JWN - Earnings call transcript Q3 2020

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Operator

Greetings, and welcome to the Nordstrom Third 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, Head 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, slides performance company's language. to Officer; Chief and a business third 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

today. and afternoon Good us thank you joining for

the customers' a they personal customers both amplify and to brands, everywhere and in returns. fulfilling years our continue and to is the To of for been this to the improving an to over the Since XXX us shop. achieve is expectations. serve always convenience and focus details to I'd adapt well that continue to been quarter, generate customer. shareholders that's our quickly accelerating key team's our moment we flexibility we as goals, on our moving to on potential offering focus experience into in our highlight will changes Nordstrom positioning to forward seamless priorities, with of navigate the growth by important. in success for through new the Rack ways, dynamic like to both and come. the has pivot disruption, these never on connection, We're our and for company, rapid capture customer with market of value diving share this our the emphasis founding environment. Before end, to years, Nordstrom needs ability retail speed of more thankful In To Fast

business, we where there the significant growth. across look potential prioritized areas is we As for three

we First, the to our efficiencies. to we're terms, on company linking blueprint selection building success better which to how up gain on market delivery operate level, increase our customers times and more and market at serve order physical customers their market now asset inventory consider strategy, the and with able share offer By of pickup. we're digital two-day next-day X or we our merchandise

than top have scale We now XX roll half our which of reached and continue out sales, markets. top more account our our across strategy in markets, to we'll for of our

is alterations our overall October, engage by at more and nordstrom.com, Another through expanded Rack styling, XXX and provide our of orders know our us order that access up with to or Nordstrom up strategy to convenient we Nordstrom X customers to spend HauteLook times. increases their customers customers pick market component nordstromrack.com services. pickup, United We with capabilities, their in now locations the can In so when nearly States.

opened Los addition, a in year. neighborhood with a fourth opening hub fifth later Nordstrom recently local we Angeles the service In location this market,

of assets up today. physical our growth and to making continuing Nordstrom digital we're Second, fuel Rack our leverage brand, one-third to of business

in an in We X between Nordstrom have synergies The new our significant XXXX. two needs meet There segment. our of serves are Rack business, bringing further a Full-Price broader opportunities customer to as brands. pipeline the million important customers to

we Rack significant to our generated downloads In channel. million third digital competitively overall higher lead Rack converting also X.X which Nordstrom, Since Additionally, We're app, platform. online Rack represented only customer nearly off-price retailer to highest one-third with will of customers XX% a the more Nordstrom of as spend. the cross-shop sales. quarter, than of positioned our our Nordstrom XXXX,

with vendor the strong Another approach provide customers to end-to-end relationships our our best of difference our brands. leveraging is ecosystem, point across

the for than will more lower There particularly underway physical of better we are our price our prices, in capitalize and our XX% main Rack, significantly stores, two the points, connecting our online on expanding at at also potential efforts XXX increase and to Rack. top fact, are In growth Nordstrom carried selection. see brands the which

more years, been view October, a our business centers For than all use Nordstrom able we has inventory. sources fulfillment by across stores having In Full-price of inventory launched XX single to and of customer these choices online quarter our are expanded from selection fulfilled nearly fulfillment. one added XX,XXX order capabilities enabling pickup, and Nordstrom of online online, Rack, in orders store We and stores. more

being we're orders picked more of than up already customer stores. XX% seeing with Rack response at online Additionally, strong

fundamental customers has been built that in both we shopping support are increase shift Our XX% is sales with to a this many well positioned as third made behavior digital a this view of year. XXXX, years up across to digital In growth and business. driver of our accelerated We and to growth. of Rack and the Nordstrom scalable platform of velocity our XX% support to

we that translate that heritage of defines know also linkages at by the means world. us must scale greater digitally creating the experience. delivering physical between service this in effectively and personalization We more This the connected digital

volume virtual roughly quarter, XX% looks from the of all the personalized from accounted styling by salespeople created And our sales styling second tripled for During appointments. in quarter.

digital-first connection our differentiator we're service. meaningful digital feel our but us, It heart backdrop, this between and between with principle this connection, us in is set At our than also the leverage how quarter. which This where see with will that opportunities we good to this closer product, shopping look will service ensure strategy describes to in for customers who the in these to salespeople just of offer third increase we is the are is are but good we standard we market to world. our their proposition convenience also value loyalty and going and helping which you, best. and more we from customers. we comes forward, service is great the of the true how Against and continue just Going capabilities and further pleased product not to how life and results for

the more immediate up holiday in The with well performance a most taken steps we inventory for pandemic, strong beyond. the first took and in and the in of us us early and Our expense actions and expectations. XXXX half importantly, all our into heading the positions set $X.XX combined the enabled discipline, in us have to $XXX ongoing year of cash to strengthen more third EBIT of share which flow earnings financial positive exceeded per $XXX deliver million, quarter million, flexibility of the of our than operating than

structure. quarter with a rebasing the continue mix and third trends We well We exited into margin of also benefits merchandise improved cost customers and from positioning serve the high-quality us year. to holiday inventory, new heading for see our to

best providing brands want, on our of that remains with high focus combined level customers the service they Our the expect.

strategic brands continue LVMH We partners like Burch, Tory Nike including American. emerging our close and like leading to with and global brands leverage have partners, relationships we the luxury Good like

amplify to events. like relevant While in-person we're we to are pandemic, travel the categories the capitalize to to opportunity the gain believe around medium demand, be needs over customers social and during or continuing meet We're their long-term, particularly well-positioned occasions that with share. pent-up will that market on customer there

guiding of you is Our growth to forward. the going plans getting our closer brand principle progress of

our markets, three on clear strategy the our Our important areas our growth the across direction priority; velocity our growth owning highest is to to our Rack support dedicated Nordstrom business. most of of and, executing team and profitable fueling of increasing is digital

and our even We customers position in will pandemic generate successfully value shareholders. that an are confident to stronger we emerge serve our this for from

at detail detail. performance With team Anne discussing in more virtual planned that, Our event February our discuss financial it forward looks with more for to turn over our to you investor I'll in plans Xth. to

Anne Bramman

our our our we We're and from took flow plans, towards continue cost positive sales which we results, the team's this structure quarter our collective third to of pleased earlier to our actions with accelerate inventory discipline. benefited rebase proud our efforts earnings recovery. path Erik. We're and generate as cash Thanks, year continue strategic immediate

serve in our and We're drive and meaningful the encouraged position Nordstrom our response capabilities, the customers quarter, brands. made connection Rack across profitably. us grow convenience During we strong putting stronger to also initiatives our in to and advances a from Nordstrom better both digital customer by

quarter, of rebasing more taxes reported included earnings CARES a positive tax share million, the per interest $X.XX, $XXX related our before we which benefit of by For and to flow-through earnings than structure. $X.XX significant from the Act. in third driven We generated improvement cost

to profits CapEx In the a a as as online digital we of to the position, business us of to of We're in healthy of our of than cash quarter. positive during $XXX delivered accelerated our including down third pay $X.X quarter million sales the $XXX ending with quarter. strength to of the cash a and of reducing reinvestment, expense, our million capital. on savings We we generation end our returning enabled cash to committed on capital focus COVID-XX-related total include shareholders. at allocation which delivered strong of XX% quarters our and working addition, across cash Year-to-date, financial quarter. platform, continuing $XXX and remain principles, with scale testament two cash in leverage charges returned the excess in during our $XXX liquidity, flow the flow realized over past The million revolver more outstanding the $XXX long-term operating to million cash. free billion net million We flow

of base, roughly ahead high end costs. taking million P&L, $XXX out We our this year. expect expense our million $XXX this excluding primarily included to occupancy savings tracking cash standpoint, of of the overhead the savings an From across momentum, our continue of targeted from XX% for in

shift, for cost were After strength throughout with we customer percentage merchandise relative forward flow-through, third improved points store in improved sales digital second Rack and continued continue sales in This Going anniversary the growth. a traffic execution, trends From normalizing our reflected by recovery. we're anniversary encouraged EBIT response this to expectations. trends our and both our to by the sequential our quarter in of line perspective, XX our quarter. full-line rebasing supports as improvement newness. the roughly structure Overall,

ability Our customer relevant anniversary contributed anniversary profitability preferences. We categories, meet to achieved point mitigating sales product. markdowns to shifting and in serves rates, brands proof as which a our record amplify strong trends on sell-through to excess by

the objective Nordy approximately with loyal members customers our XX% of met most we our addition, rewarding during Club In of sales anniversary. contributing

to event X/X digital nearly scaled support the nordstrom.com from full-line during XX% also faster delivery. We our And fulfilled to enable of seamlessly penetration. units stores online were platform

brands, diverse ability assortment Our This customer unique breadth demand this environment. price respond to of is changing in a dynamic competitive styles our points across advantage. product supports quickly mix and merchandise to

had casualization, of XX% than active, sales. in During the We quarter, we wellness continue resonate trends up home to and with more made comfort growth outsized see customers. and

continued In business. strength we designer addition, saw in our

from up significantly quarter, of of sales billion the For digital business, a third year represented XX% ago. $X.X XX% our

shift anniversary accounted market pickup the volume. in the sales sales Excluding grew enabled grew XX% order consistent and the order half mid-teens with for In the range, in XX year. trends first pickup the by impact, digital total the of of XX% markets strategy,

Moving in regular price to last the lower to Merchandise selling trends. gross our due due X/X basis roughly volume. deleverage X/X points profit, and XXX our to sales from year stronger from was from expectations margins down rate and with exceeded shift anniversary sell-through

of the XX%, for anniversary basis saw the a the year, in of nearly year. relative we with deleverage decrease reduction half in the second SG&A, impact first shift, the quarter quarter. line reflected costs XX to last the consecutive we with modest sales our rate ended of of point consistent overhead this Excluding In with inventory

our reflecting an last increase most in into and and the freshest, is improved we the fourth across year. right Nordstrom aging As receipts relevant have Rack. both of product the inventory the and mix to We're quality for quarter, holidays the relative head to seeing expect strong, Nordstrom

to normalizing in for can are quarter. to in are XXs we the deliver to the decrease continued positive COVID-XX, Sales sales low our on remain prepared our sequential which business. for in current sustain and the due scenarios reflects range open, Based fourth ensure Given drive of increasing range, anniversary modest current the percentage stores that shift cash our uncertainty expected to third environment we expect quarter. improvement expectations the the for that EBIT flow and operating we

deleverage surcharges to our of experience. in to us more deliver progress priorities strategic a higher meaningful financial holidays. made cash strength premium third In product profitability In a a addition, customers best-in-class and we offering reinvests quarter, environment shipping strong drive relevant and The in to enables position our the closing, to flow. to give the expect which factors promotional competitive EBIT fourth margin highly than pay and addition and during we in quarter deliver growth

As we and I'd head over it Q&A. profitable strategy sales XXXX, on turn our like to Trina to into for execute ability the deliver fourth we're confident now growth. in in our quarter to

Trina Schurman

Thank you, Anne.

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

We the to will now Q&A move session.

Operator

[Operator Thank Instructions] Thank you. you.

question comes -- proceed. of the Bank Yruma with Markets. first Edward Our Please from line KeyBanc of Capital

Edward Yruma

evening guys. for good the Hey question. Thanks taking

Some to commentary start We pent-up about Thank kind with for do travel thinking receipts a as in planning expect you particularly agree that? you interesting about out reopening do demand, that going pivoting start When scenario. of apparel And Do we move you. forward? in the assortment when you. to increase you assortment?

Anne Bramman

thinking Erik our address going scenario to I'm about pent-up Ed. have how Hi, for and XXXX. the we're plans question demand

Erik Nordstrom

Yes. Thanks question. the for

occasions, a a parties doesn't certainly, and things. such but as around opportunities what First the think as off, happens out sell galas to When up, built date lot night, be and we about us. of of company when occasions, a is It formal exactly, know. that going lot we we mean simple And dinner. we that opens talk for as could there's don't

looks time clearer is and a the think on. to our back of with is on being we're key year really as nimble and assortment focused merchandise The What goes There's breadth vendors. working encouraging. I gets flexible. it of our the lot half

categories. becomes during that have things we gaining a we're share time. of opening to we that on it clear, because when So, plan in certainly up that do a when lot position those in strength again, start And

Edward Yruma

Holidays. Happy Thanks.

Operator

Next Telsey Telsey Group. with is Dana Advisory

Dana Telsey

everyone. good Hi, afternoon

some As you guidance. get fourth color quarter, on more the about the want to just sales think

and had in Off-Price mentioned XXXX, does you you are think and you assortment that both how planning What channel And also, I you. Thank down about XX%. Full-Price around buys? going imply as the thinking you're expectations? how think about inventory towards

Anne Bramman

bit question take thinking Dana, fourth we're inventory a it's piece Hi, weigh the about for your then and going on I'm to to XXXX. in on to little Pete Anne. going I'm quarter, ask this to how

some we XXs So as be line. really directional guidance gave And think I low mentioned in or it the look we the across XX in negative to for at we my multiple commentary, is top going that ways.

know, it's now. And fluid very so, environment you as a right

-- We possible we are be want April, in we've meet to are sure to customers and a shop. respond lot in how a really flexible demand learned we set up and the order to to the as done as make to that out We've lot agile going holiday there.

got So as capabilities, lot in the We've a way we're thinking about our it we're out driving is, Rack inventory store fulfillment the then, pickup business. And well. really both our also we've the and curbside pieces Full-Price of got in stores. business

you sustain ensure sure So our making of we're staying very in? can a Pete, fluid, that we've really to scenarios but got range that we and we're drive to do weigh business. want

Pete Nordstrom

a team shape for be this the and probably casualization to we few stay. takes have It to of in touched There really starts And assortment our Anne accelerated mean, position are lean and so us to that been to example, things ourselves able regards good we in for Erik for be efficient that. pandemic. got that wherever that's the evergreen, things we've lot while, are of a to XXXX, pursue we've agile, and done got can on most on though, putting I where regardless here think to really inventories, we and With be just and that with going I we're mean, Yeah. of in kind think us. both a I a believe regards trend true. really

much the do to as do, out selling tuxedos and enable that ballgown, So the we're vaccines point whatever and events, it's get help. because Erik's people occasions socializing, to to and not But and much more necessarily. I going that's so about think safety us health

home. lot I us, think active beauty, and is, a in category, active done far seen what think, across of there's runway for casual wellness, we've I with so whatever things and So particularly there well home. we've really And

you'll So to distort there. continue I think us see

Dana Telsey

you. Thank

Operator

you. Thank

is Oliver Chen Cowen. with Next

Oliver Chen

Hi.

you performance. other and price that when against historically margin do with prices. promotional also had you're what prepared matched balance proactively encouraging for had environment, You merchandise you've the How really competitors

love think your ahead and for as next highlights what's as year in would of well, market thoughts as I strategy Thanks. about that as So there well quarter? fourth local we the

Anne Bramman

Thanks, Oliver.

So Erik, do strategy you both and and I the margin? on weigh want to approach take in the then market Pete can

Erik Nordstrom

deal really I our by market our we and Rack and store recall, our was, as last is our ago, two Yeah, What's a for of store order talked business, part also for it you store business in to Oliver. if we up fulfill HauteLook is years gosh, – Nordstrom.com Off-Price future today. it even it key it, connecting inventory, about a model. for a over one, business Sure. particular, and is business we inventory pick our do It We store. being new, bringing in being on strategy. talked it e-commerce us. Investor But our and Number month, Hey, able market us at rack.com how do had the Rack Day. about it big think the It really operate. first with our to terms pickups just allows of to customers store model is strategy,

their So receive really for a the lot we more have on merchandise locations to terms. customers

connecting already there's leveraging business, we and our assets of of parts in a but we have. digital lot of So there the runway only just think not physical physical the

we're doing service open and We well, lot in local store services those a our there's hubs. that few of They've to stores. performed Rack but a alterations continue pickup like

those of customers much without we leverage lot investment care there's assets, taking to a think for additional us. so existing And in

Anne Bramman

now, encouraging and right on have is, some response would weigh during anniversary. margin, It's probably I the really we in question the had from customers we've Oliver, when So saw in quite the say freshest inventory we what time. your

it sell-through gave for at regular opportunity categories both margins and we price you nice in price. us really had in QX, So to And points. the saw remix our as product, a

As we are anticipating about think competitive from QX, particularly environment, more we a promotions.

really receipt some we aging But QX. our thinking that got. and encouraged for so into freshness the we've baked the we're by and have flow that the And of

you're on thinking don't little know Pete, I weigh bit So you to a want it. in how about if more

Pete Nordstrom

don't have stuff. we stuff mean, other what I that's we do on really to control. the to Yes. and crystal lot the same But what's of exact we going with do retailers, has we're promotional a be on It a prepared, ball is out and going competitively carry. anything priced we're our

attention it's think that. So And been a good We've sure always so paying we're the communications to we of they we brand have place. making And same. different ordinary I all close there. really the expect on it's have in super We're of that working out be part of super plan got partners But out anything the we may something the time. is that everything. with don't things good aware or

Oliver Chen

Happy Holidays. Thanks. agile. very Sounds

Erik Nordstrom

you. Thank

Operator

Thank you.

is Omar Next Saad with Evercore.

Omar Saad

this play algorithm and digital of accelerated other in surcharges comparable that fourth period? omnichannel offsets Hi, almost up good how factors profitability a kind you microcosm stores what margin for about are might surcharges guys omnichannel the and made the I think for what question. and use and to other How of save the comments follow some greater isn't? to for we kind the you is EBIT afternoon. If to we new around Thanks around term, fourth marketplace? profitability help during look stores as the a charges? And the as as my attract shipping holiday quarter. an structural consumers that what that had premium we've of us taking Can the your that do think you about quarter world to been e-commerce heading towards costs deleverage of long question understand the shipping assets and of

Anne Bramman

in talk efficiencies some Erik factors. little and then Hi, we're to how more little getting of let expense bit and the the inventory in strategy specific a a Omar. but fulfillment, about I'm on thinking market bit going weigh I'll more

Erik Nordstrom

Yes, Omar.

all, is First scale. about to Number context important it's one our of I business. back, think an its digital two step things and

we where our tipped XX% So digital. of over business is total to it's

majority not because us the digital now. So we gives important but it's business us. gives flexibility efficiency a are only right And the it it

profitable, third is by business results. our digital shown quarter Our as

is mean, given growing It's is forward. retailers lot that's up. clearly, curbside So moving that think, face doing right as us of they a part really on Market and any really want more about, pick there. pandemic. strength flexibility of order a uncertainty of and it. services important we're gives and that how now that offering options strategy, to lot growing, customers I we've particularly providing is I And pickup for how talked we the the business

And -- a we us we're so of while down. uncertainty not the confidence is now stores than quarter gives much closed we when first in have, better to prefer the March position were part fourth in for but what

have stores now. our fulfill We to are -- orders able Rack

really we the offset in gets your ecosystem shipping place any have time inventory expenses number majority assets allows think a business. two, is the well-positioned to number it the not that connection I some point to and that so our may for And And maybe scale one, us point us we've in got, a trapped. digital; be where But point, our of physical to digital don't be. for to

Anne Bramman

and saw about on what areas we the you was QX that, saw were the we a results. that outside thought in as normal add are lot that of we business, to Erik because were getting And digital call that mentioned, of way the and QX specific we've investments we our out efficiencies scale made, to that

we was that saw just call happening isolated QX. what we things that So for

Omar Saad

Thank you. Got it.

Operator

you. Thank

with Sarah from question next Our Baird. Goldberg is

Sarah Goldberg

see the top there side or that for you any Hi, the insight are good offsetting Can of traffic Rack? conversion? with factors improvement more in seeing you're like question. Did my line you line to sequential Thank you taking afternoon. improvement, give trends at

Anne Bramman

want take you on to the conversation Rack? do Erik,

Erik Nordstrom

and traffic Sure. of we course Full-Price Rack both the improvement sequential in our the -- Yeah, see and business, did over sales Sarah, the quarter.

Operator

which move We'll next on to Paul proceed. you. Please from Thank Deutsche is with Trussell question, Bank. our

Paul Trussell

afternoon. on margins. Question Good

bigger on have of has perspective, margin curious Just planned. challenging a from impacted been trajectory how given your particularly more picture. it's just you done cost savings year. long-term that COVID than Obviously, take your But a originally

curious on is sustainable? permanent Just Thank what maybe you you. more think and

Anne Bramman

Hi, going context and take in give you margin think of a maybe, going the Paul. I'm to question, specific you're I seeing can what broader general. business Erik, forward with the

As it and we've the business. definitely that in we talked the customer about, how digital definitely to has seeing accelerating has been piece it, shop, you're our accelerated got scale

a As of margins took pretty – know, going and forward, XX% happening. you year those as we We we that that permanent to you're and believe savings 'XX. of about are into going early in benefit seeing we the going flow-through our think actions that about lot be

and 'XX So through not require to of in we a flow level same COVID. prior the sales we expect see better to will have would that

So business we well this cash generation really financial the and of the we're in actually think seeing flow you're also and well. the health as strength positioned. And

we So 'XX. well like really we're up Erik? for feel set

Erik Nordstrom

already this, change acceleration Paul, to One, one particular. two think saw we've change about I of place, things less no a was that talked general, was of COVID and the massive say, in shift to Yes. that in about in digital. I'd coming

now. digital. half third was over quarter, our year additional is ago, mentioned, I our A business As XX% business

big, big So acceleration. a that's

new one have those fill evolving is if And to capabilities I those model. in it I stores a have today as stores would organizational accelerated in majority order more way. is business piece different we we of that store pre-COVID. the really not we're where big dramatically our orders the digital to on labor and both been the factors changing we but in out we change that yes, where having other and is COVID it do wasn't the And be very mean would COVID. of driving pickup, not digital, for we're and of us the embracing role say, just shift that having a got than more for focused things And The the world model. stores. model business instance, model, certainly, our was at

serve order We to to And flexibility in fulfillment much order. staffing our just made store handle model with efficient. filling given it's actually an the significant us our or It's store whether and and curbside flexible it's customers in filling, stores those have much much order more in things. services our more staffing more

Operator

Thank you.

Next with Siegel Simeon is proceed. Please BMO Capital.

Unidentified Analyst

rates Thank on Hi. on see detail This shaping wondering you and the is up [ph] how then give an all? at just you how idea cadence Simeon. quarter you. I of was return if and us more could see if promotional that some Aatish you just in for for were holiday the the how just and that shifted

Anne Bramman

piece and how up to I returns. wrap promotional, think I thinking we're promotional can the it, on about Erik, the So

Erik Nordstrom

Pete hard others. Okay. is It's Yes, on It to touched this. to know. I think responding

but us, as we so inventory has our number which also the inventory, health the and of and we really our the within control, really one is well about it's that, category, as better. right freshest measure quantity never been feel good point quantities. The For as the Anne's to that

So from we promise don't customers. that's see make having won't we to And our a markdowns having inventory, excessive be excessive we undersold. but

as play So, we'll goes. have it to that

Anne Bramman

it, to it first half piece the seen return of continuing sales the trend in was on the we've So, the year. that

helped mitigate the was really the of potential a shift. and great our with to margins. it helped price some the think of markdowns I it -- sell-through the is of reflection -- anniversary of as points, highest category some seen, on is as based We're that based Some which of well sustain on merchandise some we've ever

seeing trend So, marketplace. seeing in it's of we've returns, are lower the a what we been but continuing

Operator

you. Thank

with is Next Tracy Citi. Kogan

Tracy Kogan

added could average about to you any you've what relative they're differences customers Thank you. and demographics year guys to customer? your you're in Thanks. the the I whether Nordy or the Good any Club this hoping was buying talk afternoon. new seeing difference in

Anne Bramman

mix? to Erik, do the want on customer you the take question

Erik Nordstrom

all, had shift much of had haven't rate that acquisition, towards new the customer of we first Well, customers just digital, Sure. before. a we've higher

I life -- see changed during that time. this is report And there been has are to customers there's So, willing so this try elsewhere there's new -- there. opportunities that retailers a much

So, of advantage take certainly look we to that.

experience that's our someone's not you them this program. first benefits getting signing certainly don't we -- that hopefully, customer we of club. can into at course, our And the provide loyalty in come result Nordy of Club, top new with the time, good up funnel think and Of does Usually, starts it But as all about right? experience our a of the customers Nordy can acquisition. educate

Tracy Kogan

younger And customer demographics? customer? the at all seeing anything the new Is that in you're on the

Erik Nordstrom

Yes, younger. all it's

Tracy Kogan

Thank Great. you.

Operator

Michael is Binetti Credit with Suisse. Next

Michael Binetti

from new net it to number freight coming wondering XXXX. or the cost a about, with questions if long-term, heard saying Hey be little the done higher. you've guys. normalize could of the how are I then Thanks offsets going side, from about out as a wondering of you're about of to gross I SG&A up. here. for And SG&A for help a guess, work you fourth will us some of industry be you guess, in taking versus Mostly I'm lot sticky I bit the think margin our thinking we've understand mention you did there to all XX% little anniversary the more thinking if shift. look was if coming a quarter, that, of And any that's is trying just retailers you

XXXX, to if quarter. a in back look wondering investment seeing please. line we I'm into fourth marketing any into of the of SG&A need as those the come lot early You're

Anne Bramman

Yes.

in thought So of we it, see for XX% about overhead continuing outside -- we're costs. reduction we occupancy-specific the year, the to way the

As it's it's think about We variable, particularly base to out we exit as variable, little been to we XX% about our out a XXXX well. fixed. going XX% XXXX, think into cost traditionally, bit going and be as QX more

So bit continuing through little we a flow should to see happen. happening more

we a also some more of assets holiday marketing the earlier using I would our holiday about scale we business. closer that giving things as way the well. the would way the our about strategy, talked and the back a to And customers, promotional of really baked think as general, what of lot together, in product at which the because is opportunities well some I for got theme, in we QX, labor we've a it's surcharge digital see physical specific just us our it around have the between of But pivot broadly seeing surcharges we've that we've serve got -- around in and as digital you're holiday we're As think in includes campaign common and Nordstrom-to-market to customer. fulfill shipping environment,

on business. lot a on we're there's Off-Price continuing that and efficiency to in Full-Price both our execute of So opportunities

Michael Binetti

a Thanks lot.

Operator

you. Thank

Next Grom is Chuck with Gordon Haskett.

Chuck Grom

are with of and fleet given this coming expected Hey, thanks just little sales trying a XX% to that see, sounds going just can afternoon. under the bit And the duress down at they're margin on good operating store sales then speak get a to you're base for deleverage channels, the quarter, time. fourth from And of about point magnitude how margins, follow-up will the be, now you XX% be in than the the going then, and be store you're feeling to to to like more sense perhaps digital on quarter. that expecting today gross third about the

Anne Bramman

Yes.

store can don't circle about how and So, talk you back. Erik, we're about then why thinking our base, I

Erik Nordstrom

We XX the reopen that stores. wouldn't our early full-line announced we pandemic of in Yes.

physical So we about any but really open by to market. is Really, sort store, this at assets think store of don't how have more not point. it, and we by

So that how and stores. the And right we Nordstrom and can stores, what's of Locals have we includes Rack assets? leverage the mix full-line assets

it's what have we at don't than I full-line that those with like out. to we mix to us different now. would We more ways besides going physical be to assets how just footprint, more that have, play different different probably really going say, capabilities exactly and optimizing So it's finding I link gives as our a it of it them. And ways know store. looking having

Anne Bramman

in to things is talking to for the think about XXs percentage for and just QX, positive does to script are been cash EBIT sales in I low quarter. believe deleverage about What after third improvement even and that to are decrease modest QX, sequential what range, is in which to the reflect the that normalizing point shift as that So also that got anniversary the clarify, still the we sales in a talked expected deliver would operating flow continuing though continued expect we we some we've fourth we've quarter. about, I

flow So we're have the to positive while we're to expecting guidance, this, and cash we're continuing positive I -- would that fact earnings. not even that giving anchor specific pieces with just

Trina Schurman

take question. one now more We’ll

Operator

Thank you.

is Guggenheim. with Bob Our last question from Drbul

Bob Drbul

Hi.

the the -- how the just strategy, you big there could Thanks. with how in curious, is the the a traffic New like but for talked is performing you are if and and curious City local Just responding, you York? about York market volume and customers comment New maybe market flagships whether

Anne Bramman

Pete, you question? want do the York New Thanks. address Yes. to

Pete Nordstrom

Yes.

of what, a I New before that in the huge months think don't work hit. is we that five were York that, us for legacy the body the have open, thing worst thing we pandemic

some I guess, that this up. I don't huge occasions and that big I about it market. in we a history believers have So, mean, like helps talk that. are still and stuff we We powerful market. it in remains big mean, But ways, built

and market, sales people the of there. going like York to and going to what part big think You things drives That's about tourism New a events. work

Seattle Chicago So think But any or us have, it be pretty San whether Francisco. them hit in we urban hard. that I pretty similar much it's store for or

not the and goes how customers really that but and it's with with connect to in we've probably urgency blessing lot focus there. the improve a a personal of us it's got great a disguise team around It's sales that. personally kind total everything and always. anomaly, So given of And

New be we're So work brighter York, we're it, believers still through going and big will in for there just to sure. and ahead days

Bob Drbul

Great. very Thank much. you

Trina Schurman

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

Operator

teleconference. today's concludes This

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

Nordstrom (JWN) 24 Nov 202020 Q3 Earnings call transcript