Nordstrom(JWN)2024-05-31 00:27Financial Data and Key Metrics - Net sales for Q1 2024 were 0.24 [9] - Net sales growth exceeded 5%, with double-digit growth at Nordstrom Rack and positive topline contribution from Nordstrom banner stores [10] - Digital sales represented 34% of total sales, showing the fourth consecutive quarter of sequential improvement [54] - Gross profit as a percentage of net sales decreased by 225 basis points to 31.6% compared to the same period last year [54] - Loss before interest and taxes was 1.2 billion in available liquidity, including over 1.65 and $2.05 [61] Other Important Information - The company announced the formation of a special committee to evaluate potential proposals to take the company private, but no updates were provided during the call [6][7] - The passing of Bruce Nordstrom, the company's former leader, was acknowledged, with management reflecting on his impact on the company's values and culture [22][23][31][43][45] Q&A Session Summary Question: Sustainability of comp momentum across both banners [70] - Sales were positive each month during Q1, with some timing changes due to Easter. Positive trends continue quarter-to-date, though they have softened slightly [70] Question: Drivers for reaffirming full-year sales and comp guidance [71][72] - Strong topline performance and sequential improvements across both banners provide confidence in the strategy. Timing-related impacts, such as inventory reserves, are expected to moderate and partially reverse in future periods [72][73] Question: Margins at Nordstrom versus Rack [77][80] - The company does not typically disclose margin differences between Nordstrom and Rack, as both banners leverage the same supply chain and technology [80] Question: Inventory availability at Rack [85][86] - The company has not faced significant challenges in securing top brands for Rack, with a focus on disciplined sourcing and prioritizing key brands [86][87] Question: Contribution of new Rack stores [96][97] - New Rack stores are performing better than expected, contributing significantly to sales growth and customer acquisition [97][98] Question: Gross margin headwinds in Q1 [100] - Gross margin pressure of 200 basis points was split between timing-related factors (inventory reserves and loyalty sales) and operational factors (external theft and inventory cleanup) [100][101] Question: Credit card expectations for the year [104] - Credit revenue is expected to be around 3% for the year, with potential impacts from delayed CFPB late fee regulations already factored into guidance [104] Question: Promotional environment and designer category performance [110][112] - The promotional environment is normal, with no significant changes anticipated. Designer categories have normalized after a strong period, with inventory levels adjusted to match demand [110][112][113] Question: Early read on Marketplace initiative [118][122] - The Marketplace launch has been successful, with positive customer and brand feedback. While it is not expected to have a material impact in 2024, the company is optimistic about its growth potential in 2025 [122][127] Question: Long-term margin outlook [124][130] - The company is focused on driving EBIT margin growth, with a target of reaching 6% (2019 levels) before considering higher margins [130] Question: Rack customer behavior and full-price sales [134][137] - Rack customers value both brand and price, with the company focusing on offering coveted brands at great prices. Full-price sales are a key driver of margin health, with the company prioritizing regular price sell-through [134][137][138]