JWN - Earnings call transcript Q1 2019

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

Financial Harbor discuss statements, Co-President; today's in call company's Erik Nordstrom, include Our refer performance for the Participating discussion forward-looking and may will slides XXXX. language. to Anne Officer, Bramman, first quarter Chief and please the so showing who our Safe outlook are

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

Erik Nordstrom

Thank model We today. position and us you for joining business strategy long-term us believe our for success. customer

successfully expectations. of with plans a first had We Our helped quarter to sales deceleration below planned inventory soft remains of on and fourth beginning executed quarter strong. trends inventories in quarter continuation which with We from the soft trends. the further our solid shape expense shared financial the at and our position the relative top-line results year we our sales ended for mitigate were to the

focused in their ability customers team's our term confident profitable achieving to serve and better are We leadership remain on growth. on

and it. we and executional three to with contributed provide We quarter, how what first and I'd on taking stores steps three and to we we're into areas drive within correct control Off-price know already sales around loyalty. merchandise. with the happened addressing customers turn impact and During experience These identified and marketing, we our course line. own had insight misses we're online. Beginning all had and factors like the top customer in digital the areas. are loyalty, miss; to both an to our some disappoint that the sales We've Full-Price that across

Last customers earn fall, well-established introduction Nordy of in with and program we contributing customers faster quarter. the a which notes the to access more evolved XX of early nearly to program allows sales and reward have than product XX% first the We with events. provides the million active Club,

execution the of planned. rollout not had as successful However, as our was we

to but part discovered we to program, that on move a our later decision paper our customer relies notes, digital-first segment eliminated a receiving by notes As of of base mail. these

As Full-Price and a in across result, saw a we traffic reduction Off-Price.

resolving our our are from initial trends showed engagement, loyalty and these issues results improving for and traffic customers. We spend

Club to is digital our deliberately The With second Nordy experienced related ramping business. our as incremental marketing we projected, had loyalty. to We marketing. rollout reduced shifted we digital declines The not resources factor as in traffic we

in marketing to We increased traffic digital and have sales. our since investments drive

offering The serving differentiator our third The brands, a price was factor customers. merchandise. across is in styles key of and points, breadth

started customers to digital mix continued in rebalance the opportunities we which It have this highly time focus in for to drive aggressive promotional with three our believe merchandise marketing, and as relative to We resonate already to toughest we in our growth are we more detail. annual our but quarter, on necessary to quarter, out levels. second Full-Price of will We're top-line continue to making assortment, All our digital of and to improvement first have and discuss expenses, Anne year. which sales half the better adjust includes year's take process the last XX%. merchandise slowdown changes in loyalty, Full-Price. Off-Price. the the This given was stock assortment in expect of factors, a another the contributed X% some in of callout Apparel, Beauty the increased have will and results Women's environment growth

for areas customer, is know to commitment improvement. strength and we have we our the Our

which give cycles, Over adjust through the years, business in better us we our customers. ability our serve to confidence many to managed have

profitability. a and team our improve entire top-line urgency has high Our of degree to leadership

focused Additionally, three through to delivery, this Local to enables access hubs. on following and stores Last merchandise and in and selection, the at we greater services team market, our four lower strategy with executing customer key largest our the with is cost increased strategies engagement three launched local year: market Los Angeles, faster full-line year, First, Nordstrom service a us.

in we quarter, outsized first sales positive in growth the this During see store digital with to market. outcomes traffic and continued

order through of inventory investments. to scale three our one-third Locals. nearly by chain in addition, further full-line done in stores, Nordstrom reach We're are including our LA XX pickup supply planning In the leveraging services market,

our to York key New sales. our City, online Los confidence second for market our as added us give Moving Angeles expand strategy, presence largest in in our market gains share we

We two on Local our track along flagship are on October to Nordstrom XX, open fall. this hubs with

spend a in ability more, customer to expect on our With expected that key which during to is our points. this two assets focused across We these touch result physical engage third lift meaningful for greatly important to market. the We know improving add to experience our with customers we're multiple engaged sales strategy, customers events.

brands. Sale event, pre-shop our prices for top arrivals at also new is brand unique for a a loyalty assortment extending curating focus limited the our customers' We're reduced on customers. Our offering to We're our period favorite time. Anniversary

destination our categories includes for we're focused back This we our to on own customers. results, make aiming sales we're and more gifting getting In closing, our with both points. more and price a amplifying track. accessible existing assortment, new Holiday, on gift-giving and For of Nordstrom across

to lens, do and always, at that everything we're customer is As their the of them the terms. center committed on better serving we through

discuss results will financial and our outlook. Anne Now

Anne Bramman

to I'd improve better top-line to profitability. we customers, reiterate Erik. immediate like serve action have drive and you, that taken Thank

and As we continue aggressively our making to and inventories. focus bending efficient our business managing more we're curve on the expense productive,

and in and operating customer loyalty, contributed which company Turning to down Off-Price key shortfall sales merchandise marketing, include drivers total decelerating sales Full-Price with X.X% trips digital and The trends engagement. our down X.X%, were metrics, our down top-line results, to X.X%. of – our

merchandise expectations our missed and margin we basis half to points, Although through this we several expense able hundred were sales our miss offset performance. roughly of by

in shortfall team's the and sales control Off-Price manage significantly. the fact, fully inventory offset expenses was by ability levels to down In

to profit, deleverage. to and points expectations. allows rate gross to planned ended was positive markdowns in the basis agile quarter This to with points We responding spread be occupancy due to XX a down sales. inventory year relative basis a customer us of in our last XXX Moving position, relative changes to in solid

to the From remain our an as SG&A work year. rate we This enhancements standpoint, chain; in we operating based due merchandise inventory implement quarter, model planned discretionary trends on sales improve initiatives technology to operating cost we XXX model; our entirely to supply expense in points we related increased We're our offering. relative spend. our continue As disciplined three we areas, to as fixed buys and into was have several productivity on making further lower efficiency sales. store and and basis second improvements gains current deleverage our structural last to reduced to

quarter. We with initiatives to ramp operational up the $XX with first how are shopping. stores these changes our customers ahead in align in expect over the to better plans realized we're included year million This and of

stores faster strong cost EBIT structure, direct in well a have full-line All that customer initiatives positions going for the Rack. in represent permanent at impact, which us order checkout our services flow-through improving we're these example, and such forward. fulfillment as For reductions

generational profitability of is investments. lever improved Another our

year. scale Over the investments our is we new are digital the returns. invested continuing we're decade, and our markets. expected last and past are of and cycle, investment deliver early These growth capabilities and in to year top-line this to This profitability seeing generational improved already

remains to Our financial strong, be flexible position changing business in enabling us conditions.

healthy the decade. a sheet than balance generated have flow annual more operating We of billion $X and over past cash

balanced maintain grade an allocation to us approach Our enables investment credit capital consistent rating. and

returned during first to and $XXX shareholders through approximately also share dividends We million quarter. the repurchases

of outlook, $X.XX relative range Moving from our decline revised X% to incorporates to of year, outlook flat $X.XX. annual the to range to our to growth to prior $X.XX of increase. EPS for a sales to we a of a $X.XX X% This X% a

merchandise quarter the we quarter, gradual to half the the and The Club the to year. further it's adjust anticipate into improvement our improvement trends from going We time second second issues take Nordy expect with We of rollout. lap in some beginning first as continue offering see operational

increase an EBIT expect from change sales we're outlook revenue, of From X.X%, low- fixed our assumptions for credit planning we and our by in greater a to perspective, compared prior lowered profit gross deleverage the range X.X% a mid-single-digit on current based of sales is to For margin perspective, SG&A trends. X.X% X.X%. expectations. cost bottom-line a our driven to to From

margins to expect This gross be mid-point occupancy reflects deleverage. profit, flat our of at relatively year. last to merchandise outlook, We by offset improved the

original end savings expected credit initiatives. charge estimated at when SG&A, also range we million our expect expense high $XXX XXXX. we on moderate progress are to be For our incorporated as of the These million. savings various excluding the make weighted $XXX further back-half deleverage, in We've to of

quarter, has historical For which been sales we our to second perform our expect Anniversary current trends, in-line our with the event experience.

is gross QX, to lower similar second quarter Our deleverage profit planned sales. to rate due

expense expect also to making extent We event. to of economics Anniversary, savings. lesser changes improve a we're to SG&A than to the Specific overall deleverage, QX the due but further to

our forward know our progress. lower with quarterly expanded the As to and refer as demonstrate sell-through look customers, now this third hard markdowns. product, we slides serving which improving you must I'll a on making better Q&A. in to merchandise expect top-line, turn profitability. of Anniversary and we our additional assumptions. focus in timing quarter our We it also for coming in In color updating over on driving we we're Trina from result months results for margins to better commitment on choices the result, should closing, Please

Trina Schurman

Anne. you, Thank

started everyone We to can you chance get to one we ask a appreciate a would question. Before question limit allow Q&A it, with to if

Q&A session. move the We will now to

Operator

you. you. Thank Instructions] Thank [Operator

first the with Please proceed Our with KeyBanc Edward question Markets. from question. your Yruma Capital line of is

Edward Yruma

think spoke of the proving line. the related Rack to the as about question. should the It and you. you And was bit afternoon. click Rack. progression like the at course guess we little good the and lot in ecom of taking Hey, what that of talk for issues my on specifically thanks about giving the Thank you down suffered you if kind full And seems I more to maybe Thanks a year? a you for how business look could on quarter. diagnostic

Erik Nordstrom

take Hi, Full-Price all, on one. Off-Price, and and cross Ed. This is online. certainly kind Well, in-store marketing as digital notes affected good subject off-price both we the business I'll so start touched of well first that of Erik. with our

have And some There's full-price. into variance after within well. off-price merchandise mix also We details by when different to department as you the than little get is off-price issues get a department, off-price across the but that know have full-price that mix that you well that of points as so have makes vital and mix we that the styles. we to is mix mix price

when have super pretty precise that range a is our serve delivering customers and out get affects look broad important of in it of we balance top-line. that We we really a to and mix

So, we off-price. issues have those in

a is, with in bucket that eliminating our And we other enter events. I'd was unprofitable plan The year to did plan improve of the call out part profitability some off-price.

flash Specifically, number of that had we the we've events reduced on Outlook.

up profitable. reduced, were and event from e-commerce not did price off-price the point decisions. those had in very the our improvement of We profitability we Some see the get We And the did of some quarter opportunities on we merchandise business. eliminate top-line. can racks we will effect lowest that clear on some to those had been that strategy we to than but that planned. at to greater the make it adjustments was we've and we our help The and blow top-line not look

Edward Yruma

you. Thank

Operator

you. Thank

Alexandra Goldman Walvis is with Please Sachs. Next proceed.

Alexandra Walvis

taking question. for there. Hi, much my so Thanks

of stage of change some last or thinking the You you we wonder at drivers to guidance Investor year the this year. trajectory the that? on differently last the guidance couple quarters outlined full any that whether long-term this towards the reflect even gave of at I move for from the as Day you're about to

Anne Bramman

Anne. is This Alex. Hi,

deliver. to about need. now profit making profitability a the levers lot on little could target, to at gave Investor gross financial on year we that. getting those the that and were principally we in the this the We're have so the that savings left there. [Indiscernible] we the XX% so We're bit year long-term deliver, And of we terms accelerating we left a little the change different, talked talk goals. that expense path stage we Day On a we're proceeding structural that pulling about bit playing on

signaled back we good Day. had we the actually the is in So, flow news what than through the once get be greater on Investor top-line the should course,

to want and we track talked we before on about see year, initiatives year then just in land update. out So the rest back right now, play we the where get the of we've the with

Alexandra Walvis

Great. Thank you.

Operator

Thank you.

Altschwager Next Robert is proceed. Please with W. Mark Baird.

Mark Altschwager

Thanks afternoon. my for Good Great. taking question.

generational that years? the some that's next the seeing, like reduction earlier course other steps the Just profit how wondering I of like what presumably sort slide some about sales profit Trunk and should following you're expectations talk I'm you've Club, where Rack.com, just taking on Rack. Canada of you're for of Thank reduced investment you. the path just the comments of contribution that It on a bucket. looks looking about profit show at your detail. you the up to bit and to improvement any kind you mean clarity over from generational drive that at little but two the Could one the investment the look the

Anne Bramman

Yes. Mark. Hi,

you're think for current line down once track. about take get we We improvement that And too. the nothing really levers sales on again given with should the we'll the the slightly pieces the else general There's did profit and year. in we've back for and clothes top-line it's quarter that. see get strikingly seen with through [indiscernible] right. the in better guidance Club, it's on We decline the that. different I coming And pull Trunk just and business we've and

Mark Altschwager

Thank you.

Operator

Thank you.

Next proceed. Paul Deutsche is with Bank. Please Trussell

Paul Trussell

how the inquire then, timing the it And half second you some the margin to comments walk of half? anything first also think versus What merchandise be as NYC you behind revenues. could of to you just through impact drivers mindful second assumptions. Thank us make, expansion. relates we else to assistance the some the give should slide that if referring you. about Hi. deck, second you taking about the wanted just opening of to Thank half to maybe are for And I'm question. just with half the of

Anne Bramman

Yes.

that commentary on you mentioned, based really we've of half we -- assumptions high So giving as quarter out. the did you how we're expand first second that level on to try it the as the given as plays out far half, been

more second half to half just year gradual it. just we see you the Trina back high for But improvement though that detailed question model at the I'd and the back story, So, would so to the top-line level refer some after stepping earnings on looking to call. the really towards component expect of of

York with really through it to you particularly to that local a talked as from the out we key savings. comment higher as of strategies getting out exit seeing about flow strategy. SG&A with the and that we opening extensive merch then, expect on really the New that should well coming of initiatives the EBIT the as hold continuing have we're my Primarily in local our pieces for is But anniversary more our of having I SG&A margin. a opening -- see is entering through help QX. piece sell-through year, our the side And in tower the as market market benefit the with in and

Paul Trussell

Thank you.

Operator

Thank you.

JPMorgan. Next proceed. is Matthew with Boss Please

Matthew Boss

talked you entry near-term about taking just as price issue you're full-price, or for the you're At Thanks. the two about women's is And And you are guess these level the category. dissect How improvement? seeing you I points. guess to softness it are and currently the I is some timing merchandise think in you more proposition? stabilize businesses. beauty like apparel the the actions value thinking differentiation of Do more that what

Pete Nordstrom

happened We things vendor, and some I some had be they're you're result being think to different. issues. were With a mostly This stock out we relatively really that that stock issues That getting was us nature. Yes. partners had are it is of we some there of from just of that in discrete the vendor behind will quick. pretty our beauty, there us think They Pete.

and kind look of caused track us lot in problems it's But beauty with it. We has we and lot it's price and consistently pretty that of back that also more apparel, that expect price a women's have beauty years. talked been we it little at that a do with for to Erik get on broad-based With had -- quickly. bit good We think balance the promotion of record a track over some I will issues issues about. performer some that

apparel. of I young think the in do to ways women's range in there of what kind to particular finding to appeal more customers we

I to part think make we need to make need being business feel and to of really we to the that's we is a relatively churns quickly. But months. news in do of take we able like the think there know I terms few the going changes good that

So, it's the we offer the women's better an I have the whole probably price and but that broadly points think of connected more relevance I on think be a biggest lever customers have to relatively subset to all, say is that and in we of the fair is terms apparel beauty to there. definitely with opportunity

Matthew Boss

for Thanks color. the

Operator

Thank you.

Siegel Simeon proceed. Nomura. is Next with Please

Simeon Siegel

guys. you remind Thanks. us deleverage now? the lower could Just I a you of afternoon versus sales from variable percent had just pretty is your what expense recognizing model. And expense variable fixed Good thought structure the

what annual margin? to And So, each of just there. way pressure any or point full on thoughts then, to a quantify Thanks. does help year comp any maybe basis the

Anne Bramman

is, the -- to going the bit. forward. I even we're that a you actually copies the structure that the what for special I fixed for far full-price it's given don't as if what that explicit details is models the the force that say think and for see particular sales think variable, in in but Having haven't given between we've variable too, want as year can shifting said business guidance I off-prices are you can

you think down So, margin little well which the our that through as through as are fact the actually on holding strategy flow is given better a if the course is X%, bit midpoint we SG&A.

So, I need it reverse logistics the over through. Club flow we that top-line changes, think Nordy would in you structural a we make would time as see you less that, is if do on can of these growth

Simeon Siegel

for the Best Thanks. of rest Okay. year. of luck the

Anne Bramman

Thanks.

Operator

you. Thank

Haskett. Chuck Grom with Gordon is Next proceed. Please

Chuck Grom

guys the time afternoon. issues comments issues of with stack. taking Good trying the side the some two-year your fix of merchandise for comp, in some just about the your to on I'm Thanks. you reconcile to the implied acceleration here

us improve both it's then So maybe on how line the going just full Rack? the on through, to walk and also help

Anne Bramman

probably to So, as I a bit just think as guidance we've frame given. far up little the

half So, when looks second only we've you've you you line. if change that not growth between -- top-line that based for you've and York first historically. opening fact second significantly is which half seen slightly all look the given at first look the will top-line and offset the New the top The half the in sales at it's second between that weighting got higher market half guidance not up awful sales or

at us a this and looking reactive is on back place. get we overall of sort you is on look very got inventory track when agile, out that through, we're position the the [indiscernible]. might what So, quarter allows but yes, the start couple exiting we is just good very news rebalancing to stack, assuming as We've side and of good pockets our be of

mitigate is news on allowing top-line us the of [indiscernible] some that's great to the So, issues.

Operator

you. Thank

proceed. Please is Greenberger Morgan with Kimberly Next Stanley.

Kimberly Greenberger

talked considered cuts are are Thank the opportunities you do for Anne of company SG&A if And you more there has cost if that think across so not, I'm just opportunities areas initiative. efficient. wondering you. organization? more making aggressive you Thank kind that represent about Great. making much. or the

Anne Bramman

Yes, Kimberly.

those going Investor better plans. we're about that when last buckets what at the we're year. the after, higher the our talk broad we of the at than So, that we're that's And actually had in be we'll three we've after. end going let And of million XXX savings ahead me I planned put shared Day

primarily productivity technology to is First in productivity, supply end and end chain.

those, going those but to pieces. after time very big productivity work perspective. through buckets some those big takes are some that we're are structural So It some

we've about customer I would back gets well. which of comments model implemented talk The still us in are second that drive is I with opening line helps I changes already what side. about the piece a piece wants, that the as operating in actually think efficiency but my smaller was the and also And stores discretionary bucket, talked then that

not it's cost So, really smaller of what we're savings component the that that have. we that looking the it's in -- at

And frame I so would that's it. how

Now what to would say the continuing we're opportunities business. that in for I more productivity look drive is to also

at structure see whatever will things continue right continue we're invest that stays but to to doing top-line. and we can so, our line make business, in we'll for sure the And going look trends also the invest our the in we in we to in customer consensus how with

Operator

Thank you.

Please Paul is Citi. Next Lejuez proceed with your with question.

Paul Lejuez

in then the separately SG&A the is credit about business? credit And question. Thanks. expectations that the sales do Thanks. reflection either business something negatively the other just the line going It's a with might could reduction that share a back there's -- of last One or the a impacting cut portfolio on that you on lower price if us? or be simply on on in you if from direct follow-up anything curious you top-line have perspective full might there's think it

Anne Bramman

Paul. Hi,

I on cuts it. in So, as I'll to well, some you start will to if don't this I know, with current want Erik component credit. the [indiscernible] chime And give

we with component believe had what efficiency the I it, about is, and SG&A top-line. it the really Club. top-line to drivers, driving the Nordy more the at look from is about impacting we we when it's was the see talked So the executional don't you'll really And exit think opportunities we

digital the marketing component well the as as of assortment. Some

recall anniversary at our are this we acquisition gotten year, I the the anniversarying offsetting line, have credit. quarter. if we that. baked which for SG&A exciting about that is it's year marketing credit the to on finish you're then, side if component what back customer credit guidance then, the a And into sales And have [indiscernible] or the we'll talked seeing if our in we call, you We the Erik… into the and look we, really know trends are in with acquisition from nothing last second don't last

Erik Nordstrom

are a actually our loyalty cutting expenses. and program. program, by add with the very in in away upped customers. loyalty, will We're dollars But dollar in were affected points the and of resonating marketing every digital color we on directly We well invested the in from notes, there from little a marketing, to having which investing spent two I for loyalty our added our actually our motivated executional plan issues With We by marketing. three the around that. marketing missteps the to points. and moved digital number experiences activation not retention points

missteps program marketing and certainly by or expense. connected issues they exacerbated and in the not So, are digital loyalty with driven our they're

thing Another in I'd and our our stores call stores. in full-line in Racks out is both

a Clearly, stores. changes Again, but driven have mainly model been model on while. journey by expense for some we've our change. in our not this We executed to needs

what have We model role stores on business born that. good define which Our the in and of was and stores mortar are. bricks real clarity think of we

can that's in having care of taking orders from. stores Our where that orders that a Their role. continue their stores online up that play at to online great that's be DNA increasingly we fill customers pick our a who important. some and But time locations and making sales people customer human genuine role are locations connection still one of fulfillment

I the and customers our the inventory stores labor well efficiency how are our done better changing that's can needs this oh moved have their there of have our the gone stores actually say and force in really And customer's them in stores what we getting reflect our in that cuts. leverage it's say to the on And we been I but looking are How and terms. quarter. model people for? need. been blunt serve assets our there, a would stores is boy, we wouldn't that's they want what expense with, physical opportunities in in to So, that

Paul Lejuez

you. Thank luck. Good

Operator

Thank you.

Please Binetti proceed. Michael Next is with Suisse. Credit

Michael Binetti

Thanks question guys. Hey, taking here. our for

-- tactical than -- know the like So, at the in it quick ROIC accounting, the the press you year. a the there release just significantly looking in change accounting. was if in looks but lease I calculation I or lower look on was last I'm question guys it given some

versus XXX last you year. I think XXX over report just

much contributors think would it's quarter the want going level one that gross how that under positive I up. the new see in the just be and is it's through if margin a quarter you we'll of to in so gross to contributed to in of help that think us kind and a that. maybe since down follow And the forward see had that the quick I I accounting. can much then

Anne Bramman

say broadly the had that can through that. What a at Yes. would all our accounting, walk of is less in From the Trina supplemental. really impact tenth and financials than it likely lease point we actually disclosure have no a at I was the to press material and release it you time.

walk can you So, I think that. Trina through

at virtually statement materials As sheet impact overall balance income were all. and far as the the no there

Michael Binetti

for Thanks Okay. that.

I one become dollar sales bigger at picture mortar you tactical had forward. we going XXXX. the the in track the light guys and have think want a here. in loyalty of full about these picture have a just challenges, Obviously, bigger to -- full And think base. nice of business volatility. businesses dynamics step department on same back in was headwinds price, dot.com a marketplace place to that look -- your little the that back everything the it of But you if in done continue we And higher to level job what be the traffic guys is but a I stores recent thoughts merchandising sector. see it's given how have of minute and the approach brick and price business do guess bigger and in business So, current on premier well needs some in revenue to If that that's known think bit good you how

Erik Nordstrom

Hey, take Michael. like I Erik. is This to that. will

market Specifically, point we to strategy. our local would

LA part local Let customers more our on know got and across the gone physical that Nordstrom and with future. engage across That lot engage started across know they we've included engagement in services with with That's assets do that assets. we channels the customers me we is we engagement. for hubs. a service be spend. leveraging channels We we experimenting model clear and data it started the year services and And really How by more with and new digital well. of in our the really, and that physical really last both

seeing [indiscernible] in across we inventory Nordstrom at growth [indiscernible] we're and growth four pick to being the stores is [indiscernible] second started available The talked leveraging the four the local buy The pickup or Los those inventory is is about it supply as we've deep our Local to in the good service online, the Angeles facilities. our that. of it or that to customers leverage And of either at market in seeing inventory to hubs stores stores our connecting about stores before [indiscernible] Where specific in into that either able We're the four core from our our -- We've strategy and chain in able the in Los have. close not start Xx we're part Angeles store. with inventory company. for one three a example being be the be went outsized we store's would up in elsewhere one company.

metric Ultimately local have midst the that in that here local markets really these customers that market we bigger is drives fairly higher customers Los seen stores on terms and in a to now in drives share Los can massive XX stores expanding unique do from spend. We're market engagement is market Angeles. in So of love do our and services a in core we strategy engagement gaining we all success our it that right four of Angeles. full-line piece think those way

learnings to the New bring we We when are pace on Tower. open to our York

next it is New to portfolio hubs year across on And So, that well York. island. across customers our is to greater our engagement We to that Nordstrom better services add them future service think and service our And then, with inventory positioned leveraging faster planned leads have leads business. that selection our that's Local plan economics we execute channels take us. the get full-price our two to to in the and biggest for with markets we're It model. and of And a

Michael Binetti

Thanks. That's helpful.

Trina Schurman

think I one question. we take Michael, will now more

Operator

Thank you.

comes with Ohri-Gupta Priya Barclays. from Our question Please proceed. last

Priya Ohri-Gupta

Thank like guidance, In it Great. of revised much in. still the me leverage going outside squeezing range. looks light be so to targeted your for you're of you

with you share that have with conversations any could to might at So, wondering if there have outlook current they're on might rating the agencies your potentially had be you. us any in ratings as they those or Thank the whether looking you how ratings. change

Anne Bramman

Yes.

allocation approach. be range our consistent very comfortable remain And we historical the talked So, we of very have by we about year. a expect our in end this and lot, capital we've expectations or but with to with line the a level

at grade And so, look company balance committed we an to investment remain and sheet. we our be

And big of so, principle that. we piece the think a cap guiding that allocation around is as about

Priya Ohri-Gupta

Great. Thank so much. you

Trina Schurman

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

Operator

teleconference. This concludes today's

thank may and disconnect for at your lines this You your time we you participation.

Nordstrom (JWN) 21 May 192019 Q1 Earnings call transcript