Nordstrom(JWN) - 2024 Q4 - Annual Report

Financial Performance - In 2023, the company reported net earnings of $134 million, representing 0.9% of net sales, with an adjusted EPS of $2.12[138]. - Total net sales decreased by 5.8% to $14,219 million, with Nordstrom sales down 8.2% and Nordstrom Rack sales down 0.6% compared to 2022[151]. - Digital sales accounted for 36% of total net sales, decreasing by 10% year-over-year[151]. - Adjusted EBIT for 2023 was $567 million, or 4.0% of net sales, reflecting the company's focus on profitability despite challenges[138]. - Gross profit decreased by $157 million to $4,916 million, with gross profit as a percentage of net sales increasing to 34.6% from 33.6% in 2022[158]. - EBIT decreased by $214 million to $251 million, with EBIT as a percentage of net sales dropping to 1.8% from 3.1% in 2022[162]. - Net earnings for fiscal year 2023 were $134 million, down 45.3% from $245 million in 2022[231]. - Diluted EPS decreased by $0.69 to $0.82, primarily due to the unfavorable impact of $1.30 per diluted share related to the wind-down of Canadian operations[166]. Inventory and Sales - The company ended 2023 with overall inventory levels 3% lower than Q4 2022, resulting in a 95 basis points expansion in gross profit as a rate of sales[139]. - Ending inventory decreased by 3% compared to January 28, 2023, while sales increased by 2% in the fourth quarter of 2023 compared to 2022[159]. - Merchandise inventories decreased by $61 million during the fiscal year[238]. - The company recorded a sales return reserve that could impact EBIT by approximately $20 million for a 10% change in the reserve[200]. Operational Changes - The wind-down of Canadian operations negatively impacted net sales by 245 basis points, partially offset by a 130 basis point positive impact from the 53rd week[151]. - Nordstrom opened 19 Nordstrom Rack stores and closed a total of 4 stores, including 1 Nordstrom store and 2 Nordstrom Rack stores, while deconsolidating 13 stores in Canada[155]. - The company plans to launch a digital marketplace on Nordstrom.com to expand its online assortment and drive GMV growth in 2024[141]. - Nordstrom Canada commenced a wind-down of its operations on March 2, 2023, with total pre-tax charges of $284 million related to the wind-down process[297]. Expenses and Cash Flow - SG&A expenses decreased by $191 million to $4,855 million, with SG&A as a percentage of net sales increasing to 34.2% from 33.4% in 2022[160]. - Free Cash Flow for 2023 was $54 million, a significant decrease from $459 million in 2022, with net cash provided by operating activities at $621 million[190]. - The company incurred Canada wind-down costs of $284 million in fiscal year 2023, impacting overall earnings[231]. - The company recognized $52 million in stock-based compensation expense in 2023, compared to $79 million in 2022[238]. Debt and Financial Position - As of February 3, 2024, total debt was $2.862 billion, with adjusted debt to EBITDAR at 2.9[196][198]. - The company had no borrowings outstanding under its Revolver as of February 3, 2024, with a short-term borrowing capacity reduced to $770 million due to a standby letter of credit[192]. - Long-term debt as of February 3, 2024, was $2,612 million, down from $2,856 million in the previous year[234]. - The total long-term debt as of February 3, 2024, was $2,862 million, slightly up from $2,856 million as of January 28, 2023[314]. Shareholder Returns - Dividends paid in 2023 amounted to $123 million, maintaining a dividend per share of $0.76, consistent with 2022[185]. - The company expects to continue its dividend payment levels throughout 2024, having declared a quarterly dividend of $0.19 per share in February 2024[186]. - Share repurchases in 2023 were minimal, with only 0.03 million shares repurchased for $1 million compared to 2.8 million shares for $62 million in 2022[184]. Regulatory and Compliance - The company is currently evaluating the impact of new SEC climate-related disclosure rules, effective in Q4 2025[213]. - The Ontario Superior Court of Justice is overseeing the wind-down process, with significant developments expected in the first quarter of 2024[296]. - The company was in compliance with all financial covenants under the Revolver as of February 3, 2024[320].