341			341
Earnings (loss) before interest and income taxes	1,206		(454		)	752			174			926
Interest expense, net	—		(136		)	(136		)	—			(136		)
Earnings (loss) before income taxes	1,206		(590		)	616			174			790
Capital expenditures	516		214			730			1			731
Depreciation and amortization	445		213			658			8			666
Assets	5,237		2,638			7,875			240			8,115

Fiscal year 2016
Net sales		$14,768		($270	)		$14,498			$—			$14,498
Credit card revenues, net	—		—			—			259			259
Earnings (loss) before interest and income taxes	1,006		(298		)	708			97			805
Interest expense, net	—		(121		)	(121		)	—			(121		)
Earnings (loss) before income taxes	1,006		(419		)	587			97			684
Capital expenditures	593		249			842			4			846
Depreciation and amortization	456		182			638			7			645
Assets	5,291		2,088			7,379			479			7,858

Fiscal year 2015
Net sales		$14,376		($281	)		$14,095			$—			$14,095
Credit card revenues, net	—		—			—			342			342
Earnings (loss) before interest and income taxes	1,220		(302		)	918			183			1,101
Interest expense, net	—		(112		)	(112		)	(13		)	(125		)
Earnings (loss) before income taxes	1,220		(414		)	806			170			976
Capital expenditures	837		241			1,078			4			1,082
Depreciation and amortization	428		143			571			5			576
Assets	5,460		1,720			7,180			518			7,698