Nordstrom(US:JWN)2025-03-21 20:35Financial Performance - In 2024, Nordstrom reported net earnings of $294 million, representing 2.0% of net sales, with an adjusted EBIT of $593 million or 4.1% of net sales [151]. - Total Company net sales increased by 2.4% to $14.557 billion, with Nordstrom Rack sales rising by 8.0% to $5.167 billion, while Nordstrom sales decreased by 0.5% to $9.390 billion [162]. - Comparable sales for the Company increased by 3.6%, with women's apparel, active, men's apparel, kids, and shoes showing the strongest growth [152]. - Gross profit for fiscal year 2024 was $5,161 million, up $245 million from 2023, with gross profit as a percentage of net sales increasing to 35.5% [168]. - EBIT for 2024 was $495 million, an increase of $244 million from 2023, with an EBIT margin of 3.4% [172]. - Diluted EPS increased to $1.74 in 2024, up $0.92 from 2023, primarily due to higher sales [175]. - Net earnings for fiscal year 2024 were $294 million, significantly higher than $134 million in 2023 and $245 million in 2022, resulting in earnings per share of $1.79 [237]. Sales and Revenue - Digital sales accounted for 36% of total net sales, with a 2.3% increase compared to the previous year [162]. - Comparable sales increased by 3.6% in 2024 compared to 2023, indicating a positive performance trend [164]. - Nordstrom Rack comparable sales rose by 4.7% in 2024 compared to 2023, driven by an increase in both the number of items sold and average selling price [166]. - Total revenues for fiscal year 2024 were $15,016 million, compared to $14,693 million in 2023 and $15,530 million in 2022 [237]. - Net sales for fiscal year 2024 were $14,557 million, an increase from $14,219 million in 2023, but a decrease from $15,092 million in 2022 [321]. Operational Improvements - Operational improvements included the expansion of RFID technology, enhancing inventory accuracy and reducing inventory shrinkage [155]. - The Company launched a digital Marketplace on Nordstrom.com in Q1 2024, featuring over 400 sellers and aiming to scale further in 2025 [154]. - Nordstrom opened 23 new Nordstrom Rack stores in 2024 and plans to open a similar number in 2025, indicating a strong investment strategy [156]. Cash Flow and Investments - Cash and cash equivalents increased to $1,035 million as of February 1, 2025, up from $628 million in 2023, driven by changes in working capital [182]. - Net cash provided by operating activities increased by $646 million from 2023 to 2024, reaching $1,267 million, primarily due to changes in working capital and higher net earnings [186]. - Free Cash Flow for 2024 was $747 million, a significant increase from $54 million in 2023, reflecting improved operating cash flows [198]. - Capital expenditures, net for 2024 were $506 million, down from $534 million in 2023, with technology investments accounting for 56% of total capital expenditures [189]. Debt and Financing - Long-term debt remained relatively stable at $2,618 million as of February 1, 2025, compared to $2,612 million in 2024 [240]. - The company had no outstanding borrowings under the Revolver as of February 1, 2025, maintaining a short-term borrowing capacity of $771 million [330]. - Adjusted debt to EBITDAR ratio was 2.8 as of February 1, 2025, indicating the company's creditworthiness [205]. - Net cash used in financing activities increased by $263 million from 2023 to 2024, totaling $372 million, primarily due to the retirement of 2.30% senior notes [191]. Mergers and Acquisitions - The pending merger with members of the Nordstrom family and Liverpool is expected to close in the first half of 2025, transitioning Nordstrom to a private company [158]. - Nordstrom, Inc. will merge with Norse Holdings, Inc., with shareholders receiving $24.25 per share in cash upon closing [298]. - The merger is subject to certain closing conditions, including shareholder approvals and regulatory clearances [300]. Inventory and Assets - Ending inventory as of February 1, 2025, increased by 11% compared to February 3, 2024, despite a 2% decrease in sales in Q4 2024 [169]. - Merchandise inventories rose to $2,104 million as of February 1, 2025, compared to $1,888 million in 2024 [240]. - Total assets increased to $8,966 million as of February 1, 2025, from $8,444 million in the previous year [240]. - Land, property, and equipment net value as of February 1, 2025, was $3.039 billion, down from $3.177 billion in 2024 [322]. Expenses and Liabilities - SG&A expenses increased to $5,125 million in 2024, representing 35.2% of net sales, primarily due to higher labor costs and supply chain asset impairment charges [170]. - Total advertising expenses for the fiscal year were $318 million, slightly up from $313 million in the previous year [264]. - The company recorded a significant increase in accrued salaries, wages, and related benefits, rising to $424 million from $244 million in the previous year [240]. - Total lease cost, net for fiscal year 2024 was $372 million, an increase of 7.5% from $346 million in 2023 [325]. Accounting Changes - The company changed its accounting method for merchandise inventories from the retail inventory method to the weighted average cost method effective February 4, 2024 [228]. - The cumulative effect of changing the inventory accounting method resulted in a decrease to accumulated deficit of $39 million, net of tax of $14 million [280].