Nordstrom (JWN) 17 May 182018 Q1 Earnings call transcript

Company Profile

Participants

Trina Schurman	Director, IR
Blake Nordstrom	Co-President
Anne Bramman	CFO
Erik Nordstrom	Co-President
Pete Nordstrom	Co-President
James Nordstrom	President of Stores
Oliver Chen	Cowen & Co
Mark R. Altschwager	Robert W. Baird
Paul Trussell	Deutsche Bank
Erinn Murphy	Piper Jaffray
Matthew Boss	JPMorgan
Chuck Grom	Gordon Haskett
Simeon Siegel	Nomura Instinet
Kimberly Greenberger	Morgan Stanley
Brian Tunick	RBC Capital Markets
Paul Lejuez	Citi
Michael Binetti	Credit Suisse
Lorraine Hutchinson	Bank of America Merrill Lynch

Call transcript

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Operator

Greetings, and welcome to the Nordstrom First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode.

We will begin with prepared remarks followed by a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I'll turn the call over to Trina Schurman, Director of Investor Relations for Nordstrom.

begin. may You

Trina Schurman

thank will and minutes joining Today's us. your Good XX you minutes call last XX and earnings questions. afternoon, for will for include

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

so may language. statements to slides please discussion Our forward-looking showing the refer include our Harbor Safe

call going family. does discuss call plan performance to Officer, today's the the Participating XXXX. on for Nordstrom of company Financial not the Blake and and private today's the Co-President; that During further process Chief quarter Nordstrom, Anne are in comment outlook company's Bramman, first will who

Joining Nordstrom, turn that, during Nordstrom I'll Erik Jamie session call Stores. and be over to With Co-President; the the Blake. Pete Nordstrom, Q&A will and President of

Blake Nordstrom

you thank joining for us. and afternoon, Good

Our to ways. first physical and efforts quarter and ongoing relevant new our results our to digital integrate reflected serve in customers assets

performance growth which off. primarily X.X%. continue We loyalty we're was on basis investments expectations. points shift. in-line from our This Our basis, like-for-like pay a digital of reported XXX making The increase sales, Comp X.X%. to overall an event of in sales around with sales are a total increased delivered included

increase During year. compared through to quarter, in the generated the an our we XX% previous enabled sales digital capabilities

comp Full-Price with sales Our increase trends. of consistent X.X% generally our was

X.X%. of sales comp Off-Price increase Our

Store, features including X unique to serve store Columbus brand improvements to milestone business. kiosks, in delivery, men's express history Circle. not trends customers significant & we're of the in company's our Rack This on partnerships. and by store recent our in on service with latest experiences terms, our near While York with first-ever making help Online satisfied April stores, achieved our Up we're XX City, XXth, our On returns same-day Pick New in their a Buy we three-level, XX,XXX full-line opening located square-foot focused

market which destination premier of off is City ahead good largest New of to also a XXXX serving our experience City. scheduled for our represents meaningful lift in New a opened expect full-line online in on of markets, flagship our retail and stores we're and customers. we this York sales fall is to flagship store men's York deliver Our Manhattan new start. Based a introducing

marked more results quarter US, this Nordstrom the we the achievement another in spring Like openings businesses. important our off-price this markets, from This Toronto our between Calgary store three for full-price with synergies Rack our three planned openings and in fall. seeing in introduction with terrific and expect We're Canada. experience of the

continue create to establishing partnerships regular our We the to as a on a discovery with with supporting newness. of sense We for grow partner and through while our these brand of selling. brands collaborations strategic choice focus customers price providing Nordstrom want

and include brands along partners established emerging strategic ones. Our with new

During we've capabilities growth. in customer investing a us our to positions market drive of time transformation reach digital been engagement. to in uniquely and the and increase This share industry, expand

and improved digital our deliver Our named merchandising our integrating Worzel differentiated with allocate top as we assets Digital In market and driving further gains, across technology, profitability. chain, of engagement, capital approach to goal customer-focused services our customer experiences. we Ken share recently Chief our physical To how supply we're markets, lead and marketing, the informs and efforts, Officer.

we We customers capabilities intend customer quickly LA market of learnings in to markets. scale and to shopping He kicked our launching instrumental our as group recently Angeles with business. This President efforts evolve is in Ken continue strategy our will our his leaders, we're top our apply of engaged other as of year unique to to journeys. also our off to Los from largest efforts a link role continue in to driving Nordstrom.com. digital one our As co-create highly

We continue continues we share to existing The customers metrics, growth, positive channels increasing which helps progress outpace our gaining sales trends growth shopping new ones. across an market contribute engagement way to and customer which are to gains. and measure see in with in important in multiple customers customers active

the we our As strategic and the is fashion best retailer, providing services three aspire compelling and our strength to offering, pillars: be delivering exceptional on centered strategy customer a product leveraging of experiences, brand.

our like over to call additional performance into the turn provide year. the insights outlook financial Now to to Anne for and I'd

Anne Bramman

afternoon, reflected everyone. and of From the to good reporting Thanks, with growth. start Blake our were solid a consistent year, $X.XX. QX a overall strong line sales We digital EPS and top expectations had perspective,

efforts came stabilized revenues core had trends. Nordstrom In result than the growth. Also, improvement. account new expected, significant credit to in by reflecting In offset Rack Additionally, our showed stores' sales Club US were Trunk outsized plan, below business recent better drive our of digital slightly our Off-price, growth Full-price, performance.

As throughout Blake we year. mentioned, expect the improvements

to basis due New relative points to occupancy to Turning in decline York This continued and addition last price We exited trends. to regular the good with Men's expenses the sales position, pre-opening selling Rack with our in XX quarter with rate inventory the were and exceeding a was in associated in margins approximately line US year. to was expectations strength gross openings, Store. higher Merchandise inventory. growth planned in X% Canada reflecting prior year, related profit, down

roughly New points to was due last than Store. XX higher Men's primarily rate York SG&A year, for Our expenses pre-opening basis the

in continue relative benefit recent supply and trends Our to as an improvement to SG&A chain. performance productivity historical rate gains from reflected marketing, technology, we

I'd Next, to path insights forward. provide on our like further

an Club. following inflection We've scale. Canada and improved investments XXXX in foundational these investments as result generational our We of HauteLook As of for and on made drivers: capabilities. we our Manhattan from shared We're acquisitions in and a productivity through in to Trunk improvements benefiting call, operating the expect last as profitability based also gains point quarter's anticipate be businesses we

continue to expect invest in we leverage, experience. chain, improved and expense We improving ongoing and for value supply in technology. creating marketing opportunities end-to-end the customer particularly In

that lever strengthen another represent and a compelling partnerships us provide offering to regular-price product brand enables our selling. strategic Our

Now a to allocation our moment to I'd like you take of remind capital principles.

shareholder in reinvest priority business value. our foremost, long-term create the to to and is First

Over the next $X.X opportunities in market sales, of Manhattan new supports X% Canada. of CapEx plan in and years, five digital billion, capabilities and investments our or

In finally, investment-grade addition, share strong shareholders through We dividends recently resumed return to dividend directly share to capital announced and seek we maintaining per And quarterly to repurchases. and share $X.XX committed repurchase of activity. a we rating. remain a

narrowed now incorporate the our full range we've the $X.XX to performance. end quarter raising to year to to low Turning EPS $X.XX, our outlook, first

remains sales Our comp reflecting first unchanged, X.X%. X.X% of a increase sales to outlook year

mid-teens trends revenue growth Our rate. updated EBIT outlook a assumes current at

following our the outlook reminder, sales timing includes considerations. a As

be a sales total event shift will comp Sale. like-for-like Anniversary While an impacted sales by reported the on basis, will be from

materially to sales, timing sales but to to to impacts be appendix are Please create approximately impact the further in Additionally, to impact revenue is recognition factors QX. related for there Anniversary total event refer growth shift. a color. associated points combined not estimated full-year will basis and XXX These expected our by two QX

more to turn future, event insights We strategy, will creation. host an value before on Finally, give to will how like we'd the our further and announce Q&A, with This to plan details. to we for we're opportunity customer us to our and XXth. follow the event an webcast positioned of provide July investor drivers into up long-term plans

turn Now, it Q&A. over for Trina I'll to

Trina Schurman

you, Anne. Thank

Q&A, limit started one that with get Before question. to like we'd to you ask we

you queue. Q&A please move If session. now questions, We'll to return have additional to the the

Operator

[Operator thank Instructions] you.

from Our Oliver Cowen is first with question Chen Co. proceed Please & from question. your

Oliver Chen

curator service on really with and job assortment. and the structure innovative men's the store great Hi,

such rates question opportunities in accuracy, in features Our the What's to enabled seamless as of is of you Thank about your love that, supply overtime? and possible that And related as next bigger You've What terms would digitally terms making sure comments is of chain? the supply in really you your of lot advance profitability just geolocation the sales. that and are inventory that thoughts? margin the around and of would ahead say you. it's improving been a changes. chapter offer

Erik Nordstrom

Erik. the enabled Sure. But This on is sales. first digitally

engagements our those have. highest sales profitable profitability customer Our that's terrific, some is really of we on

we do we've all So to things customers on those the Los of participating, we We've been can learned in our and awareness. only local and challenge what engagement add easier services not customers more those more some the to services not we all the stores highest is store is services. to with communicate about our Angeles one goal that's they opening And lot focus at satisfaction our profitable that a as always been have store to of It's customer capabilities. it's terrific. having provide. importantly are a what services are a of It's by of our conspicuous

chain have in inventory lot inventory to we're better. it's close in our growth, nice and enabled We customers we'll to to continue do Supply customers seeing a leverage we're we sales very [indiscernible] So advantage is that. very, to an stores. looking which digitally have that we serve think of the general,

obviously the to. online vast our customers stores are happens of Our majority in be where markets and big are that to the

that for our leads other So filled able be faster - much able us significant step working to in bigger rates big step we'll also initiatives we're plans customers and and in assortment pretty getting California. to just We're much be center efficiency offer it inventory on, be at shipping selection but too. through in a way on will that, to that. opening on Southern some our

Oliver Chen

regards. you, best Thank

Operator

Our question. comes of Altschwager proceed from next from your question the W. Mark Please Robert line with Baird.

Mark Altschwager

the Thank all? color the of that key a comp business. What improvement drove believe the at to a you. side? quarter? the weather And off talked and store you role about softness do you did drivers some the at play see on more on bit And remainder the year over you especially in the Could you price what did the of in provide results the

Blake Nordstrom

for items we first really price, whether Mark, Predominantly largest stores women's of it's a below is off our seasonally slightly women's softness and was HauteLook number quarter that increase our in X.X% did apparel, did I classifications you mentioned had in just Rack. but division and impacted. some the Blake in within There's we some that in that strong merchandise had build our see plans digital Nordstromrack.com working we see a comments the the on. related we're and but our and price initiatives sales that online mentioned

is a buyer customer if that encouraged opportunity we mix that of so and we we I still and flat, the we're thing are the about a get accounts great traffic think the foot have right. lot most real the have

have Our line, inventories with fluid, we buy to we mark and so believe risk don't undue downs. we're are in open we're

of number and this throughout expectations year able improvement to So a both those are address QX. we've we're Those underperforming our working hard daily and so to on and that we to things see in expect initiatives our on that basis. been plans address in opportunities fully

Mark Altschwager

Thank best of you luck.

Operator

comes question the line question. your from proceed with Paul from of next Our Please Trussell Deutsche Bank.

Paul Trussell

just shifts. we sales understanding and comps want the between sure the I away to walk with spread various make

So Could by XXX those looking basis helped inclusion do whether net be shifted on wanted just XXX appreciated. into basis is ask out against I I discuss Net you first into event. XQ? or and sales understand basis, the we but XXX rewards, from Sale I the Help sales shift would overall that that by gratefully not included to you that then point guess loyalty Anniversary by loss be it the helped while XQ. will And mentioned event items, if also comps that loyalty the the could clarify in points. you

Anne Bramman

days Our XXrd-week days. so so this perspective and year let we're no retail challenging looking me on in you what and the a walk space for company try that, talk from matter like comp through you like a always are

is triple shift is deck the calendar is recognition. to sales. went well The revenue laid point several that through delta we in for as in only the the slide the a shift, we of that and of quarter counter no there So out wasn't net has of appendix comp impact impact as that the it's things, on any

calendar, for shifts together that all through the and we When all to and that and at part met recognition that events net to you comp is all that's netted do QX together and just the look we schedule QX impact. all you revenue which total that between we sales and shift in So - of of rest go in growth. and have we together of spread

Paul Trussell

thank Okay, you.

Operator

Next Tulsi [ph] proceed your from Group. question. Please Advisor is [ph] Dana Tulsi with

Unidentified Analyst

you. what in you it's about the differing and bit terms Thank Can you Fall-line? in business of a the talk are terms of little side you're versus Rack in put new new of how brands products seeing in, that merchandising resonating that

Pete Nordstrom

a It's growth it's how to exclusive Pete. most and it's purposeful The thing in it new is because been new not because a well. this large to kind encouraging of that's because gone that's while fully be or part strength across [ph] bring of trying brand. Dana, that and see really brands our that's we necessarily it's for our initiative it's all because portfolio about savage in is explicit It's together. works or a or smaller probably

so play I of So the a we've store our of brand vendor I we're unique for lot time, and when done and by have the brands are part takes the in where same time also at all establish mean, things with problems think we of that's breadth we you new that of that what's I business to really that good we where a on Anthropologie having encouraged of it and and relationship out of growth working trying [ph] all is On, in really mean in whole introduced that finesse in future. Chanel men's kind common working there. we're been St. this that and Gucci, example, of terms established on a Valentino spend the of but [indiscernible] solving have it's great. and Sweaty you possible it of look it Betty, brands think we Like top know. a I some the we that's see Laurent successful. designer Phase handful for But and you lot we're really know offer all in time, also at have Allbirds collaborative Home, something been we're recipe

Unidentified Analyst

line should there you what stores, see strength looking the categories on we categories towards? be that is to improve full any And want more

Pete Nordstrom

want QX came of probably to one we challenged the We more had stuff that was in is shoes. of a seasonal earlier. I'd shoes Well say related some that the a lot that improve to up

weather can difference. the continues make that just We've If of well. that's business I'd in track. big an sales purely country that humming continued shoes women's we our of on bit our sandal say lot at kind if which swung handbag along back as of to just a had is you The now now. like beauty would accessories really business look get of strength do a the example, across little changed

we handbag, is, growing You offerings heard think it lot me suggest think well. men's mention about designer it can could brands. businesses, encouraged part so again a women way do apparel and more the designer part, the be that's of apparel, and the I think There's I we better, the that about and our the talk The be as across. best shoe as good that established we to

them and like Lotter like around [ph] Nike business that, strong You collaborative and get good been that people with long brands for time or have and have we efforts. good

Unidentified Analyst

Thank you.

Operator

Next with Piper Murphy Jaffray. is Erinn

Erinn Murphy

focus. going back digital the I guess to

that on furthering that's where long-term North to of number how Full-price a you about stores the you Rack overtime? at impacting going then for you're being about of And just and digitally kind both in this here do think you see thinking could America? speak basis If XX% enhanced maybe

Erik Nordstrom

really had Erinn, looking market share how market this full little both Full-price we've our further we and it and look assets How by our can price within long looking assets. at both and physical Erik. I'd we Is in at data. is leveraging digital we're say stronger gain and markets and in by off-price

between digital. And of to better the the continue the so time and all physical get synergy we information

year stores of don't on with to I last years. couple seen two know you've that, So a a three close

scale don't in are anticipate large barometer I of stores all both closing, and store profitable our best going think line We stores. Rack full forward. our certainly [indiscernible]

up it's market relationship best So with more engagement be understanding get customers a where adds and the we that with profitable how customer. to

our local can market and grow by how is So share focus market we that.

Erinn Murphy

XX quarter talked million you customers, then maybe And on last about customers. active active just

the I time of update first where any was that to at quarter? first end that given think metric, it's the you've the

Anne Bramman

give Yes, commentary we the far materially it's color [indiscernible] in as the so how customer. changed [indiscernible] to I in don't try some plans, our think as

I XX-month to basis. metric look you'd more on that want of a rolling think that's to a

Erinn Murphy

Great. Thank you.

Operator

Boss with Matthew JPMorgan. is Next

Matthew Boss

Question lot to your fourth quarter flowing to store at at a with signs of towards decelerated doors, similar. of I a X.X customers. price, stabilization. do in what But speaking strong despite comp I a your consumer full-price sequential same backdrop comparison are companies for you a what sales plan accounts comp for from the sales spoke X.X think you core pretty said the guess full your this quarter [ph] know and you hate

and Just sequential that any flow. thoughts you have for maybe that Blake

Anne Bramman

things Yes, numbers. so overall. before couple want of I in get the I about the that a anchored of just some think we to talk

thing channels full Canada first the and includes in price stores, as talk when So as is about that digital we our Trunk it. well Club

is so gotten at quarter. we price we're we that really on at well. less in as based it's really all and looking on soft very more less so as on mentioned a and that's business sales same the gotten and full channel price. sales it's store really it basis So even muddy not and total inside necessarily comp It's last full a look price how it's this a not

price full of last business the trend against a year what comp. actually versus QX, like in was you you negative actually thought second in when and that's the in So business. that year went could that to was year. that the price at last thought trends has full see we on a get, we QX we we basis, so of number if showed we it the look positive our so one overall revised particularly last half in release comp in comparable QX actually see so feel continued

Matthew Boss

Great.

comp And on this so that fourth you the your what quarter, you comp apples-to-apples X% basis? that did did quarter in

Anne Bramman

X.X%.

Matthew Boss

deceleration to was that Right, so that what really the sequential the X.X accounts basis for X.X from the question? of

Jamie Nordstrom

This Jamie. is

of QX, quarter mostly we I of product or started things a that the to of early bit of in with changes trends the deceleration online in its the so results with we the marketing, execution. made some end - think Those on saw was little one is of our quarter. traffic towards into coming shift slight some the much

show while So does it a you're right, deceleration.

about QX. our good metrics. price business our in two it's there's puts over how over if of in came overall and the point those the ticket and all feel pretty full years, look I average out QX, takes at last you and think We stable terms of business been we incredibly and year traffic

really to give you it's to would nothing So that color. point any

Matthew Boss

That's the one.

Operator

Chuck is Haskett. Next Grom with Gordon

Chuck Grom

March color on progressed. back you XXXX Anne as us gave some cadence margin in the

the said afternoon, you ask clarify. this think deck see I not you it's so want in just slide if to and could

would quarter you cadence below, you to think and in down the rest back XQ, the first throughout the just see about operating the I believe be basis would in still want be quarter of XX here half points second above said if in then line, be were the margins year.

Anne Bramman

in So a directionally, there's when and you bit we at cadence. it right pretty but be to QX here we for little gave look the expectations. the our margins with Clearly that's was line there, going

year - and gave downs correct. still was pretty we it's as ups guidance as so the full for well the the So we [indiscernible] and

Chuck Grom

talked shown you've in to would there next get ahead you It's you I on what slide you will looking out to where of be leverage could just planned and you then need that would that over what be hurdle? years comp XX, operating time guess the margins curious the just the get think the and and and embedded that, couple second Slide about look the Okay improvement.

Anne Bramman

talking sorry I'm the investments? you're so generational about

Chuck Grom

the talked we XX next five improvement four years. to Slide on planned over Yes, the about

Anne Bramman

is we've penetration Tower opening piece it. fall in Canada So been the in which of the about, in coming strategy along of awareness year. that, New enhancing as And customer that's we've investments the the way. we're piece had stores really is to a been and market our big York - other with big next we're talking Canadian seeing making Rack we've the And online and it's

highlighted comes digital that and and we're help about as to going we as our the off continuing So both that's see margin online really this growth price to And the in growth business then so Trunk improvement. price that talked full price. the our and off outsized that fact the Club's online digital fact we the business highlighted and we improved had and also for we've

Chuck Grom

thank Okay, you.

Operator

Simeon Next Siegel is with Nomura Instinet.

Simeon Siegel

question. To follow-up on earlier

why and with I puts us extracations methodology rate thanks. of And takes think new start the comps. I'm [ph] not could it. the compare way to sort help have that what's so figure you I to missed guess when recognizing XQ come of [indiscernible], you for is tax does right The comp and for if XX-week the any give down, sorry about the Just of and that

Anne Bramman

within disappointed, the is, just still for would are guidance basis we a the have light delivered for so give still year so comps quarterly shift QX Yes, don't also year tax what gave looking rate so I but on the way we between gave we for and total shift choppy we'll throughout timing we we're the versus comp. be about guidance at be day the are the and beginning first we rate US, versus wind so the and but comps the to and we reaffirmed sales normally some the on our gave so to account going guidance it comps X we points in year year guidance as the a that on looked think Canada it it's like for should total there's of profitability at and full [indiscernible] you you. again little at, recognizing for

Simeon Siegel

of right the for luck thanks. year. All the Best

Operator

Stanley. Greenberger Kimberly Morgan is with Next

Kimberly Greenberger

ideal what analysis both in for then at a coming just store gone Erinn's the optimal you're market-by-market US store an that Rack question and on your with store After count I to looking just it And are basis. Knowing that that the up you fleet out, about just do numbers terms aggregated wanted from of ask, follow-up through execution on to like count. sort and you for you've of the the issues so in was missed think wanted only miss much. women's were to Do business, it I the plan? plan weather? you and slight any off-price business to there the sounded came apparel Thanks business that Full-price? attribute that

Jamie Nordstrom

Jamie. Kimberly, I'll and first to this take the is it part hand over Blake.

In tops not Angeles terms of looking I'd for count where XX we're earlier, at reiterate Erik markets we're to years. now more market-by-market store looking down and matured had business we mentioned happen number. we've really at what doing Los been right gone we've from

Some were centers better that some are of opened these they're than in in doing than stores we've centers we that better once and that now stores ever. got

into lot a And at by investing in look It's it. we there's existing so stores. that goes how

of made plans investments to in end our last continue that big best We few and have have we've stores to number invest of years stores.

that that, when In be market all we made store fifth that opened in sixth that or have more a addition to sense. the we might a store

us you've some I think XX, XX, ago and XX of XX, years seen closed stores. those

So effective there. investing as that customers of best it's serving seeing as a it be our possible relevant not overall and our anymore, as looking stores, those can that stores in in how involved we are are market-by-market calling combination at but

Blake Nordstrom

this is Kimberly So Blake.

shy productive stores. year. pleased billion are last robust was the very of well. as stores In These roughly we terms very just XXX a to and $X Rack It very have have of online we're or Off-price business

Erik of about in So understand and a how looking we're Jamie about of view trying and mortar best in to it digitally. as earlier in them physical talked can we customers' bricks serve both days point and earlier and also from

about terms a strategic store in opening in of opportunistic year. don't we're number. have set Canada Again we we're growth, six So new this we're and XXX,

We four have XXXX. We've in US relocation. in six the stores slated for

strong But It stores general, best it's that. our looking a serve are criteria, we that not to close these the base, meet strong we're so base customer. So we do to to very that all in stores a with not has have think strong set digital number. in

think Your at that you I were more and other seasonally bets second in yes customer and seasonal as But any weather execution about some QX question was women's didn't made or I asked the material were that some most that well, regarding was play the was. issue, out voted. areas part, the related mentioned there there that least in the we

was, the Rack area predominantly areas question met were other exceeded or other the plans again of business. large opportunities within that an had after. that part it, since would [ph]. see I we and women's on what is businesses or No say of such impact lots other there any misplanned Your across board getting we're It the merchandise but merchandise their slightly the

We number have we in can right we're that we is agile and working made line pretty that of is that's and This take some are it so on people those now. tests days nimble business and a get a fact our learnings the adjustments. the in literally feedback get strength for real and us. feedback a And the apply some XX customer, and our within inventories from

Kimberly Greenberger

so Thanks much. helpful. Super

Operator

Tunick Brian is with Nest RBC Capital Markets.

Brian Tunick

negative you growth reach you're impact still billion haven't fulfilment you determent outside on is now have seeing DC's right heard a talk for what scale? or you being you're the a Thank and secondly on then that is very assumed that is Question investments? etc., shipping having and other chain just CapEx in in off guys and margins that about supply being $X.X much. talking versus I your the digital, plans about,

Erik Nordstrom

part. Erik. first Brian, this the I'll is take

what's digital [indiscernible]. in the Our question? growth Really

Unidentified Company Representative

Fulfilment.

Erik Nordstrom

that. about Sorry

That the at hard we about e-commerce store in our about additional break margin as us get combined being the price, as sales. heard for profit price said, as our physical full journey and captured of goes when impact talk off we because customer we way much is can margins. you've and As profit beyond there's business full exactly digital our look We and very what's the precise price, same so e-commerce it do out overlap. to break out it's best and much it

experience shift Anne there's when to physical movement digital. any in from our operating [indiscernible]? don't margins a we So

Anne Bramman

QX our spend almost the combined, look about the that if in was CapEx you and technology fulfilment last XX% roughly was was it's Between provided it of [indiscernible] or half. a and just highlight. and fulfilment CapEx I quarter earnings, think at

Brian Tunick

helpful. July very XX. See Thank you. on you That's

Operator

is Next Paul Lejuez with Citi.

Paul Lejuez

curious and environment was this in And might you just to on of quarters. how recent Just there event promotional today characterize gross XQ? the the the might relative if curious higher there impact level, shift Thanks. what impact the loyalty quarter margin out a

Anne Bramman

component take So we shift margin want do gross you margin a There question. seeing the I'll to aren't the promotional to take environment. the in it really so Pete, and

Pete Nordstrom

kind Yes, in done of has pretty kind that the there's approach that promotional ways some given the we've in of strategic news mitigated brands, that, things the no environment it's preferred stable, really brands, to we're pretty taking to by that's in if response in you but lot it, lot flat. some it's offset at of of look large trying promotional activity, in the Consistent. of

Paul Lejuez

of there the have quantify for margin there plans sort XQ size gross of promote Did below in more to line. Rack. was to - and on any the sales the you at pressure Okay move heavily through to

Pete Nordstrom

because it's the anything I classifications don't like case call responding is the would if a would of are be in know got kind is we've whether customer that there there not isolated inventory, out, glut dresses.

downs gross and done dresses lot a the classification. what mark oranges But got up we in for margins previous move to a times additional at we've and and apples needle of not might so the it's take doesn't we've they're selected backing years. and So it total move

slow So and maintain address able those margins. we our sellers we're think to

Anne Bramman

year gross were out just say, in And margin comments as expecting with that we is I the would pretty year our that in over what consistent well. calls

Paul Lejuez

in dresses you a result be the quarter face pressure out. expect to that, do and any called of in the second glut, Okay as

Pete Nordstrom

No sellers we trying more good time real address about why I the that's full and And in slow feel about pleased risk we're team it, guidance. it. I very any current think confident we're think Anne to our how year have with felt inventories exposure the and we our or and

Paul Lejuez

Got you. Good you. Thank luck guys.

Operator

with Credit Next is Binetti Michael Suisse.

Michael Binetti

and comps momentum to these the view and which momentum crystal the quarter won't know is and build not you the that X.X you off earlier quarter that sort at to the shifts business? that's we you should incorporate second early acceleration blowing that be by doesn't want the some quarter with effected help then digital the of underlying headwinds by momentum start But that out is come momentum us near mind your your with first end just spoke of some way we the in as in quarter, of the of here the you to be rolling our think roll that underlying and so loyalty with about the XQ, Jamie is I that we ignore the forward if comp, I the year. us gave term of clear forward in from

Anne Bramman

digital. to we're growth accelerated guess I'll well based gave it would comp were to we X.X when think in end pretty expect pretty the continued high that on We as continue we Yes, the what say on our was comps off fair. I of in as business seeing a the guidance see I on that's trend. X.X going our to price guidance consistent

You much is the in comp Which stores have end for high in on low price doesn't change the year. that of pricing. you assume change the on would end, contemplate really to particular Rack in the that the the off

when the So [ph at I on bellwether the rest comp, this you look would the year. use of

Michael Binetti

quickly then, the margin, really just and Okay here. on a couple

gave quarter think first last down that will be through. some quarter commentary that came EBITDA and I you

was EBITDA to up. quarter Second be

margin be the of of sale? gross analogies impact of how shift historical anchor second flat help quarter. Third of Anniversary much the use and and the we for sale margin moves then XXXX Can because ourselves fourth can moving us, the the gross the quarter you to on in

Anne Bramman

pretty granular. That's Wow!

Michael Binetti

on There's going here. lot

Anne Bramman

lot there. going on a there's Yes,

build again patterns the you and think take guys I think I I totals you sale. comps a do at and look there our encourage would accounts some Anniversary of from that you get you historical are like once shipped look around then So at that on the of, things

the look would like can to it pieces margin in you think EBIT I the it. structure massage with

Blake Nordstrom

sold related the A in through that sale the we minutia, if not sale there's that because result downs then a well for mark count and issue road. margin to the down

really moment it much. So in happen so the doesn't

Michael Binetti

Thanks. great. Okay,

Operator

Lorraine America. is with Hutchinson of Next Bank

Lorraine Hutchinson

your follow-up what quarter. you Trunk made just comment, in about Club expectations the wanted to improvements that significant why for Can little the that and Just a bit year? talk this on are business

Erik Nordstrom

really team pretty around dive of - of business and spent the the mainly majority We deep all the business Sure, year, a model, year time we typical last do through is spent Trunk's. the it's last pretty Erik. doing business. the It's Trunk change the the have Clubhouses,

everything business. encouraged certainly of that where the of think on model that the it, customers sent a what model and number something that particular, keep I year that that significant as have over think particular several rates serving start point do, the we're positive. it are business of we from significantly to from bought last In to the we better more. we success those excited is right marking about we're and we're and been we've So but can to months. and Trunk's has point to describe we're it now, get up for we we still days, are confident behind get last have we scale customers signing core can we so think business had improved back repeat has and both the continue response shows customer's can we the the Trunk's our since out something about, early leverage the business, the metrics we up I Trunk would more In it's pulled

Trina Schurman

We'll more question. one now take

Operator

Brian from Our with [ph] comes America. last Bank question Cowen of

Unidentified Analyst

long-term on ongoing balance it sort M&A additional I if comments can the if discuss guess unique sort your you'll basis you perspective, continue targeted then a run appreciate willingness find find you flex to changed or from to sheet IG Thank rating an operating the the ratings. share you high you you. X.X repurchase, opportunity. of for of investment and credit a comfortable wondering the and of be where leverage has range X.X I'm to I on Anne, at times end your

Anne Bramman

company leverage that mentioned I to investments start bringing range, as and we in committed generational end the as some a the some feel you the see back and don't and [ph] tripping on being very growth the to at side so to from investment the know had We expect of to we're more in the get up pre-opening comfortable flex that range. the so with of of more Yes into norm. comp and the top We're Manhattan end comment. leverage higher we leverage grade Canada this the still in you right investments debt expenses know now, strong we've line, some

As at general, lot a in balance far a on well. the sheet, the flex think on as and but we conservative that to balance to provide in on Day I we have to is look value we and our the we'll driving investment, take as metric in dividends looking sheet. best value got the grade in price more that very opportunities opportunistic way to color have do our first be an share Analyst some do flexible and From return fairly we investment want at sheet, look that we've We return shareholder the the and investing where way a a mitigating to is we're in think cash M&A the again then or return little opportunistic company take perspective, see at a manner. a we buyback best buyback. shareholders where that balance with intrinsic as do share be the company as balance,

investments So again we're the for looking at what's return the best long-term shareholders. and right

Unidentified Analyst

detail. Appreciated. that all for you Thank

Trina Schurman

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

Operator

today's concludes teleconference. This

You may participation. your lines this you time. your at disconnect Thank for

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