JWN - Earnings call transcript Q2 2022

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Operator

Greetings, and welcome to the Nordstrom Second Quarter 2022 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 Heather Hollander, Head of Investor Relations for Nordstrom.

begin. may You

Heather Hollander

thank and joining us. Good you afternoon, for

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

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

Erik Nordstrom

the income continued Thank today. toward and strategic goals. guidance, while good second quarter services. our Total We at merchandise refreshing afternoon, second second improvement interconnected balance in XX% categories with commitment year our occasions And lowest our softening which We the showed them you, were with last service. last to of results know grew increased approximately reduce gross financial Rack Total over sales results and despite wardrobes, one basis predominantly June, product to banner quarter. or shifting delivered that solid we and their significantly Thank our Nordstrom sales which and in and model, digital to the decelerating for and we into year, the taking week continued sales GMV, look Heather. Rack growth, over differentiated We most well-positioned our sequential you of reflect customer year, in In to includes X%. progress our are shop trends levels. of us sales XX% to to of our our demand core we our levels. inventory from delivered our the the increased for are grew late these customers second customer top-line offering, occasions outlook matter demand and consistent sales over was for customers quarter, actions the long-term and for us value, Nordstrom the joining drove convenience with these each everyone. updating Anniversary profitability, and Sale X%. a quarter, customer points pre-pandemic benefit for XXX cohorts. Though serve previous also increased

and Before I second discuss of behavior our our the the base. customer I’ll spending perspective year, half share on within

sales the July decelerated more in in months the the percentage Nordstrom Across Rack two the saw see in customer first to of customer began reporting the quarter, higher the with Rack. the base. X resilience quarter second of at the As not spending, our pressures adversely to June, late we of mostly did we soften, in when discussed demand we income trend greater first impact profiles, attributed banner. which results, was most significant lowest while continued through while our segments macroeconomic banners, income time, until points segments. both to This customer we Compared the softening quarter profile higher-income

our AURs sought Customers items Fall lower-priced through outlook into outperformed positively of overall, this to excess newness the and Anne example, and to the product very account, at financial the are provide well as reflect luxury updating quarter pressure underperformed label with the we banner, the more from our to XXXX anticipated were detail private clearing on clearance Nordstrom updates. inventory. higher-priced product margin deceleration items. Taking those all will of Within significantly lower but For business, Designer end product. as responsive AURs. less in responded our higher assortment

exiting on At position. inventory increasing to Rack the and time, half, aligning adjusting same profitability, in performance, in a actions the we means our focus the rapidly business continue those and the evolving reducing inventory to for supply levels, our position improving flow. success chain prioritizing current in expenses and environment. and a clean second plans, This year short are We to plans optimizing our inventory term for

making We these and in not we offset beyond. reductions will benefit inventory of margin they fully impacts gross progress in this XXXX are initiatives, and while year, them to expect our performance the our

a A action strategy serve continue in will headwinds, capabilities fundamental customers to winning capabilities, better important While and we digital growth, we winning take Closer is drive our to of our advancing long-term our most in component most and markets. build You Nordstrom to important Rack address with additional performance. short-term focus to on profitable markets, these improving our

strong Our omnichannel connection, product and best store market customers fleet, linked banners, level. selection access convenience, strategy a through unique two capabilities the at and provides the to

quarter, For increased this stores our in compared utilized year’s as customers example, integrated Sale, touchpoints, X%, convenience of we last our during this scaled our Anniversary order pickup year’s event. on our the order Building next progress, by You day markets XX points. additional XX more our stores percentage top expanding our Closer markets to capabilities by X XX pickup strategy outperformed other And Rack to top in than markets. to

our continue extend working to to further advance also personalization and digital our digital a customer service world. capabilities, We heritage to of

a and offering We styleboards, styling scaling looks, styling are of our stylist-inspired online program digital range virtual including appointments. and services,

styling, Nordstrom are these see number within an still growth average customer. our with of engaged, Digital more seeing than services. highly engaged times also X in-person digital are spending rapid styling highest the we While customers we customers

Finally, increasing of Rack we and on brands, assortment, focus premium supply Nordstrom improving our brand improving our continue performance to by growing awareness.

levels sales initiating workstreams. sequential since growth driven have these in and quarters progress making pre-pandemic versus three are the last We improvement

to encouraged response the positive are growth customer also our initiatives. We by

this year, base early from in expansion. at lowest beauty half income in deceleration results than greater our Rack customer more program pronounced a Nordstrom. June. at of proportion of customer Rack’s For example, progress seeing the in late which we first Despite demand Rack significantly the decelerated are strong segments, trends was The the represent

work Rack have optimize ahead also more We to assortment. our fully

best Nordstrom prices of Premium XX% Rack. our the at having focusing brands at before, each the brands locations. are of said at Rack top are Nordstrom at we are sold best we’ve the and brands differentiator for a on the As

This underscores brands Rack the which quarter, our of XXX increasing supply of our opportunity from at the sales brands. increased top premium XX%,

premium we resonated improving addition away the items customers. are penetration shifting not In lower Rack brands, of have with from to price point that

a Pete we the brands our of the cycles. the seasoned As aggressive managed taking a to increasing at will differentiate of fuel as growth. our In through shifts, action of offer second team range we top will business though the that consumer have has face half inventory Rack successfully in describe penetration through We uncertainty later, and we the believe closing, are this that year. clear

customer to We teams we do. service being is build result legacy of market our leader that a of have the continued in always of putting customer at a on the everything our center

fortunate about people truly who care with customer. have to are many us so the We

cash and We investments digital pockets we strong sheet balance in assets, of through have to a demand. to are position, capture You and and well-positioned strategy our Closer

Pete. increase that, We steps drive serve I’ll are while necessary our turn over navigate in to value. also With to growth, the profitable invest taking to customers, continuing and shareholder capabilities the long-term term, to it better short

Pete Nordstrom

second Thanks, taking I’ll Sale, actions through Erik. of the and the begin then about discuss category half in Anniversary we’re the clear excess I’ll our year. by the to performance talking inventory

Beauty’s Men’s increase margin. both were to growth our supply Both with Designer such were performance. category also offering to by categories and you as particularly last our styles. improve had Shoes the on and year and items across posted and occasion-based suiting gross and chain updating dresses Apparel. supported Sales flow our expanded shopping strong. dressy at update over inventory work Starting growth quarter, I’ll Shoes in performing casual see this decelerated. quarter, trends the were although for double-digit pleased their double-digit closets Finally, customers of double-digit growth and well growth, this events and Rack. also We with driving results Beauty Women’s

As product lower-priced premium outperformed Erik indicated, higher-priced product. significantly

our Anniversary Sale. now to Turning

new a engages Each reduced use limited we loyal from performance. process the the data-driven event we As improve time. customers rewards best year, our evolve Sale Anniversary and at and as for always, to prices brands offer a product

year, in softening trends the to late see fell Fall customer event product quarter, customers over pleased total were last to responding positively, day during We This event. one Anniversary in June. sales third despite that quarter, including began new that the X% increased overall,

However, private third of the label a portion with quarter. underperformed, leaving product clear to us that in inventory

quarter, levels in our While are half spread our of plans the sales in to inventory reducing and second the the improved sales year. inventory second we

the demand newness are that our our customers align through to, taking and they inventory on trends by are focusing responding not and the action We and with product clearing of to want. fashion balance offering current improve

areas. following are Our in right-sizing the efforts focused

than to take been to clearance markdowns half have year. the product. had quarter, continue we customers of dynamic First, second less the that anticipated to responsive In and the inventory clearance to in move second we expect deeper

we the of disappointed private our label are product. Second, performance in

in customers. We our product new our brought strategy more leadership are compelling to to and deliver have resetting

still Designer growth, decelerated. though are category sales have Third, digit double posting trends

increased Nordstrom business. for that current sales make pressure clearing markdown And anticipating Rack Rack, trends. through are We based to prices items finally, on drive the point great brands room at at premium price lower we are the

of in assortment. outlook. We which expect markdown additional this half improve our We we that activity second pressure updated actions million, to pressure approximately gross $XXX reduce profit estimate associated markdown will are half clearance and approximately that this reflecting by reflects we’re our taking

more external softening demand promotional environment become will expectation is second the that other competitive in of such year. factors to related half retail in the The the as our half and

action the clean inventory the aggressive excess taking by and clear plan are have We of year. current to to through inventory end and

necessary longer near clearance While implement drive consumer growth strategies in profit pressure exerts with term to on it that this align will our term, gross is and and shifts the profitability. activity

faster capabilities through cancellation to Anniversary reduced benefits initiatives: rates, realized through First, and benefits optimization also decreased on year, improving second Third, efficiencies chain we are flow, of centers; the efficiencies improved our consistency expanding three our productivity four chain year’s In accelerating predictability on costs flow good accelerating fulfillment product work selection order our as progress. better Sale. the unit well and deliver delivery of Second, next-day and expect customers we operational our pickup. action supply network; taking customer delivered deliver average, making We We are the in unit. in following initial half finally, shopping the from more same-day and days market-level increasing this And to our supply and by we per handling for significant and our as the speed; With to inventory in-store work operational distribution

inventory promotional increase Beyond supply customer markdowns. advanced assortment, the needs, better action long us we term, levels position. we our effectiveness, conservatively expanding our In more to our be that opportunities in sales a are inventory, business Most optimize over chain will clean XXXX a managing allow improvements, margins and right-size understand merchandise on know to importantly, to we inventory remain to to closing, identify and taking to using spread, focused in analytics improve improve rapidly changing enter our environment. inventory responding agile

We’re work our long-term and in it to our capabilities. improved merchandising financial benefits over our optimization deliver to chain ability confident discuss turn supply from to now results. Anne I’ll

Anne Bramman

sales benefit XX%, remainder in Club, and second Sale Thank pre-pandemic to then with sales $X.XX. second was the expectations. XX% XX% the excluding markdown basis Trunk costs, X% diluted points, for per on higher review for quarter. inventory with through the Gross profit, shifting XXX sales of rates a increased represented results, Earnings increased decreased Total XX $X.XX the optimization adjusted take Digital the exceeding to sales net pressure. one increased levels. of in percentage After into a charges to increased due second I’d Nordstrom year, Anniversary you, year. approximately higher our points progress wind-down grew were our of Overall, quarter. cost higher net cost week basis last increased fulfillment supply buying total occupancy by versus Ending the our net of Pete. includes related partially offset the sales partially a as offsets primarily to labor making like from GMV pressures provide Since as a on to product. Inflationary XX our of on XX%, points clearance Rack XX%, the on EPS share. banner sales and X% start Nordstrom of sales outlook with quarter SG&A you which chain been during and sales, sales. offset were increase by basis and labor quarter. due initiatives sales, we’ve of expense. a percentage leverage consistent leverage to of

After margin ending will for million available of wind-down the line related EBIT benefits margin EBIT of the expect the was of with initiatives liquidity, in We of We half strong adjusted charges significant quarter second second year. maintained including a and these cash quarter. X.X%. available in billion Club, full $X.X Trunk that deliver X.X% more $XXX the sales in million to the $XXX was on financial position, credit. our revolving the excluding second

updated were prepared In encouraged first to wardrobes fiscal our our we XXXX. customers for turning for outlook momentum their business as Now, occasions. by the updated the quarter, and in

customer predominantly segments. our continued we customer adverse by schedules. quickly until Rack staffing June, late an seen Nordstrom call, spending our aligning to As reacted expenses demand not shift QX pressures. managing we at That impact had in and to on inflationary this We on and began when income soften, described lowest from

we half of these quarter, our the assortment. for are the and inventory year consideration, increased topline address reduced factors Pete at to and reflect right-sizing financial second into demand rebalancing As markdown and to our deceleration shifts second the pressure. expectations described, XXXX growth Rack, in Nordstrom of outlook Taking end we the customer are our improve all updating

X% For in growth to now fiscal XXXX, Nordstrom of sales expect the year we banner. high-single by versus supported growth XXXX, revenue digit X%

approximately EBIT Adjusted XXXX. up margin X.X% of X.X% full expect for the from We in X.X% to year,

we points Gross EBIT improved Gross forecast last be basis Profit year, margin for the SG&A margin the roughly Our first Though leverage. driven to flat for assumes by expect be that over XXX full year. will year improvement by half Profit

our reflects assumptions our for outlook Despite million outlook, second outlook. approximately year the revised incremental impacts in that SG&A outlook $XXX the the Our relative we our to lower Though of markdown previous remain facing of unchanged. half, in chain at our the the pressures, sales with we leverage of our optimization beginning offsetting along are initiatives. supply inflationary pressure expense year, contemplated benefits

is for to expected Our $X.XX expect effective year. rate fiscal approximately now We tax the of XX% to Adjusted EPS be $X.XX.

of future I’d quarter. for of third of any beginning we that Our also impact on the the some would share outlook growth the provide year, forecast saw versus a mid-single in quarter, versus prior detail third the to tougher year-over-year deceleration Anniversary excludes At Due quarter, the the latter year the now Sale and second in given comparisons demand in the repurchases. additional the prior we decelerate expected the our decrease we revenue shift. to quarter, year. quarter expect second part the sales third digit like

one shifting week anticipate include XXX points. approximately points be quarter, projections of year’s the that Sale third growth by margin last revenue of basis Our quarter basis XXX quarter. impact EBIT reduces of our out will the approximately third third Anniversary below We which

markdown third will between that second of assumes the incremental in evenly half the $XXX forecast Our year quarters. of the million split and pressure relatively the fourth be

serve long term our business invest better to Turning priority to and the customers growth. to is first our capital allocation, in support

we and to capital levels supply invest expenditures normalized technology capabilities. of as at in chain X% continue planning to X% We’re

our second is reducing priority leverage. Our

investment ratio We by expect X.X and are committed grade to of credit to XXXX. below leverage an times decrease the end rating our

We a times. ratio continue target leverage X.X to below

million $XX In of third priority $X.XX of at share. our repurchased per quarterly to price cash returning of cash per a we approximately an our Last Our declared quarter, is also average second $XX shareholders. Board the week, Directors stock of dividend share.

$XXX remaining share our authorization. have million We approximately repurchase on

profit, conditions. ticket are customer well Nordstrom a end repurchases the encouraged We and refreshes, In are cash a working items. actively despite for will we expense of of decelerated our continue Though derive supply our by work pressure supply management, Within environment demand wardrobe navigate the closing, to from With the year, improve for to the ability long-term activity now occasion-based quarter, ready demand deliver confident benefits customers chain we questions. gross with optimization in financial we’re the brands. growth as year our this will initiatives, We of flow approach to we half of premium take and demand, strategic second to measured apparel though and still SG&A our on and we our that, in expect aligning our to share current remain well market softening increase still to Heather, and responding Rack, to plan recent goals. profitability. as big continued year-over-year and and our clearance at are

Heather Hollander

Thank you, Anne.

responses Before to one with we started get their one and limit that follow-up. ask we participants’ question Q&A,

the to now will move session. We Q&A

Operator

Instructions] comes [Operator first with you. Thank Our from Yruma of Sandler. line question the Piper Edward

Edward Yruma

guys couple you. kind price doors guess, really are then, away on I fine I that to end given there incremental you guess, better. me. a the that? lower consumer. the that had Rack that probably to full got now a trend did July a in could stabilization as offering but lower first, you a indicated not draw reducing points, follow-up, want the for at years Rack indicated point on companies or of I Two particularly it, some that opened aperture gain not commentary of ago of of strategy? -- thought on lot up you you backing Thank any I guess, price of a is see of And too the an the end of line? kind from Are either just productive

Anne Bramman

questions Thanks, the Yes. take first do there? Erik, to couple Ed. you of want

Erik Nordstrom

Sure.

we’d points. balance Ed, got like. our Rack we product obtaining year, that out of having the difficulty some points, about inventory yes, brands level Rack of from as adding price of and in last our highlighted And that we the lower price So premium some talked little a

Rack with brands us. come great And environment. it’s for. brands focus really what at having The in off-price That customers entered unique prices. is to Rack in what we differentiates great we So, the carry singular are a of this year

point well. we’re that those and that’s in of to our inventory brands in our And inventory in performed lower have lower general, we So, premium in, to amount is strength. But to the question, the looking our your some product price greater price it lessen of proportion a brought rebalance those points.

As say of of the at a a saw from And as the quarter. July, it’s to June. it’s for deceleration of a bounced environment. a the shock It not mentioned, of to we end bit end end did, June end by around that clear we think I the volatile

I week way or of make particularly too We appropriate think in other. is one the don’t a customer a plans or to the income accordingly. it’s much thing And prudent change our two lower So out we think saw change segments. to

Anne Bramman

that we Nordstrom Yes. that June, had would within banner, really in well. And plus the And just saw add the a Anniversary talked in to meaningful particularly Sale. July, trend. with private about of the X% label that, In did as his comments, I where Pete some on see deceleration in Rack our softness we we

well. pocket the label July, that Sale the in the -- banner wasn’t deceleration core private for customer. Anniversary with Rack Nordstrom well, in we just categories the but had So, we in really particularly within general, are a performing We the performing saw

Operator

Next is Omar Saad with Evercore.

Omar Saad

And a get pretty right some that couple bit maybe your Overall, questions. on got talk the you. Anniversary of private little guys you in. you’ve maybe then are initiatives back to satisfaction the and level know Thank optimistic with underway Sale, I about quick label. course. going A learnings

private bit Was little you. label. wrong too with what little, of would color a too offering the inventory? be it went detail little much, there more much talk maybe fashion, too in Thank type great. So, A wrong

Anne Bramman

Thanks. Great.

on follow want Pete, you to the maybe Anniversary And private So Sale? take Erik, do the label? up

Erik Nordstrom

Yes.

was mixed of product Anniversary trend better. strong Sale our In overall. AUR a kind year-to-date So, plans that than and our sell-throughs general, turned point. higher products. as X% increase number did lower our Say, it saw in stated, into bag. off that at we It’s Anne And of that a was

Anniversary I’ve The inventory is for question. And important clearance business, there label is on not a And made our that products second and clearance are reduced event, in seen two is they while a One product. we’ve call-outs. Our up is in branded your interested business. private And are of softness always clearance customers a out also, than newness call better. -- which did portion. a set will we’ve softness clearance The our in merchandise. demand seen prices clearance softness in portion more

both label of private So of in that the we softness in saw Anniversary. for were drivers the some clearance

Pete Nordstrom

in Yes. the This label. is Pete. double-click private The

revealed us, environment has that we able buy into vulnerability mean, put of anything macro that about I successfully. able not, some that’s the it we’ve the think and the heard levels think added that is have the unique business what’s couple working, if to about what’s there is, in on a part that the not that, of has label, longest to stress -- talk largely over as given the customer I biggest bit ceiling I terms last about the well. a years. that what of be you’ve talk the private pressure think our the changed fact and And do. not our in we us to demand glass more it we’ve of been of probably of that importance that years And challenge execute I way also in think just shifted you of and tried it’s execute when it’s to you to the And lead we goal achieved has but time

table consider our scrub looking all we’re we’re to leadership changed we’re pursing, of really we that chance on looking and at and there where to of to it, that have a right the categories we So, look the play, now. design, it. we think be We is I working really on at at field all mean, successful. the taking we’re

better want at. a we still -- it’s It’s to our it’s So, future. to important something category that get

We’re investing it. in

year where in of in it. the we reason the will you’ll a better at kind from see now, us a midpoint we every underperforming have some We private curve of bending probably inventories do we’ve clear label. ‘XX, got to ourselves out of get really believe position But that to

Anne Bramman

an on Anniversary Yes. service great we Omar, thing great that. the did site on and add and from perspective phenomenal Sale, had team the job. a traffic on board, the would our is, other across I volume execution We site --

to was well. from Our really And the chain. of customers. were our inventory our engaging We customers deliver course, selling of number to supply shortened flow fantastic days and teams our

So, from prouder be team great we our delivering customers. perspective, event an execution of couldn’t in our a to

Operator

Next is with Boss Matthew JPMorgan.

Matthew Boss

the on place sequential Erik, product softening you that initiatives company-specific cited in picture change points of trend And XXX the to the then cohorts at lower macro at pressure So inventory? basis any stabilize are do versus income customer Rack, that spending to full-line, assortments how of at larger you much attribute you cited? merchandising there the or more

Erik Nordstrom

versus that income segments, What with has lower segments within at customer the portion Nordstrom customer our of average. Rack softness income. customer does to customer that by makes the our customer household been more we’ve banner. and stand income. base Thanks, pullback our But significantly household range That the customer seen saw higher out segments customer. is bigger Rack does it And the higher Matthew. more the a of exposed looking is up income than

is is significant us there which believe correlation there, macro. part to the a So, of pullback that clear pretty leads a

I and way in a stores and segments, we responsive. us income going focusing cases full-line We And well be able hearing as give to we significant. while. us want away it at, we’re there’s to that that you be far the pretty But could income responding because stabilizing made to at to lower plans to you’re take what think not by cuts think the customer we’re seemed forward things is for from be be on times, for get uncertainty across then say served customers, I what here there’s best that tough. it having better but category to segment, respond that we’re And what volatile need As category. really incredible only cases that allow to moving to made is be and agile to it’s And and customer quickly. flexibility served

shift we category You’ve two able to responsive super need think to over significant a last seen the that. be And demand by we in to years. be

So, want responsive levels segments segments part the And to puts unusually about less part about And there us give of ourselves are have customer thing that more nice what between want part which as is we responding and to but is, they’re be. gap, as to. our -- customer high, softness bring is the the inventory which spending. The customer We have productive is while super really First is productive, that do down. is of inventory clearance is right product that being That mentioned productive the that now. that the flexibility. there that? preventing do high that we we there. we our and that is earlier, of There’s the do on we inventory pressure are us always inventory not gap less that to I from

to the it’s likely where what of message I going regardless here more is matter it no here responsive, how that’s really a be think our little goes of today, different plays rest year out can down So, where inventories say. get would be it than because our say to the anyone I we

up, we’re we’re really can productive respond less to clean parts us that whatever and be to of get our the address in customer what that’s demands to position agile a are. So, inventory, flexible those looking where

Operator

you. Thank

KeyBanc. with Zatzkin Noah is Next

Noah Zatzkin

And forward? the you’re of Where think brand in this way at the of writing Rack there we think about clearance a kind mentioned about ending using that as were should mentioned the XX% how of kind You you I Rack. do mix brand channel. terms of the quarter, you last the of quarter? you mix think moving

in label full-line. I private through the some well that think for didn’t of items sell

think be the at righted to the Rack. to the timeframe trying next Thank you. about brand just So, for

Erik Nordstrom

Yes. Noah. ways We has a to still of premium mix this Thanks, our go. Yes. total grown We steadily -- year. share have the brands to

that the expect that will so the and not we for the business, that outperformed we at that’s in direction. that our last And point quarter, of year, over availability than but right take significantly with have if We’re you Rack last confidence product Data XX% more shared the overall. brands XXX%, we brands has grew those improved, ever you top XXX business continue.

So, be. bit. we that our have We need almost inventory we’re where some of there. are It’s to a not pockets down still

have buys We have to particularly open in opportune banners and to it’s are are great get inventory for to And a we to is buy think be important, we as in need there, that the clean clearance the able out in time going particularly particular, our out up. both industry. and that it’s excess there inventory dollars be Rack to in there to

ways that premium as inventory. continue grow of So, we proportion our go, expect to brands a still to to of would portion and

Operator

Next Haskett. is Grom with Chuck Gordon

Chuck Grom

a at both on hit range. new On you’re the mid-single-digit one- full to should improvement think for order decline, in it banners? basis quarter, year the third to fourth pace we then, And guide looks quarter sales that the as and a look we a big ahead about like three-year expecting

improvement quarter? I that in fourth what’s the assumption driving guess, So, for the

Anne Bramman

in the the the shift gave year-over-year on for We impact talked will Chuck, component. Yes. basis, fact things. a guide We a Anniversary couple banner the about Sale a so half. which second of Nordstrom that

So, points. it’s a hundred basis of couple

And so expect banner Nordstrom be mid-single-digit growth. for we the the full to year,

will do we that continue. that believe And so,

as deceleration Rack, say did what would in we’ve see also talked is about. So, the we I

half. that anticipating the trends are second in We continuing some in

banner. customer look So, do sales, we still we’re our categories respond the the we and really, -- total in at year to core really well seeing the Nordstrom when

it the to it think One, Anniversary to to QX sales things is QX say to as I couple approach think the for a I year, the of So, what in chain. last there’s component piece would And a supply it. about. bifurcated

have variant, prepare We particularly may in year. in as actually have the as component we bit in year, of -- impacts that the December got pulled lot chain for a of of second issues business. is store quite then supply we we all start And deliveries QX holiday, which had late the I we for a all -- forward you as the last Omicron receiving QX We Last timeframe. guys impact will it particularly think recall, QX. our had

I think say about year-over-year. bit a So, to easier it’s you little as would lap

Chuck Grom

of of item Okay. had help developments really over That’s Macy’s past about second pace Kohl’s couple credit the year? half the the slowed then, Can the in think days. revenue similar of helpful. that us the line you and And quarter, in

Anne Bramman

Yes.

what say from a Throughout we would But we in had remain increase the in absolutely saw it’s overall, we what rates. gradual So, pre-pandemic. were elevated credit expecting the customer line see. perspective, a to quarter, payment above rates payment overall, with

a in So, we few years. saw different shift last the very

a different it’s seeing little we but in trend, better a We’re of XXXX. bit still much than saw

general, have I in the say the this credit in -- we’ll not to other has just think impacting our is, to healthy would quarter, card very and revenue we I see losses translated portfolio. thing continue

We’re very pleased with our portfolio.

Operator

Katy is Hallberg with Cowen. Next

Katy Hallberg

expectations, terms basic is sort Nordstrom or sort of if items sort is seeing on different of digital you. of the or you’re how one other your of more maybe the Thank in would then performance, businesses, second in first And down channels specifically and channels perform clearance that any versus did be just guidance? just either The great. the the of Rack towards sign trade

Anne Bramman

Erik, do down to first piece take Rack? the you on the trade want compared to

Erik Nordstrom

down. have answer a Sure. of lot not evidence Quick trade seen is we of

As part has soft been real our earlier, inventory. I a actually of clearance mentioned

customers at it’s more customers price I on products. It’s our want. lowering an They we’re want the not driver. sell taking And from So, seeing is by we’re is prices clear What out example regular older to think looking really main tougher. didn’t price markdowns that as they driven seeing what newness.

down. trade of signs no So,

Anne Bramman

as the it’s add mentioned, piece, opposite. pricing of kind the I just would Erik Yes. on

it’s having actually think sell-through in pattern the reflected we’re fact take would. on little a strong. and It’s clearance higher-priced different the on items quite that we to I deeper our bit marks normally is than

channel, just freshness, I really components I would say in So responding general, line it’s channel question think performed the is to. the fashion on to newness, in On our expectations. customers with what are your the

Operator

Citi. Tracy Kogan is Next with

Tracy Kogan

across wondering Thanks. was the in slowdown just And give could categories. slowdown there. was if if it And you any was you the was designer. the color mentioned the can June? correspond slowdown Rack I you. more of with end at I give guys any did all wondering color in Thank wondering designer business you the on more

Pete Nordstrom

because fact the This still has quite we’re And about, that growth. for of a been fastest we’re our part Pete. This But there, our there of deal good kind growth gosh, been double-digit having designer is deceleration. growing some Yes. part of is time is nuance we’ve talking the having some is business the business. really and strongest

are deceleration. our saw what before -- into those bought we our plans the that So, generated we were happened plans

demand So, elevated the consumer plan compared trend an actual what we were is. into buying to

So, that’s what about. that’s

of what’s if be down, higher think What to happens durable. That’s of those tending happening. to of more would you item-oriented see designer see in businesses the luxury parse exactly range we’re some is what super part. some and want slowed in end I parts have lower-priced the of the really it the what compared to

and we’re So, continuing that to at work it. look through

really flow always in get good, we the a parts think issue just newness, here that’s it’s of As quantity but I that certain business. and

We’re and for happen activity we if prepared that on sentiment, just customer don’t perhaps possibility cautious on approach and prepared would taking a that. that for change that be see preparing we’re this promotional the being of in year, later a should we

Tracy Kogan

that? Is is of are true out the say of you slowing. the not enough evidence you points some maybe the brands aspirational more would that that So, points, kind customer noted I that of price of kind there designer brand, these when guess of lower or entry price is luxury of trading it

Pete Nordstrom

know look mean, specifically, I know be a think I make. we breadth could think that well customer you to of seeing. That I reasonable if base. could No, very but that’s that the at our that don’t assumption be. we’re I what

learning We’re the time stay and to close all that. more to try

Anne Bramman

time question. have more we for And one

Operator

last Simeon Capital from BMO with comes Our Markets. Siegel question

Simeon Siegel

in summer. XXX Inventory, then, you’re how heard thinking update to and And way ones if correctly, Anne, you’ve brands, three Rack I Hey, if on top nice units how inventory changed AUR ask in had versus through the price, just I and Thanks. could XX%, any units? I then, on about the hope change dollars? has between just think inventory maybe then full And everyone. Within any a the that and quick what inventory. that is between packaway.

I in there a there. know bunch Sorry, was

Anne Bramman

do Erik, want So, you to start with brands? XX% the

Erik Nordstrom

going premium about And not inventory of proportion as it we in It’s Yes. encouraged some of we’re both. some It’s our specifically. of to what But we increase we’re both. brands. these is are -- break out

the units, our seeing inventory adding we’re and proportion So, dollars, of increased sales.

So, be XX% would the units AUR and increased. both,

Anne Bramman

Yes.

that environment is the in continued be really on inventory intent clean taking see So, is the And inventory our of a promotional markdown inventory own we’re QX. What really that and to well. We And banners very really in as both components anticipate we’re through. QX. the in between current in think I would working by I -- the what highly split we end say don’t contemplates fact both increase QX inventory we markdowns piece, on QX, out that QX, you we what the to be guide the the to XX-XX, get banners is saw it. to

a the pressure it’s more what point. we promotional baking on inventory be could think -- continued in environment So, that at really

and be thoughtful as the a very, ‘XX to inventory volatile customer be the continue current very to -- intent and and environment. be to we plan is to in have plan, clean the reduce responding So, dry out the powder to exit of in QX

Simeon Siegel

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

Anne Bramman

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

Operator

today’s concludes conference. This

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

Nordstrom (JWN) 23 Aug 222022 Q2 Earnings call transcript