JWN - Earnings call transcript Q2 2020

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Operator

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

We will begin with prepared remarks, followed by 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, Senior Director of Investor Relations for Nordstrom.

begin. may You

Trina Schurman

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

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

Bramman, Harbor who statements, Chief today’s in call provide Erik Nordstrom, include Our refer update the the Participating discussion forward-looking and may Officer, slide performance company’s language. to Officer Chief and a business second Anne Executive please will for so showing Financial our Safe discuss XXXX. are quarter

Joining Brand Pete Nordstrom, Officer. during call President Chief I’ll will that, Erik. and the turn Inc. the Q&A With over session of be to Nordstrom

Erik Nordstrom

and afternoon Good us. thank you joining for

take to liquidity. and a this the our onset like I'd pandemic, moment managing share plan the primary approach how quarter, protecting the environment. for objective discussing current enhancing we our through of our pleased to We're with executed At to QX. Before was

long allowing minimize Given to and we inventory markdowns investment, more action the decisive first uncertainty over In our we bring took the for mitigate XX%, our levels our temporary inventory newness business. reduced as with than customers. quarter, closures and biggest us stabilize last risk to significantly will store and by how in

we restructuring further in and to drive perspective, a of contributed of nearly and in organization which steps plans quarter. cost pace the achieved our reductions execute to identified accelerate, full-line our This opportunities our second From proactive customer XX change took strategic included the greater we overhead As behavior continues XX% expectations permanently topline also improvement. to to stores, with closing speed.

and flexibility product. a position inventory and to Our relevant bring us operations streamlined new gave

operating in began savings. capture the be and event, While time results to inventories our and of We're left receipts event, helped sequential to in sales expectations, position, Off-Price, notable merchandise with week with grew traffic improvement the we an This deliver decision final open were for better-than-expected July of to with and as up in demand demand. our with and margin, QX, remains customer from we're to businesses, August buy indicating geared in digits a offering limited some at and flow improved in in and customer inventory earnings sales sequentially flow. full that digital quarter we increased in begin cash is demand. clean reflecting and the consistent, steady We trends. see advantageous increasing inventories signs In on by Sale as inventory X. our traffic conversion our our line are improvement In We prudent starting plans exited unmet, we to arrivals Anniversary new constrained double receipts. largest price year-over-year our

As growth customers new experienced through had quarter, our Nordstrom we last in platforms. we more than digital XX%

our profitable Rack foundational made our market building investments strategy, of digital includes scale in growth market sales prioritize gains and service business. initiatives. offering to our share pickup pickup also contactless returns, financial engagement order XX% We position With nordstrom.com of represent and pickup as curbside In one such we're customer total, to approaching services order quarter of is increased pivoting sales. strengthened, now of our growth. Nordstrom accelerate We out to volume. which capabilities and our heritage This brand

services. and efficiencies to to We're us. our business. over with flow cash on shop account total five our top expectations. we we billion unified in strategy delivery generated and well to our summarize half with markets plans of we're engagement $XXX providing inventory strategy and our customers ahead faster we quarter, market inventory merchandise with operating we achieved engagement of liquidity, on a deepen our year XX%. discipline, ahead, To they seamless choose experience, operating our Through delivering and with that our team our customer by greater quarter offering this with while increasing and Ending flow earnings expense executed nearly the merchandise XX levels markets, for selection scale and cash improved focus $X.X plan, operational cost track overhead through than more on the structure. our in in on As greater realigned In million personal however, lower executing to look of expenses is reduced margins a a

is COVID-XX, to for Anniversary customers customers to opportunity moved merchandise important while to and of and Due comfort for experience event the Our July assortment. our loyalty to customers introducing an safety our to help and Sale relevant August to most we Nordstrom. one-of-a-kind new ensure our employees us deliver provide from a the

meet assortment Our our customer both executing took drive and growing to home. preference casualization, evolving by and preferences approach to reflects and for and on Anniversary planning topline we're during leveraging how to to agility categories enhanced wellness our this expanding important customer We insights period. focused reflect actions comfort, profitability

items catalog customers check enable time, and faster it when shop. out could a wish digital to first preview through them time was the a to build For to list

for to million customers but also items. adjust Our to high us nearly was real-time not demand them in lists, only to created engage XX a which allowed way wish great early,

emphasizing emphasis to products to across leverage making categories and and to been by and continue on Anniversary, last success, and build We're categories. expanding on breadth continue inform services customers. in an convenience to we easy lower shop of will we greater to with year's our our and similar For resonating are with assortment has data experiences an prices it stores festive that with to focused assortment customers plan in successful our our for at online. Using holiday, what giftable on approach

model competitive business a Our advantage. is unique

and combination of We building and and through our connection. convenience customers strengths terms brands Rack across of stores serve are online Nordstrom Nordstrom their seamlessly the on to on a

attract and growth. with deepen share to our new and expect gains driving We existing profitable customers market relationships ones,

last for worked create to organization. the more also several years flexible a have We

With structure we strong cost to that capital structure, on customer this change we combined providing additional our are accelerated for in forward a growth details quickly event investor strategy our well-positioned behavior. with reinvestment, the later resetting of the respond to to and become look We leaner provides more of our When virtual base have period a efficient. year. at foundation

team Finally, I entire our want to customers. thank commitment to and their our for dedication

for customers. to now Anne the I'll defined over this insights provide even an emerge customers. the pandemic is exceptional we company, to from work Our to to will we our brand it our Thanks results. financial strive people successfully to provide of we in turn that hard the believe service by serve additional stronger position throughout into

Anne Bramman

Thanks, Erik.

deliver on continue sequential confident in we in ability improvement our we're path, As to our business. our recovery

sustainable structure strategic further a strong drive position investments capital to we leverage and our growth. Our foundation build strategy as and success our liquidity on provide the market long-term of

driven the structure. our We making per COVID-XX-related For an our in impairments. significant liquidity permanently charges associated came are cash $X.XX reported a EBIT by ahead of $X.XX, with we progress expectations, million, from QX, corporate share or $XXX primarily continued asset million, cost loss well of including $XX reductions of in improved loss reducing of on merchandise we Earnings, benefited overhead costs. and and margins our

working more cash the In of beginning $XXX ahead million of savings continuing COVID-XX-related savings addition of $XXX $XXX realized year-to-date. CapEx of execute million and in expense, plans, savings the million to of million to year, across capital net planned expenses. expense our to at Tracking than we're cash $XXX we

cash roughly billion with financial liquidity, a to a generated capital financial closed line $X.X for ended in We position. in more pay down principles allocation our quarter billion to credit. $X the days From than our the Turning QX, operating us of flow enabling Despite perspective, $XXX XX% our the in of cash. million of remain stores being we same. $XXX on including revolving million, long-term

plans by drive continuing While we our invest growth. and technology seamless profitable to a XX%, in experience digital to customer physical annual reduced and supply we're chain and provide roughly CapEx

store our been by more reflected and that to decrease impacted of West QX COVID-XX. markets have XX% in our Turning sales, Coast East extended closures

from results XX% range expectations. home, Full in excluding also top-performing or timing shift. decreased categories in when sales approximately line from were a and Anniversary beauty entire included sales the included: Our percentage into kids mid-XXs Overall, Anniversary the of sales XX%. both decreased accessories, price with Off-Price QX XX points businesses, the event wear, shift moving QX. Across active.

May Our expectations. June initial store and trends into were improved reopening our from above slightly

margins. merchandise stabilized In in expected, addition, From a which sales we than July and in deceleration we perspective, larger the trends surge markets, merchandise in overall and traffic saw our store of traffic several COVID-XX while had fewer cases with benefited have improved. returns we

of the decrease sales Anniversary shift. by was Our impacted digital X%

result suppressed flow reflecting a XX%, demand this sales on merchandise the of shift, Conversion inventory constraints were from digital approximately a and mentioned. Erik trends returns. grew Excluding benefit lower as that

exited of XX%, our significantly in trends our overhead with lower excluding on to driven a and in was inventory inventory We to reductions planned the was approximately to We shift. Merchandise sales XX% profit, are efforts nearly decreased Anniversary attribute QX our line volume. on COVID-XX-related structure improved the when flow expectations markdowns margin out-of-season from last clean lower XX%. deleverage gross This reduce the improved first rate SG&A, quarter. for when this last of charges. by costs down EBIT markdowns and year us excluding to volume permanent, position, Most QX through. In in to exceeded year merchandise. Moving from the relative decrease well our expenses reduced sales and to due to levels XX% cost with primarily positioning sales mitigate

into and to take the to head flexible prudent year, the second we business. continuing planning of approach As our we're half a

sales, a These environment, the Anniversary experience, range inventory ability we're grow sustain the current gradual in of the maintaining prepared scenarios we on highly customer trends confident the shift. enablers our ensure are in back expectations earnings the the of can to business. cash and and expecting Given incorporate and We're continue we ability Based quickly. developing sequential to half improvement and for critical our in year. our to uncertain while of plans, flow adjust

closing, of into us remaining up in steady off-price a a and for this receipts our of inventory financial shore half the month. XXXX flow increased to position In head open, of full-price continuation of half Our stores to in prepare actions year from our position and first a of inventory allow XXXX second strength. began the that this in receipts

digital our strategic and optimizing agility have plans and leaner the more our long-term of mix organization. by accelerated physical assets and efficient increasing We a through

reductions meaningful cost structure, recovery. sales higher our to our have We enabling during to drive made profitability us

on medium a experience customer sheet. Over best-in-class term, near a deliver to our reinvesting and while priorities we're focused balance growth in the maintaining strategic strong

as positioned be turn Trina from disruptive retail for gaining As this I'd driving a to growth. over is ambition now emerge for to profitable our and to Q&A. like we share winner period, by Nordstrom market it

Operator

Thank you. Instructions] [Operator

Trina Schurman

Instructions] [Operator

Operator

the Your Evercore first question. Omar proceed question Please with your Saad ISI. with from line comes of

Omar Saad

there's or kind you seems categories home taking is rebound plans And logistics the Anniversary do Sale think of now? most are constraints to of strength? my Do to that and to exposure in kind -- Good for plus you kind about I Thanks areas digitally-sophisticated that and think shift lower constrained more hottest excluding the XX% is or you're are growth right e-com the guys have accordingly the there merchandising core be that fashion active, question. there and the more X in you the to digital there, retailers is the out of afternoon. in by being growth of the be out a guys and know are your you it the athletic business of talking shift impressive. going inventory merchandising which Thanks.

Anne Bramman

thank Omar, Hi, the you question. for

little take digital can piece how assortments? what and Erik, you we’re then about said don’t So, the thinking a you Pete a bit components why we maybe on about the first talk

ErikNordstrom

significant stores successful inventory our placed get it's by of great Certainly aspects are There's and those Yes. categories since those we the last just grocery that what the inventory not that's invested I for hotter. the And in categories. But where to home, over of in demand of like pandemic those point been three has retailers can quarter flow, subjects but are dollars seeing about adjustment is across categories how are the shifted really into one and that to Anniversary Sale adjust we into Those customers sell, include we're inventory a able that business that's doubt significantly and the they last have great no invested. online. that dollars nicely. we our categories, but investment, think, and your we we've reduction, cut by our categories a feel home we're to growing adjust plenty performance include, subjects from There reflects that. signals and been of where dollar overall quarter. also

businesses, confidence site, going with So, physical there the flow improving it effect but in as of in our inventory made weeks, of some is couple and gives only improves, us also last certainly. digital, connections the is to forward, our our we've in digital assets. digital investments in that, coupled the it not And

Peter Nordstrom

little Yes. a I'll what's color while of relative we've generally the America, on the path give casualization happening a just customers. our product. happening with on what's And about for to the been

an right that, that to that surprising amplified find So -- be it's we not situation now.

product it have our digital quite casual offering And the a about We're bit I we getting good to this of first for very breadth we flexibility, and us place in news we're in of lot the think allows of the more lot to So, to into is relevant a our and have first. offer. a pivoted customers signals clear fact that us a this moment. meaningful leaning what's of

we're So inventory Anniversary at you really what And and And mean, of with even point, like in about flexibility us happen clear signals talk active that's going a it. date and adjustments offering. second having performance in our customer clean half the you, to and It first. confidence and in we outsized again, to here make things some way year, we gives because and on -- able us we're to it are going the respond position. a Erik's were some have a home that late I seeing of gives opportunity what's the such a lot to

Omar Saad

wishes. Best you. Thank

Operator

Your the with next proceed line your Yruma from question of question. Markets. with Ed Capital Please comes KeyBanc

Ed Yruma

the question. excess look been industry, given be was able quick I for third the housekeeping be does in understand are the liability, there on seems eyes have you quarter? inventory I there that opportunistic? implications for And Rack, second that quarter? just any And us across the you've what if good really return-reserve Hey, evening. kind Thank one to help taking Thanks you. to reversal how the can question, guess of guess -- like a

Anne Bramman

Yes.

So do take Erik, Rack I'll sales the question, why don't you the and return-reserve. --

Erik Nordstrom

Sure.

stand-alone business, synergistic, have Off-Price online in so total inventory our has this business it's our really connected a both our So Rack is us that clearing but business. as flow to we've of being look at and and component, in The robust new we Full-Price business out business allowing roots stores not more efficiently from merchandise.

So certainly inventory played team asset, and capability, inventory into we at us that that clean our across a company, the time is in our for to in overall health look a enjoy getting leverage us huge position now. Rack this that our part being to right

and during that a As far doubt the it's the has little to our access back base pandemic, we pulled closer collaboration no many cases with been vendor spotty. get vendor in our takes it flow partners want. product, that to as There's a

Anne Bramman

Yes.

return on we record digital as every go reserve, a through have sales models, have, analytics we data and a item. gets the we at quarter. process That's use We we know, So what to and look predictive sales what returned. net what you

than less but that did coming forward of saw at we and we so digitally well. the quarter through as a in true-up what filled pieces the as been returns see do we of anticipated, had look quarter, And what's this we every

Ed Yruma

Thank you.

Operator

question. Please Chen proceed Next is your Cowen. with Oliver with

Oliver Chen

Thank you.

strategy planning? of in back And As some with affordability main half, given that would the are of important the really environment and you the in impressive value question, holiday is holiday how to we how your the context approach your in the differences characterize consumer.

are best what your that So positioning your mindset with thoughts business on as well?

Anne Bramman

you don't we're how take the Pete, offering? talk why and holiday thinking about So that about

Peter Nordstrom

we're but on last to that what's a categories. only us price from and holiday exactly gift-giving to Yes, plan really more of with well. year, as the learned and do it's look I we've be think points to what for executed continuation selling, relevant that encouraging as And also that a relative has and

in, around be expand because pretty when being thought this we to time before digitally, being space sales in pandemic we the -- a holiday more think, moment we path opportunity offer came opportunistic successful well our we particularly So it we on of so gift-giving. the have clear could And led there. had I there's by not you're itself done that floor limited things the I to like around the and floor, think actually where

have for themes idea on a time we we And getting, but wellness time customers whole that's we that we we're the can what have where position, just that and active super amend about positive. inventory products buying have -- to like clear the and we're you we fact and So good all in going the relevant the what world, don't and the going again, to happen. casualization, signals it's then open of feel some have along the

Oliver Chen

Okay. Thank Best you. luck. of

Operator

Siegel Simeon with Markets. BMO your is Please proceed question. Next with Capital

Simeon Siegel

everyone. were and help merch Thank go from intentionally versus your given you sequential and well of pulled XQ? where for job margin year-over-year? external the the expected expect margin rest afternoon the to you merch the you between the what family the And you then And between of more Anne, constraint then and year? Sale trends impact lean the you. expected nice margins timing Hope what's frame this. maybe inventory just are on Good could inventory back supply shift Thanks. doing the Anniversary Hey, How the improvement. merch XQ through

Anne Bramman

Yes.

step a back context. take just and this broad So talk in let me about

came out last that QX, were markdowns fall we the anticipated, year, got half on inventory. the of better, planned in came inventory set we because year. merchandise want we so then the margin the of simply better in that QX side we've sure choices got period a that to value certainly really seasonal we and and of second in but that than up our from through more had we was we And markdowns partially for much think definitely, made transition we for have very the prudent we're inventory perspective, because that make So in it in more

lot broadly stores a giving Anniversary that not and will for we is Anniversary, open not given shift again, from a second perspective flow about cash to -- in we given that expect planning a margin we in guidance. more and given think As this. be the improvement, an inventory fact say half, the shift What year. in second half the we're thought giving we're expect I perspective, both from of prudent the very perspective in the and we forward stores, how we about From the and in were we're of sequential topline

plan and Our and in and have, primarily on that to frankly, inventory, were with really we best risk which that. inventory, was, is pleased we preserving investment liquidity looking quite focus just how cash the how executed manage seasonal really to biggest and against at we

Simeon Siegel

much. year. Thanks Best of Great. rest so the the for luck of

Anne Bramman

you. Thank

Operator

is Next proceed Baird. your Sarah question. Please with with Goldberg

Sarah Goldberg

ask question. Thank what there thank you. the on for Good and season. I your an thoughts I for heard afternoon. curious earlier start. taking you're wanted discuss And Hi. planning timing for And the expectations you We've that? retailers holiday how was are of other my some to just

Anne Bramman

a talk about want how we're about thinking you holidays? bit can little setting Pete, Yes.

Peter Nordstrom

the comments we that may long-held that's thing our else We've Thanksgiving, after that we but until from decorate Yes. customers get had stores that and anything positive we be about in it's more -- sell an an be they prior doesn't do, tradition it than this position shouldn't want, a what And they think opportunity to there's want gifts that when we to customers that Thanksgiving. for us opportunity for pretty I clear of selling it. mean us don't

already we was that last when our so an takeaways. year, learned of -- what the from gift-giving extension the about strategy one talk And key of we've

in bringing be have we gift having before to to that going offerings and that. clear we're customers it Thanksgiving So

have it how can about we've that we and represents makes months. the think us the to pivot good few living the past opportunity curve So, a for growth here feel and again, that that with the bend I trend we been

Operator

Deutsche Next with is Paul your question. proceed Bank. Trussell Please with

Paul Trussell

And Anniversary maybe talk detail seen Hi better had you a XXXX year-over-year planned maybe Sale good in terms addition, more wanted then and provide strategy, the converted of have in going, a in where you performance what Yes. And market discussing bit is a just -- the just understand on afternoon. kind just the execution how basis? and were you've other how on were XXXX I Thank the just curious anything any in to far? markets you of learnings you. of the on you on the on could be process that you slide are that and class? so

Anne Bramman

Paul. of that. was in a There couple Hi, questions

Anniversary I think focus planned learnings. going we're to on Sale the

we're of want really from what we that some you going do perspective and that? think I take this to category seeing is focus thought on Pete, how that. on we're to the a about learnings

Peter Nordstrom

ways. Yes, And may when done year from credit legacy in got zero. being a past our have I of in team a about and this was different thinking give on for a Anniversary I perspective, it And we lot turned nimble the whatever do.

what's would in over, well, the two performing not the happening -- I clear our scrambled probably there's classifications we so as type And I've were in biggest bring also before, are benefit Anniversary. get -- brands of we our signals results the as do is sale just as of right-size big inventory, to benefits far, categories casualization and it's that's working say many you So we and trend to so mentioned look that the relevant but a to there's of at broadly. confirmation about can categories. we And well what that happening

standpoint again, a customers number also secondly, products. as we're us and just fact the two. clear you're get through sets categories, than from before half that a all, profitability ever rate we've sold brands in selling getting about, relevant of one. we higher That's signal at through a up super But First from well

always Anniversary increased like it beauty while the we're think lot of so And in what carry. that relates gives can wellness we about again, like perfect active that amplify right the I indicator two, we're half a to home of track isn't how what's that a confidence we and going us, happen and categories on learning to now,

Anne Bramman

Erik, do market want to on you color give some strategy? the

Erik Nordstrom

Obviously, it Yes. outperformed bumpiness lot business. it to markets. COVID our has that has rolled a strategy, other we put clear some added mildly have where out to market of been time But for have our those markets

this resonate it working So say we our rolled was strategy back this really is are it's top our roll delivery, of engaging last pace out in clarify more XX. that now the in giving but I that is right ways and customers out The of pre-COVID, customers. half greater the right year. It to more year, -- just pandemic we inventory on five to would markets services with the that choice, half And obtaining that back strategy. five faster the we their in is product of of

Operator

your is Telsey Telsey Please Group. question. with Advisory Dana Next proceed with

Dana Telsey

everyone. and everyone safe hope is Good afternoon, I healthy.

stores you. that concepts? between you're you that there's that the of Thank demand closures you expected? pent-up what like on, been satisfied. they've are open, stores, seeing the have do the What's lastly, had the and two spikes been the are of the in transfer store As seeing full-line reopen the difference a biggest are sales you of been the just in terms going And has regions COVID? you which period with now And both Rack and seeing

Anne Bramman

inventory in want to little So about performance a inventory talk Erik, what do seeing you in bit Rack? in we're

Erik Nordstrom

very full-line all have did amount a of but didn't small some -- There's was a and significantly, a in spikes Rack in trends stores of for now. close Rack by we traffic full-line the our decision, COVID stores not we're market. overall, once. both But open traffic almost open but very than so. are up and and there's few again have It's our been at seeing Yes. slightly difference been better consistent, It localized all when time, stores, outbreak trends

Dana Telsey

transfer how going any the And closing sales stores that along? from are that is of

Anne Bramman

that take let Dana, me one.

Erik Nordstrom

Okay.

Anne Bramman

It's that. that would there's say a there going on right lot now. -- there little right out early I tell of on -- noise to

it's expectation a little our is that will I certainly, but that, So happen. think early, transfer

Dana Telsey

you. Thank

Operator

Boss Next Please is your with proceed JPMorgan. with Matthew question.

Matthew Boss

you of you on just the on magnitude roughly cadence elaborate the the a XX-some Great. sales that performance could mentioned? July Maybe think percent. on math, moderation think negative reopened little of reopened I Full-Price, I Thanks. stores at our

course the in Just to where curious, you cited you locations? gradual how the And on best today improvement about of over think store that stand year? performance reopened the of remainder the

Anne Bramman

Yes, Matt. Well, chime that let at me take then to want others and if can. a stab they in,

in in see stores, in July a So traffic COVID. moderation these especially have general, did we in our in markets that some in spikes

all ways, a given big view general, exclude full-line up like really it's quarter, in once. of a so of a down the you that opened especially In for sales. Erik the Anniversary was And shift shift in was lot at bang the there's earlier, had big a that a stores Off-Price anniversary. different noise, about, and XX% mentioned little we as talked -- ruble, As it mid-XXs, very the wasn't

say that, did Full-Price on would ballpark I the than better So, little sales, still of the Off-Price a it. in for bit but total kind

in the also the product. business, talked we in seen, inventory we're for inventory weeks we've the a about inventory and last categories. talked really seeing we're So going Rack, traffic as couple see flow flow, seeing high our our ever as sell-throughs seen some in for we're higher the that newness pleased shift are of forward, with Anniversary really we've Off-Price so conversion seeing than as And Sale people and with higher fact about we've of we've coming the in stabilize pleased we're very

Erik Nordstrom

seen the trends just would darn improved that trends us that topline cash quarter, last hard of it's not the changed, advantage traffic improving is in really our add I inventory the to in over it position been and has several teams because our and taking what weeks, -- gives position. confidence traffic has worked our Yes, see position, we have with it's last pretty our consistent. be both But we

in topline we're both As stores. seeing open full-line improved because in are to can, we're we flowing buy product and and stores Rack

Matthew Boss

That's great. Best luck. of

Operator

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

Paul Lejuez

is talk that's wonder decline. decline, the Hey, on higher charge-offs simply could seeing in you early curious or business if percent we could color portfolio, balances? to if about anything you thanks. Or say your those the of second, could whether of I sales terms then provide about the paydown credit in revenue related you of are talk exposed you seeing And what you're maybe would to Thanks. what And any categories? back-to-school?

Anne Bramman

me then back-to-school. little Pete you Let a talk to the question. take about credit can And bit

general, in total seeing to that in customers pay sales retail overall say are strength we're the current. cards. revenue credit credit portfolio, being I We're pleased would with their them is seeing portfolio So really of down. staying our our proportion we the

overall, think customer got we've so we healthy And a pretty portfolio.

Peter Nordstrom

pandemic, whether kids a school kids unless what And private or before that very and very just Back-to-school specific time. keep to It's again, be in great not. would regardless close exactly that business in that is to of other to any because happened. that's physical are true. they with the the a regardless from growing used in is kids happens not were a But at what used about uniform, school is makes kids school different durable from that tape not be rewind And it great were question I what back-to-school. it were COVID

another in gotten if good is we the kids And results. signals. clear that's kids, we've potential where upside So relevant clear have kids, product had for that for place we've there some us it's and

a -- it's don't the business, yes, in I to big have kids don't -- relevant much limiting think physical of factor need and school grow we're have a is business, but pretty those sizable So new we ability kid sure particularly, they shoe as clothes. as I is part kids a make product our it

Paul Lejuez

Thank Thanks. good luck. you,

Operator

Suisse. Please with with Michael proceed Credit is Next Binetti question. your

Michael Binetti

questions for Thanks taking Hey guys. here. my

just think I quick two ones.

per of much Can that if you normal contributed transactions, us returned that categories help the you? the COVID-related your differences X% digital customers are product and loyal helped that -- business, businesses maybe that you are the digital than through lower lens of would growth KPIs of versus new of in reported of a decline and maybe you I low think how And the think harder last help merchandise up versus when the guys there be look mentioned how I be you any if some And order could returned that wanted guess, order to year ask about with the to the think in are values, I and that customer the quarter. customers profile bit parts those margins metrics, about like you What XX% that, growth understand when of less the be you the understand I you that was behavior are biggest help could temporary? likely that report, customer, could or average structural think the some then us rates? anything? versus rates, into new more just remain new changes you like that unit versus of of pushing on guess, revenues digital-only new any how us grows

Anne Bramman

Yes.

I'm digital about seeing what the about and had, to in question our a you with just Erik business think customer we So new stab do we're return quick what take can side. talk is in and the how acquisition I then going general think

helped come -- inventory, not again you going in it's margin. it more It It it, So, would in product, on because the that take we would we're but return actually process. sales, it come seeing sell did inventory the would had seeing -- that in, markdown inventory the hurt anticipated we have to back. was we're -- we help

be news it back sales different that was From the thought other categories category we the in is that good tends we was to return the a customers both So from perspective, perspective, a is didn't would. with piece inventory that coming points are like offset have we less. seeing categories in we certain that as active, much is to that price that it and as

watching. early bit how can metrics those of you you we are want And through keenly little something that digital as about read so discount? we days that a is but a Erik, it's that do return data,

Erik Nordstrom

online clearly price. lot big Yes, also I pre-COVID. doubt shopping pre-COVID. is in mean, difference difference there's do much There's in and a online, of a There's the different shopping than a no funnel customers categories didn't big we

unit So inventory. our of are per the average think, of I that transaction result of that, clearing up, our units price reflection down, some and is is a out of,

the But that it us thing quickly in-store we we the will online, regardless engagement. up If Some feel transaction can just curbside engage than a pick engagement, a shift that get services. of longer online customers in continue is it of last think that stores for we encouraging in, is be or can like QX. with our growing categories little we them, the new increasingly or is, buy what services or really really good in

Michael Binetti

lot. a Thanks

Operator

with Next Please Haskett. Gordon with your is Chuck Grom proceed question.

Chuck Grom

afternoon. Thanks. Good Hi.

in shape great Just the than inventory levels XX%. here are

line, the Just wondering about holiday? you think quarter could gross particularly just guys and also to fourth and the their if takes, Anniversary the with the on hold margin puts shift Thanks. the hands the

Anne Bramman

Hi, Chuck.

we markdown, other We the thanks we to year a year. to going of it of to to in -- continue where our half perspective a Anniversary the good quarter structure expect inventory. lot newness the for because second like business. -- bring versus margin we're was really to is it half alterational to margin position as sales the really was for of related it last we improvement this Off-Price gross would So in related the about Sale forward, in in half it in From deleverage see of continue -- good and our feel was for QX, feel related we finished a some and

Trina Schurman

now more Great. Thanks, Chuck. We’ll one question. take

Operator

from Our Guggenheim Securities. of Drbul the question question. with final with line Bob comes Please proceed your

Bob Drbul

Thanks how trending the -- the just over can talk I And bit guys. That last York New New and little helpful. bit taking have really a be York would stores? guess how the few question for months? is, little you're operating that in Hi, about you are the Thanks. about I question. how those

Anne Bramman

you take do question? New want Erik, York the to

Erik Nordstrom

Sure.

it, a I make couple Just sure heard bits. of broke it

in operating how question New we're York? Your is

Bob Drbul

Yes.

how York sort the your -- Just trends of are it's you're how handling stores and the really how and performing marketing. New

Erik Nordstrom

have been general, harder would mention And a hit bigger Yes. big areas. retailers have say, I've our our other I that than seen urban in by in COVID the in had stores drop-off general, traffic. areas more densely-populated

is out we two inventory are the us. the we strategy York of of to full-line pleased So more in in our with have not capabilities group it's in stores, on that that have of kind market that unusual, New two for there well we leverage the market and Local in of is a the What the York Rack stores that have we're rolled stores New island locations right middle Matt, there. we there customers as own any as whole connect Nordstrom with our

order in flexibility in that proving New is So beneficial and York. returns very pickup

Bob Drbul

Thank you.

Trina Schurman

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

Operator

teleconference. today's concludes This

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

Nordstrom (JWN) 25 Aug 202020 Q2 Earnings call transcript