JWN - Earnings call transcript Q4 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. And welcome to the Nordstrom Fourth Quarter 2021 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. turn Relations over for I’ll Head Heather time, Investor of Nordstrom. this the to call Hollander, At

You may begin.

Heather Hollander

Good afternoon us. and thank you for joining

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

our Chief are President may with Bramman, Erik now, and Officer, Executive Pete forward-looking over Nordstrom, Nordstrom, call Chief provide update the include Participating Brand a Anne to language. discussion turn I’ll company’s and so please Chief Harbor Our to who will discuss in Erik. and the Officer; And refer fourth Financial statements, slide Safe today’s call business performance. quarter Officer; the

Erik Nordstrom

thank us for joining and today. afternoon you Good

growth, long-term and on improved in executing Our strategy. progress profitability sequential fourth quarter results digital marked continued our were by strong sales improvement,

on back an delivered with margin Looking XX% increased fiscal revenue and our the versus in we XXXX of line guidance. X.X%, EBIT year,

on to our have Event. progress presented and at our XXXX initiatives, the made financial we the in we’ve year, achieving, Importantly, targets strategic sight Investor of line coming

additional Our build with greater to to better market work and urgency profitability. to customers, deliver team share serve continues expand capabilities

plans thorough we laser of our inventory Nordstrom the our performance. on are key in optimize analysis and with Nordstrom and customer to three Starting prescriptive improving the we flow. We third a the the supply quarter quarter, Rack areas undertook profitability focused increasing experience and performance, and outlined optimizing chain last developed improve Rack, business

XXX customer are results implementation, early in fourth reaffirm Rack Rack improved outlined. at faces the and in of points Rack improvement brands posted a to unique environment plans a terrific sector. drawn confidence purchase average in the Rack sequential mix in in limited Customers same scores points price. price we’ve at and our the difficult off-price Nordstrom the of top improving is we the of as constraints we of off-price As clearance a levels we stages inventory store our product. procurement are in levels a after has we particularly stores, sales sought satisfaction brands current quarter. Though the and raised lower the distribution of Nordstrom carry unique production with challenge to the with brands basis

increasing result, the a we QX, both brands carry, multi-layered executing we our brands and frequent we the inventory, of to stores, core deliveries Rack partnering are source vendors, selection As in-stock matter the as want. customers from efforts more a well expand our on In Apparel. such coveted we improved customers, that plan focusing deliveries, have as new as our ensure Shoes our position offerings at most to our of flow Rack sourcing making categories by to to with the to most prioritize and

opportunistic increasing constraints. deploy larger system tight of also Pack then of relevant items to Hold periods select demand, us it use hold are inventory, quantities supply available, portion We of and allowing a high or our to with in buy when

better align to As customer of to a balance assortment premium achieve with the tune at better our we points of we and supply fine needs, Rack. brands improve our expect price

we and Finally, awareness action brand to traffic. Rack’s taking drive are strengthen

and Rack throughout anticipate showed continued comprehensive set with performance Reasons Rack this be actions, Through our grow business in To pleased future improvement results to marketing increase confident are so. our be fiscal ability Rack which are the to of our in clear, we We do intent. we XXXX. More campaign, won’t until meaningful satisfied profitably purchase of in a we

structure SG&A, and through strategic we and our and Pete XXXX sustaining management. progress cost deliver quarter. category remain to-date through in discipline. delivered merchandise pricing Turning our improvement to will profitability, overhead in incremental committed our in XXXX you we to Within significant this plans improvement rationalized to expense margin our take

team taking mitigate in the to macro-related facing we’re the those drive currently, costs pressure fulfillment to Given supply optimizing labor efficiencies. the action and pressures, overall chain including that is our significant impact from

We enhance the will in moment. growth for efficiencies on drive XXXX. chain expect workstreams implementing supply chain plans more topline we provide optimization this labor a also the and began that in and will customer Pete quarter fulfillment our experience supply in while driving improvement detail

growth Turning quarter of to increased sales were of or capabilities merchandise versus Rack GMV sequential gross X% by XXXX. delivered XXXX, improvement our and flat, enterprise strong to saw quarter in performance, we utilization in the XX% Nordstrom market in while addition interconnected fourth banner, increased value banner versus our fourth strategy. digital the

see of continued approximately the our X U.S. the in pandemic. Southern stores disparity quarter have points source percentage outperformed urban by are points. our effects the fourth banner, strength been XX% Notably, by U.S., by in outperforming city to suburban locations Northern of performance. percentage for XX disproportionately impacted a locations was The the as where centers We the located, Nordstrom significant of geographic

leveraging and important priority that positions closer our a physically In addition winning we to strategic discussed, strong markets, Event priorities most the laid our last with velocity. our customer. in focus important markets win I’ve we areas to that growth team progress at most to out increasing continues three in our key digital us year, make store to Starting in the the Investor the are our fleet

our allowing strategy location shop. choose pickup, no average available time, pick This customers through delivering Our product and up ability for Nordstrom the omnichannel to X with access how greater Rack is links the times service and us platform shipping orders Nordstrom, day a local the Local better of or convenience at at a differentiator, one Nordstrom drive to to matter and in to reduction providing product choice. engagement capabilities level, day unique next customer customers unmatched their market more

Rack digital locations, the record of of with Nordstrom launched Nordstrom.com quarter. And all XXXX day order capabilities platforms. order integrating across in a we and XX% two physical to up pickup next the this demand the pickup Rack of store Nordstrom.com continue scale at to reaching We was banners picked ship of our enhanced one-third to demonstrating our stores, power like and and options high expansion across sales

are increases order customers Up highest services. Customers omnichannel customer We channels, multiple evidenced leading engage have advantageous is when of value by pickup in-store spend journey. and as growth most across customer service. a our X.X it our Pick demand, profitable times our utilize model is they engagement satisfaction increase strength Increasing pickup indicator in clearly the as spend of in than and utilization dramatic who both experience higher banners, encouraged utilizing the Buy a future Online don’t and as by In Store more customers

times average more a example, both channel across the that customer over banner. spends For customer and online, a and single in-store than shops banners, utilizing XX

We building ever to our deeper differentiated and to closer also continue through evolve before, our program loyalty service our customers approach get connections than to model.

a Club with loyalty program XX% driver, Nordy Our powerful in XXXX. is engagement sales penetration

highly customer Our core loyalty engaged, remain levels. exceeding XXXX customers counts with

are to well customer acquisition assortment to see responding customers levels. services, to pleased also our activity XXXX We and returning with new

digitally. styleboards versus our salespeople highly style recommendations, to including in-store customers selling This XX% We and year, offer last allow increased to virtual tools, links, volume digital relevant remote sales our year. continue our both to advance and

and XXXX. We chain, in of percentage plans fourth shareholder the is and by an meaningful increasing With representing times and us sales satisfaction digital average total X have to we with our mobile Rack With traffic. profitability that customer on XX% average app are much penetration growth opportunity encouraged quarter, strong to increased over leading at the past Though quarter, digital progress program we to years supply for we’ve with XXXX. our regard usage, of by increased our improving our XX% made outlook We over velocity, spend transformation, Nordstrom.com this us we very customer. Nordstrom of high also quarter total digital, NordstromRack.com results gives by ahead there approximately strategic X has continued and serve a high our the the maintained to two record scores saw to digital value this work points business better In mobile transforming performance in the do with increasing of users fourth customers XX%. and confidence still growth over customer believe creation. for

to to profitably the capabilities We building financial have continued beyond grow outlined progress ahead. of targets sight line at Event, We market the while achieving look in quarters share that. sharing our Investor our XXXX the to forward

thank their to evolving back year, XXXX, like As to for tireless building serving team look capabilities and on customers, our we’d we look our outstanding forward and company. new to the dedication

truly I’ll over people asset. to Our Pete. our it are that, With turn greatest

Pete Nordstrom

on update category and improve increase, and strong Rack. We expanded category levels. banner pleased and compared fourth fourth and to with I’d XXXX continued an double-digit driven our in Erik, like gross Thanks, XX% our the and the categories with our had pandemic-related Designer in And by posting merchandising increase quarter, the then to Starting flow, good performance. performance the model. during supply to see our transform follow the an strength to with and Luxury everyone. about initiatives in our chain inventory were afternoon, margin, Active, to continued strong and Jewelry particularly outperform, of categories Beauty XX%, quarter, growth also a Home with double-digit XXXX. over offering up Nordstrom Fine growth sales launch respectively, in talk

Outerwear are collectively make quite with in up and renewing than Apparel interest to Men’s not but of Shoes. improving are trends XXXX in Dresses, categories business, back customer they Sportswear, saw occasion-based core recovering. which more Our post-pandemic levels, our in Shoes, Women’s of signs We categories, and XX%

a merchandising both customer through We our our have believe around experience inventory flow. and Now and our meaningful on improve financial initiatives. to opportunity we outcomes to the efforts

merchandise progress made margins quarter, XXXX. This improving we significant versus our

identified the team while expand advanced and our pace markdowns. optimizing holiday and of analytical through increasing compelling increase customers entered offering, depth promotional gifting also effectiveness engaging on As to focused tools, we our the opportunities holiday driving we and by our profitability. holiday season, sales Leveraging

see and customer-centric are category for category optimize We’re work, very XXXX. also the results, the our to using assortment role customers, Nordstrom role and possible defining our each up margin for additional basis the encouraged opportunity in XXX category by XXXX over Rack, improvements approach this merchandise are we more data-driven provide assortment management. our best optimizing drive each then we the margins we points To a Nordstrom with to plays. at and Through of

and opportunity it our a brands in for shop depth to us on with in-stock highlight analysis potential category the highlighted inventory into a too, our focusing most has and selection after customers customers, strong the and group of but aligned more shop, Month increased our is to Earth goal lean Women’s of work. a for Denim most is an important a category that increase after better sustainability. April’s in-store share make the response margins In analysis, easier our merchandise customers, always campaign with sought existing been destination it piloted items. we to our Denim ensure attract of a an to highly planned performer management for to for Our as are to improve highly wallet Women’s customers of and denim category. example by great showcase on extensive a Denim our curated dedicated sought focus we jeans to with a new

build pleased are XXXX. with seen plan management to in results very this with we’ve momentum on initiative our the We initial and category

chain develop shipment fourth helped product for we to season now, quarter, for were supply inventory disruptions cancellations approach flow. in-stock an our scarcity, the delays. early securing on while the ensure with simultaneously improving we and aggressive we’re all product to been holiday dealing capabilities, This and chain took our to and with continue that spring. we customers. a for While We’ve supply global order focused these merchandising Entering

recently these bit cancellations significant begun chain as as supply improve and we challenges However, have weren’t to anticipated. order a

fronts. planned, our pandemic and to network, ending disruptions result, evolving we our sales-to-inventory than related and by expect across first a capabilities higher our experience chain a learned quarter. We’ve our half cut As spread but supply navigating of inventory processes, several in the the end we’re from was lot

,as flow the expense and us actions centers, next distribution same by us our and improving well and velocity the customer depth through expanding reduce right pickup. and as right in of allowing network, selection day for our our They’ll throughput predictability and with the finally, day efficiency. the consistency increasing delivery second, the and First, shopping unit improving the customer. place also in-store speed, to third, These markdowns closer improve sell-through increase assortment experience, help improve to fulfillment will

to of with We follow in more half. expect the from these beginning XXXX, the to second see actions in first benefits half fiscal

are our about our enhanced we and ahead, value the business excited As shareholders. our plans ongoing customers our to we and deliver to look transformation of experiences to

brand and some with directly partners. Nordstrom and with our expanding campaigns customers to connect concept continue traffic, through the Media to which two engagement. our pleased scale the customers forward XXXX of with value partners our to to were Network, this program increase allows best over brands grew media Nordstrom the We brought and We and to it We our years. next three off-site look years in on to sales

We are inspiration also customers with delivering brands partnering newness, new ways. to by selection in and our

Edit, and Our alternative Fanatics new percent approximately Rio, of today. Open GMV XXX ASOS Farm XXXX, banner and partnership brands We gained a this over XXX since XX% DESIGN. models basis as have Nordstrom launched including reaching points year partnerships

and significantly XXXX, enter that also as enhance through year, as expanding new work. remains to American, existing Bean, and continue we partners, with direct-to-consumer the brands, of relevant assortment high We’ll the share category Luxottica. our Chanel, People, management choice while designer to capabilities, count, and by we Ugg, and process and Burberry. attracts also leveraging We Running, Burch, that Gucci, out record Free including our XXXX continue SKIMS, our started analytics to curated, our we wallet LL grow scaled Nike, closing, growing expand ON Good our grew XX% count brands enhanced this a with customers. Adidas, After center Saint In Dior, customer such our brands Vuori. at customers luxury And in Laurent, deliver selection. We’ve Tory business choice scaled top and as including

profitability. and more transforming give are our and the to choices approach We leveraging insights deeper increasing customer while relevance

customers with merchandising our a supply With and our flexible and all we’ll better price to we ecosystems, where quantities, fulfillment, our when the the while it turn through deliver that, right at more discuss it, right Anne to As agility I’ll want newness our improve providing faster results. experience productivity. over improving chain and financial and

Anne Bramman

versus our fiscal you the to compared Thanks, fiscal compared same XXXX results, of then to through like I’d net Pete. begin XX% forward, increased unless same period Overall, sales review X% XXXX. period fourth XXXX. flat, speak were quarter, increased in X%. line our while to finished I’ll XX%, the and in with noted. to for fourth in sales banner fiscal the this otherwise year the in a revenue up with the Total our quarter From comparisons outlook GMV point guidance. take decreased XXXX In Nordstrom

portion share provides mentioned, improve XXX stores. vendor a raised the partnership inventory points a we our significant alternative and business, Erik Nordstrom market average levels over quarter, our measure executing improved in additional as price capture plan And as to performance and in quarter, multi-layered off-price we the in As models performance. a X% become improvement sector. third are the sales basis fourth declined GMV the an more sequential of Rack have of of topline points Rack’s

Gross increased occupancy in due merchandise business fewer as of grow, quarter net promotional points, half primarily increased of inventory with costs. increased XXX percentage ensure and approximately basis to XX%, XX%. to a Our investments buying the sales with effectiveness, fourth increasing planned sales, increase profit, availability. Ending to in-stock and due markdowns digital leverage continues inventory to

navigating by XXXX benefits our the the the continued in the fulfillment in made SG&A XXX margin pressures. we first EBIT quarter of increased resetting expenses increased a fourth store structure staffing XX basis indicated, non-cash in to center As X.X% of macro-related and as of a million were we points. disruptions. improvement cost points by as net percentage sales Pete continued and offset in as quarter. fulfillment COVID-related of cost spread purposeful both of half for sales-to-inventory an a by reduce the and was investments continuing $XX the impairment from end partially These asset quarter, our fourth labor We serving result plan and customers prioritized charge sales Total basis XXXX.

X.X%, EBIT end high the of the was For year, our margin toward guidance.

fully including our X.X $XXX in and on with strengthen ratio financial the a leverage billion our times. $X.X million year to continue liquidity, available We of ending position, revolver

our Now I’ll projections. by underlying outlining for outlook fiscal assumptions turning XXXX. our begin to macroeconomic the

wage reduce employment Potential in headwinds which discretionary include XXXX. that income and and the inflation, will expect growth We spending the markets. overall impact of consumer levels support to risks financial higher could and geopolitical economy

into the return We are a prepared variant. chains. a continue conditions social to disruptions all relative events and after such pandemic-related be seeing and and factors and upside by consideration, to encouraging further balance downside of as being to accordingly. in the early Taking the delayed resumption signs planning consumer of assuming time, behavior for we of same in-person risk of supply travel, global are even At activities Omicron office these are macroeconomic roughly potential current we

plans and interconnected our Our physical through XXXX outlook our Rack to performance. growth deliver in improvement reflects continued Nordstrom drive digital topline and assets

as derive pricing more management our improvements, category and average as we planned improvements. well single-digit increases, from margin merchandise we continued price retail expect mid benefits As

to XXXX labor our greater inflationary we we providing costs with our outlook optimize from freight the supply Today, offset plan business are with are and partially taking to XXXX. we to comparisons Finally, chain. fiscal productivity actions

and half, in with pre-COVID X%. revenue For as second first of of expect softer from to early XXXX. in year X% XXXX, halves rates lap comparisons between that year we growth growth year-over-year be seasonality We levels, will we the higher the fiscal anticipate resulting first consistent the

QX consistent Sale QX, sales with Anniversary year-over-year second quarter. that growth expect also the the to We back roughly be shifting and will between

EBIT consistent increased first as that of the leverage, also anticipate margins, margin XXXX, in half EBIT gross profit result the year. improvements of and operating efficiencies. be X.X% half for greater improvements to and expect expense of between second a margin approximately We full We X% will

Our quarter that plan slightly be EBIT than assumes better will first breakeven.

be Our expected XX% rate approximately is effective for fiscal year. tax to the

productivity with earnings coupled share we the growth, topline the our impact $X.XX of expect on for diluted per share to any. solid $X.XX Given if repurchases, year, which initiatives, progress of excludes

capital Turning allocation, in now and business to to experience. quality the investment our highest first is priority our serve the customers deliver

and planning We’re supply support at primarily normalized to to levels X% capabilities. chain X% of expenditures capital technology

is leverage. priority second reducing Our our

an of and decrease We ratio are leverage rating the X.X committed track grade our to credit by XXXX. investment remain to approximately to times on end

to of to group, cash completion returning cash is to process first completing our position dividend audit quarter. anticipate that our with Board certification priority mid-March our the the in third returning shareholders shortly thereafter discussing expect be We to rate. we and an at related shareholders. in and process with bank a resumption of Subject to by appropriate Our the resume year-end quarterly

in As in with We strategic us results now demonstrated Event our our you’ve achieving increased work give our there targets margin improving plans. coming and progress clear against our to and performance have the early in ahead, guidance year. we’re Rack Investor merchandise we delivered a confidence of today, the heard initiatives. is indicators more sight Though line with line seeing

our also on us selection launched grow year, alternative strategies inspiration of by in sales progress XXX now and partnership last which delivering newness, is at and all XXXX. than models, high, customers. Choice count to merchandising with significant throughout brands We made new more position our all-time an growth to

to no stores matter how serve fulfillment want and and are to they shop. staffed customers ready Our centers fully

optimize and drive long-term. turn Q&A. to it with about urgency a across to over significant shareholder scale. future closing, ahead the of flow over we as to now platforms of to and I’d deliver act to Heather In for continue business, ability the work We remain cash profitability excited value like greater we achieve the our our sense and

Heather Hollander

Thank you, Anne.

limit one responses we we participant’s their started Before and question Q&A, asked that follow to up. with one get

move now Q&A We the session. will to

Operator

Thank you. [Operator Thank you. Instructions]

comes question Omar first to Our ISI. Evercore up line Saad with

may proceed question. You your with

Omar Saad

of blocks first afternoon. versus down on profitability. acceleration sorry, had Thanks In of on demand? were, this data of that the the there or my the in see. with maybe Is that more Sales expectations back the of behind question of more have coming question. the for slightly to better. maybe I guidance. I question, the Good acceleration the more of up? already in Omicron Is kind some customers mid-single to XXXX? of slightly What it been COVID by and Is post-January strong. job the digits, taking a kind color of impacted northern love older that little signs kind Nice have customer think, something kind Thanks. give the quarter return of markets you Occasion get I’d you’re seeing some pre-COVID. you’re they’re kind comfort it -- of kind follow the flavor great quick a of in my especially It’s building the for [ph] key that acceleration? guiding underlying seeing for some your are

Anne Bramman

and going then I’m start any that. have guidance conversation And invite Omar. with the they the I on Hi, and if Nordstrom on to Pete thoughts incremental

two at leveraging the of we category of Nordstrom our the and merchandising across is Nordstrom. market expecting X% really and really performance advancements to pieces to topline strategy X% first improved the I management really the on QX And And of the XXXX this we’ve growth we’ve driven guidance plus it, quarter. coming Rack be all our and So, the at been already the of as to on really chain you’ve the work Board. steady XXXX. topline versus have to up doing growth is the on improvement it’s think started in in see out by But based that progress to all, to some and it’s supply guidance

tailwinds both seeing a we balance general in customer on of will the just from see basis with a like some see to continue coming it bottomline. that customers macro We kind back equally customers and top on we the and as to given basis the work. inflationary see progress Omicron out that out on and expect our well, as occasions out and headwinds socializing by pieces coming what and to partly are We did and doing of things we travel, encouraged to consumers really trend our returned all we’re coming, with

Erik Nordstrom

factors this signs slow, I’ll Anne continue we kind continued to steady, efforts internal we that’s have the Erik. is It’s about to see really each quarter-to-quarter kind that balancing external couple current. we see of Omar, Yeah. and comment, other just out. that, and consistent add progress, our of

We have effort of our Nordstrom quarter, a plans on saw lot And in go Rack has and banner ways continued and the we work hard on and going healthy business. improvement last have we’re opportunity we like improvements some geographic been for The our and to business that to a we while and believe steady very there’s data there. two points.

see, one, an encouragement difference number, up about and North South. continue country the whole We which is between opening to give the us

Our stores and Nordstrom outperformed suburban stores. urban our Southern percentage more then X stores the by Nordstrom points Northern stores versus

and areas And stores behind have obvious that come urban dense percentage XX these biggest not that, these employment to just our when locations workers expect Our these are back. really of it’s are pretty vast majority in not help These and that’s happen points of locations, locations. we will some you’re in the only stores. starting

opportunities. So scenario a we lot see some planning. of do We

direction confidence. prepared does we’re for give the of travel volatility, us So but

Anne Bramman

your second… is what Omar,

Omar Saad

Thanks.

Anne Bramman

…question.

Omar Saad

like Thanks. have big it’s something a on a of footprint talk maybe Yeah. be lot the types you and the obviously, on -- items lot timeline of traffic digital point that, when like guys, at PPP/marketplace, what’s services, and Quickly, you impactful more of traffic, can have of Thanks. a really leverage kind see mobile, bottomline? a this little about, bit advertising those you that to ways

Erik Nordstrom

Yeah. I’ll start.

I’ve response Nordstrom -- our app platform, good Services, a Media our we -- that For had advertising there. and started

the the I which we think, yeah, our and coming key them more. there. of monetizing brands, thing lot a native chunk think site important is our and we of look most big is digitally talked growth business, a one of continue it’s otherwise. traffic. seen of their our and large. partner on our a that the digital a It It’s allow -- while to gets and We lot especially it lot the of wouldn’t of us and that that again, business of lot a models way attributes the traffic So, a expose to our scale alternative brands, of grow We’ve be businesses, a for quite brands softer see about for bit to can going that’s a people at up

focused on enable customers support different platform our bring ways technology more to to we’re and product -- to platform models. So our

feel confident, grow So continue to you’ll for area see that us.

Anne Bramman

our to just starting included that our banner. already you’re -- to with sales X% when up It’s particularly GMV, we’re about that. with Omar, see our add, Nordstrom the talk we DMV in with

So we’re from already in some starting to see the that business. of it

Operator

your Next with Chen Cowan and with Co. is Oliver Please proceed question.

Oliver Chen

Hi. Thank you.

are the also your sustainable division, you now, composition Thank inventory on thoughts of best about you. just about we’ll in creating much, terms underway? then And of what look big Rack what’s are demand roughly just good, we as where are your the And pricing forward? versus ahead, the to categories the inning about categories what Regarding on nature manage what and not the better, as have and where may the then architecture be opportunities? and had best on value going a do thinking supply to how well you as too you’re curious processes enough now had basis you

Pete Nordstrom

Pete. is This Yeah.

I to relative the opportunity. think Rack

started the that and prices attempt gain there things customers and our that we’ve in really you to strategy lower some works. aperture broadening an with new some that different offering tried As price of know,

we customers. access expense is, brands type have. that kind our have we’ve do existing what that we stuff you value that truly premier that’s the of And the to. I at that That can’t learned also the think really, of existing customer somewhat more unique is

upon ourselves build with I love is, not do. have our we good by what a So to trading Nordstrom and we the do, Rack we’ve need existing really we customers, that think what people that off expanding confirmed what situation

And so about how of balance geographically. surgical be I opportunity apply to offer the we to think there’s it our of improve a and more lot for us

just the and ability over learnings this We year. better last to insights have do that better we’ve had that through

to we’ve our that learn game working it -- we for business what to that extra to continue we’re and its, we going. So it’s going is about where and this certainly us with year a it investing resolve learned sharpened on last of we’re innings to as It’s evolve, going ends. and continues confidence our to over mean, in have our I I keep never think just and -- into -- inning that. lot a lot rigor of have what improve energy because Rack important

the numbers inventory composition, this last what of time lived what part don’t the to just with story, the in of and kind through really yeah, in to trying COVID. because we year react chase was terms real tell happening was In big of headline a whole

work So that’s you’ve improvements same have example, an time, categories talk came home active in businesses big really of everything anticipated last of traditionally from then and our and could position quicker some the about, social the into inventory in occasion pretty and and all been was But we’ve ourselves and dressing strong that any found kind that’s occasions. we a fall, a while business like other us Things largely we than chasing that to for and summer heard return to true. good types to, at of back weren’t. any and travel, stuff at

traditionally strong expanding with But that categories return of types success up now, have momentum categories we’ve built so we’re seeing well we those several over that those really And done on months true it’s to last the what also franchise to. is with.

like thing. somewhat the So, again, Rack it’s

of of I was because it where looking go. faster think bit, pretty, a down And and little entire spectrum focusing to pretty it’s lumpy. on the need volatility the across balance the simmers at we

us have be to broad going us. confidence of think that the good assortment lot effective is I it for that gives a we really and

So -- there’s going lot there’s to forward. focused in where invest going of a on we’re to think terms I us be for

Oliver Chen

regards. very you Thank much. Best

Operator

is with Next Grom Gordon Chuck Haskett.

question. your with proceed may You

Chuck Grom

could question. That’s you and Hi. last and the to why close also margin much. operating first Thanks to for you bridge gap on afternoon. for margin could I SG&A help guide elaborate the year Good this X% very was expecting to breakeven? to year’s my X% quarter you’re X.X% between gross from be if Anne, first us hoping margins the operating

Anne Bramman

Hi, Chuck. Yeah.

me you of little Let around context a bit give it.

all that over The really in through from both about guide got our I we’re efficiencies supply as the early its So as our well Pete talked cost, improvement, price the the pieces the that of share chain topline from merchandise in the in and with necessarily opening single-digit nice margin as quarter that, you reminder. don’t growth. progress fourth as with really supply that seen, to offsetting that is run the scripts cost And biggest that the inflationary we’ve this, management getting basically regarding work of which what as to pressures the fulfillment, their talked coming we a lines efficiencies. are year, coming while doing, in line, we for well half his that so piece that -- SG&A Erik in really fulfillment from mid Pete P&L, leverage comments about the specific between in continue and going we’ve that just the our increases category remainder about can we initiatives have next chain is seen of bridge we’ve are comments to labor been talked that in their success

the -- really the is the of high level So that’s components that that’s that really of really piece bridge. the

the first As far while and it growth, as half a for quarter did very in to perspective given to sales comparisons a that being rate you with little small less half, did bit the have, that half, general, the and we growth waited small really is first always quarter. quarter had split deleverage that’s been the on more for QX, us guide the always get XXXX a we force second in comps we on

Chuck Grom

to Okay. question, on -- you referenced have you second or this you your fourth touched what in AUR have raising That’s guess, any Thank demand remind single-digit guess, And just I that, degree then very tested and seen that was the of Can increase? you. destruction XXXX in confidence you AUR I maybe you helpful. in degree? us, And my retails the mid your quarter?

Anne Bramman

really two general, In banners. I between say, would split the Yeah.

have some really customer did would price the we do with it’s pricing on haven’t Nordstrom pull partners the back resistance and a really in We and the brand -- at is primarily bit work we Rack the our really more testing For industry. see any in look in The elasticity. to at or banner, QX seen little Rack room purchases all.

So year. we of into as confidence this that gives us lot a head

partners, you’re the some in but seeing we’ve done us the our into from hearing the talk quarter hearing well what So in we’re both, of also heading work brand next in market what year. that as about

Chuck Grom

Great. Thank you. Okay.

Operator

with Markets. Siegel Simeon BMO Capital is Next

You question. may proceed your with

Simeon Siegel

everyone. on the Congrats story really alternative the brand is The Congrats progress Hey, Thanks. quarter. there. exciting, on

the Just you can should pack inventory and sales and inventory the to and time what the for should point, between up Thank the impact quantify earlier what over be margin think between then And to versus my go GMV just follow percent cost you evolution? and of is you. to units that growth where delta speak anyway hold?

Anne Bramman

go Erik, to we’re fill seeing do of and questions. then other I want where GMV with some that you the the in tackle can

Erik Nordstrom

to financial working our what really and of don’t really apply These is gap be It’s model models versus would results precision I earlier we’re between point, to of GMV add. app the and brands a on -- what total bigger the we’ve to Directionally And That’s what And be seen bigger back there’s super that. strong going but important alternative be I business. on. also GMV step sales. Yeah. to are. will it’s to from will it, Anne’s have chunk a continue sales. also

the both it many coveted important able partners the to of is being pie grow for business with been be. something in best we real the and of being for points us. our proof There have story super has years good continue to retail that world for partner to brand continues our is So brands for that and a see

So gone up that’s really well. that then you pie negotiation, and how it split becomes

big we to a at. right adding I continue with platform we our customer we’ve is had categories greatly the we were brand we’re to partner part I having really And capability can has the and able enhances -- linear ability incremental believe more drive recently been previously. the customer site onto add, choices it would really more example direction it to be able business adjacent what in that’s it’s it of on So a work almost part not choice. scale way is to And Fanatics of it, that to say, but a build good example our take there be that, XX,XXX significantly of much capabilities, accelerated our It’s should out choice. than and some we or go brands, take trying coveted sell to by we more as

Anne Bramman

in our -- is, part how focused And about, of right customers more as the the deliveries And then got for bigger our day to because far really on you’re what thinking getting it I customers customers, would specific next serve for quickly seeing guide is to vacation that respond inventory back to the help customer, cost as positioning for making closer and in things. sure on really Pete just starting the reduce well it assortment in areas believing of based does based in to that strategy other gets and we’re as about seeing our particular inventory the as markets. say we’re front on day between on we’re and same we’ve XXXX that talked general assortment, come as really to

think to inventory. well, price about as balance everything the As guide from points we overall we

that have We we our as are a through to more we flow go units. -- even say, will drive unit profitability balance we should more, as the continue to year inventory anticipating of per

Simeon Siegel

Thanks.

versus at you inventory is easy? about that inflation, cost, the one so thing how just about at And think any delta units between

Anne Bramman

think of see to we everyone’s some change, Certainly, But of about of to don’t those what seen pricing as thing. as a costs, general, as it meaningful mid that piece it’s spreads. in it, guide. landed that far components you’re part freight increases the cost, in sales single-digit talked going in contemplate really of I inventory type that’s

Simeon Siegel

luck guys. of lot Great. year. Thanks the for a Best

Anne Bramman

Thank you.

Heather Hollander

one And now more take we’ll question.

Operator

Our comes Tracy from last with question Citi. Kogan

question. You may your proceed with

Tracy Kogan

on your Thanks. EBIT versus wondering relative Rack full where you if was could for you the was and the you I’m I XXXX? you. if wondering could just what price. us and more little I Thank talk margin detail overall levels? if about dollar is your a case, historical driven that’s SG&A give to gets growth And assumes by guidance for if margin improvement and recovery wondering a see Hey. secondly, Rack, Rack F to do then EBIT expectations more that

Anne Bramman

do to of in get around we’re would growth our some Yeah. Thanks continues in Rack divisions Clearly by to just we Rack margin. as both EBIT. this -- would which EBIT we’ll at rather we say, more our more was help expense operated guide will Prior both for topline rate. Nordstrom our growth as EBIT on topline, about the our general. in as Tracy. -- growth -- COVID, more both what space, our steady and to I Rack think general parity bottomline saying, question, in which we’re don’t Nordstrom to back thinking just see on for both is contribute typically improve, the around in leverage how we will topline the context What our give in segment growth, it general, recover as expecting I in we Nordstrom to banner, drive our continues see also and But profitability.

Tracy Kogan

the SG&A And then have? growth we dollar

Anne Bramman

Yeah.

productivity component and typically on and working EBIT continuing also offset the efficiencies some see the margins to how we’re costs. efficiencies, about specific try thinking we’re on in and of you is rates inflationary our help we What our throughout pressures chain freight year. on were wages will SG&A, which we’re supply And seeing of give we to our don’t on a line So both give bridge guidance merchandise did do items. where

Tracy Kogan

Great. Thank you.

Anne Bramman

Thanks.

Heather Hollander

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

Operator

This concludes today’s teleconference.

your may You at your participation. Thank for the lines Enjoy time. your you day. rest this disconnect of

Nordstrom (JWN) 2 Mar 222021 Q4 Earnings call transcript