EX-99.1 2 jwnq22024ex991.htm EX-99.1 Document
Exhibit 99.1
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Nordstrom Reports Second Quarter 2024 Earnings
•Sales positive across both banners and digital during second quarter
•Reports EPS of $0.72, adjusted EPS of $0.961
•Updates fiscal 2024 outlook
SEATTLE – August 27, 2024 – Nordstrom, Inc. (NYSE: JWN) today reported second quarter net earnings of $122 million, or earnings per diluted share (“EPS”) of $0.72, and earnings before interest and taxes (“EBIT”) of $190 million. Excluding a charge primarily related to supply chain asset impairment, the Company reported adjusted EBIT of $244 million and adjusted EPS of $0.96.1
For the second quarter ended August 3, 2024, net sales increased 3.4 percent versus the same period in fiscal 2023, and total Company comparable sales increased 1.9 percent. Gross merchandise value (“GMV”) increased 3.5 percent. Anniversary Sale timing, with one week shifting from the third quarter to the second quarter, had a positive impact of approximately 100 basis points on net sales compared with 2023. During the quarter, Nordstrom banner net sales and comparable sales each increased 0.9 percent. Net sales for Nordstrom Rack increased 8.8 percent and comparable sales increased 4.1 percent.
“Our second quarter results were solid, and we’re encouraged by the continued topline strength in both banners and the progress we’re making to expand gross margin and increase profitability,” said Erik Nordstrom, chief executive officer of Nordstrom, Inc. “We’re confident in our outlook for the remainder of the year and look forward to sustaining the momentum we’ve built as we execute on our 2024 priorities.”
In the second quarter, active, women’s apparel, beauty and kids had the strongest growth versus 2023. During the Anniversary Sale, including one day that fell in the third quarter, the top growing categories were beauty, active and home.
“We’re pleased with the Anniversary Sale and the enthusiastic response from our loyal customers. They were highly engaged throughout the event and responded favorably to our assortment, experiences and service,” said Pete Nordstrom, president of Nordstrom, Inc. “We appreciate our team’s continued efforts to help our customers feel good and look their best.”
As previously announced, on August 21, 2024, the board of directors declared a quarterly cash dividend of $0.19 per share, payable on September 18, 2024, to shareholders of record at the close of business on September 3, 2024.
SECOND QUARTER 2024 SUMMARY
•Total Company net sales increased 3.4 percent and comparable sales increased 1.9 percent compared with the same period in fiscal 2023. GMV increased 3.5 percent. The timing shift of the Anniversary Sale, with one day falling in the third quarter of 2024 versus eight days in 2023, had a positive impact on net sales of approximately 100 basis points compared with the second quarter of 2023.
•Nordstrom banner net sales and comparable sales each increased 0.9 percent compared with the same period in fiscal 2023. GMV increased 1.1 percent. The timing shift of the Anniversary Sale had a positive impact on Nordstrom banner net sales of approximately 200 basis points compared with the second quarter of 2023.
•Nordstrom Rack banner net sales increased 8.8 percent and comparable sales increased 4.1 percent compared with the same period in fiscal 2023.
•Digital sales increased 6.2 percent compared with the same period in fiscal 2023. The timing shift of the Anniversary Sale had a positive impact on Company digital sales of approximately 100 basis points compared with the second quarter of 2023. Digital sales represented 37 percent of total sales during the quarter.
•Gross profit, as a percentage of net sales, of 36.6 percent increased 155 basis points compared with the same period in fiscal 2023, primarily due to strong regular price sales and leverage on higher total sales.
•Ending inventory increased 8.3 percent compared with the same period in fiscal 2023, versus a 3.4 percent increase in sales.
•Selling, general and administrative (“SG&A”) expenses, as a percentage of net sales, of 34.4 percent increased 160 basis points compared with the same period in fiscal 2023, due to a charge primarily related to supply chain asset
1Adjusted EBIT and adjusted EPS are non-GAAP financial measures. Refer to the “Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT Margin and Adjusted EPS” section of this release for additional information as well as reconciliations between the Company’s GAAP and non-GAAP financial results.


impairment and a 2023 gain on the sale of a real estate asset, partially offset by leverage on higher sales. Excluding the $54 million charge primarily related to supply chain asset impairment, adjusted SG&A expenses, as a percentage of net sales, were 33.0 percent.
•EBIT was $190 million in the second quarter of 2024, compared with $192 million during the same period in fiscal 2023. Adjusted EBIT of $244 million excluded the charge primarily related to supply chain asset impairment.2
•Interest expense, net, of $26 million was flat compared with $26 million during the same period in fiscal 2023.
•Income tax expense was $42 million, or 25.7 percent of pretax earnings, compared with income tax expense of $29 million, or 17.2 percent of pretax earnings, in the same period in fiscal 2023. The increase in the second quarter of fiscal 2024 was driven primarily by the favorable resolution of certain tax matters in the second quarter of fiscal 2023.
•The Company ended the second quarter with $1.5 billion in available liquidity, including $679 million in cash.
STORES UPDATE
To date in fiscal 2024, the Company has opened eleven stores:
CityLocationSquare Footage
(000s)		Timing of Opening
Nordstrom Rack
Pinole, CAPinole Vista Crossing23March 7, 2024
Snellville, GAPresidential Markets35March 7, 2024
Kennesaw, GABarrett Place25March 21, 2024
Macedonia, OHMacedonia Gateway28April 11, 2024
Gilroy, CAGilroy Crossing25April 25, 2024
Jacksonville Beach, FLSouth Beach Regional30May 2, 2024
Queen Creek, AZQueen Creek Marketplace28May 16, 2024
Elk Grove, CAThe Ridge Elk Grove25May 30, 2024
Wheaton, ILDanada Square East29May 30, 2024
Oceanside, CAPacific Coast Plaza32June 6, 2024
Bay Shore, NYGardiner Manor Mall24June 13, 2024
2 Adjusted EBIT is a non-GAAP financial measure. Refer to the “Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT Margin and Adjusted EPS” section of this release for additional information as well as reconciliations between the Company’s GAAP and non-GAAP financial results.


The Company has also announced plans to open the following stores:
CityLocationSquare Footage
(000s)		Timing of Opening
Nordstrom Rack
San Antonio, TXBandera Pointe25September 5, 2024
Franklin, TNCool Springs Market24September 5, 2024
San Mateo, CABridgepointe Shopping Center36September 12, 2024
San Diego, CAClairemont Town Square26September 19, 2024
Mooresville, NCMooresville Crossing28September 26, 2024
Houston, TXMeyerland Plaza34September 26, 2024
Mason, OHDeerfield Towne Center30October 3, 2024
Fort Myers, FLBell Tower31October 10, 2024
Raleigh, NCTriangle Town Place32October 10, 2024
Noblesville, INHamilton Town Center25October 17, 2024
Omaha, NEVillage Pointe30October 24, 2024
Tarzana, CAVillage Walk25November 1, 2024
Davis, CAThe Davis Collection25Spring 2025
Matthews, NCSycamore Commons25Spring 2025
Geneva, ILRandall Square25Spring 2025
Manalapan Township, NJManalapan Commons26Spring 2025
Apple Valley, MNFischer Marketplace30Spring 2025
Houston, TXWestchase Shopping Center30Spring 2025
Morrisville, NCPark West Village25Spring 2025
Coral Springs, FLPine Ridge Square31Fall 2025
Surprise, AZPrasada North26Fall 2025

The Company had the following store counts as of quarter-end:
August 3, 2024July 29, 2023
Nordstrom
Nordstrom
93 94 
Nordstrom Local service hubs6 7 
ASOS | Nordstrom— 1 
Nordstrom Rack
Nordstrom Rack
269 247 
Last Chance clearance stores2 2 
Total370351
Gross store square footage26,563,00026,348,000


FISCAL YEAR 2024 OUTLOOK
The Company updated its financial outlook for fiscal 2024, which also now reflects the charge primarily related to supply chain asset impairment and related tax impacts recorded in the second quarter, as well as estimated accelerated technology depreciation impacts expected in the second half of fiscal 2024:
•Revenue range, including retail sales and credit card revenues, of 1.0 percent decline to 1.0 percent growth versus the 53-week fiscal 2023, which includes an approximately 135 basis point unfavorable impact from the 53rd week
•Comparable sales range of flat to 2.0 percent growth versus 52 weeks in fiscal 2023
•EBIT margin of 3.0 to 3.4 percent of sales
•Adjusted EBIT margin of 3.6 to 4.0 percent of sales3
•Income tax rate of approximately 27 percent
•EPS of $1.40 to $1.70, excluding the impact of share repurchase activity, if any
•Adjusted EPS of $1.75 to $2.05, excluding the impact of share repurchase activity, if any3
CONFERENCE CALL INFORMATION
The Company’s senior management will host a conference call to provide a business update and to discuss second quarter 2024 financial results and fiscal 2024 outlook at 4:45 p.m. EDT today. To listen to the live call online and view the speakers’ prepared remarks and the conference call slides, visit the Investor Relations section of the Company’s corporate website at investor.nordstrom.com. An archived webcast with the speakers’ prepared remarks and the conference call slides will be available in the Quarterly Results section for one year. Interested parties may also dial 201-689-8354. A telephone replay will be available beginning approximately three hours after the conclusion of the call by dialing 877-660-6853 or 201-612-7415 and entering Conference ID 13748345, until the close of business on September 3, 2024.
ABOUT NORDSTROM
At Nordstrom, Inc. (NYSE: JWN), we exist to help our customers feel good and look their best. Since starting as a shoe store in 1901, how to best serve customers has been at the center of every decision we make. This heritage of service is the foundation we’re building on as we provide convenience and true connection for our customers. Our interconnected model enables us to serve customers when, where and how they want to shop – whether that’s in-store at more than 350 Nordstrom, Nordstrom Local and Nordstrom Rack locations or digitally through our Nordstrom and Rack apps and websites. Through it all, we remain committed to leaving the world better than we found it.
Certain statements in this press release contain or may suggest “forward-looking” information (as defined in the Private Securities Litigation Reform Act of 1995) that involves risks and uncertainties that could cause results to be materially different from expectations. The words “will,” “may,” “designed to,” “outlook,” “believes,” “should,” “targets,” “anticipates,” “assumptions,” “plans,” “expects” or “expectations,” “intends,” “estimates,” “forecasts,” “guidance” and similar expressions identify certain of these forward-looking statements. The Company also may provide forward-looking statements in oral statements or other written materials released to the public. All statements contained or incorporated in this press release or in any other public statements that address such future events or expectations are forward-looking statements. Important factors that could cause actual results to differ materially from these forward-looking statements are detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024, our Form 10-Q for the fiscal quarter ended May 4, 2024, and our Form 10-Q for the fiscal quarter ended August 3, 2024, to be filed with the SEC on or about September 5, 2024. In addition, forward-looking statements contained in this release may be impacted by the actual outcome of events or occurrences related to the Company’s announcement of the exploration of possible avenues to enhance shareholder value and the formation of a special committee of the board of directors to consider any proposal which might be brought forward by members of the Nordstrom family to take the Company private. These forward-looking statements are not guarantees of future performance and speak only as of the date made, and, except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances. In addition, the actual timing, price, manner and amounts of future share repurchases, if any, will be subject to the discretion of our board of directors, contractual commitments, market and economic conditions and applicable Securities and Exchange Commission rules. This earnings release includes references to websites, website addresses and additional materials, including reports and blogs, found on those websites. The content of any websites and materials named, hyperlinked or otherwise referenced in this earnings release are not incorporated by reference into this earnings release or in any other report or document we file with the SEC, and any references to such websites and materials are intended to be inactive textual references only. The information on those websites is not part of this earnings release.
3 Adjusted EBIT margin and adjusted EPS are non-GAAP financial measures. Refer to the “Forward-Looking Non-GAAP Measures” section of this release for additional information as well as reconciliations between the Company’s GAAP and non-GAAP financial expectations.


NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited; amounts in millions, except per share amounts)
Quarter EndedSix Months Ended
August 3, 2024July 29, 2023August 3, 2024July 29, 2023
Net sales$3,785 $3,662 $7,006 $6,726 
Credit card revenues, net109 110 223 227 
Total revenues3,894 3,772 7,229 6,953 
Cost of sales and related buying and occupancy costs
(2,401)(2,380)(4,604)(4,407)
Selling, general and administrative expenses(1,303)(1,200)(2,456)(2,304)
Canada wind-down costs— — — (309)
Earnings (loss) before interest and income taxes190 192 169 (67)
Interest expense, net(26)(26)(53)(54)
Earnings (loss) before income taxes164 166 116 (121)
Income tax (expense) benefit(42)(29)(33)54 
Net earnings (loss)$122 $137 $83 ($67)
Earnings (loss) per share:
Basic$0.74 $0.85 $0.50 ($0.42)
Diluted$0.72 $0.84 $0.49 ($0.42)
Weighted-average shares outstanding:
Basic164.1 161.7 163.6 161.3 
Diluted168.8 163.2 167.3 161.3 
Percent of net sales:
Gross profit36.6 %35.0 %34.3 %34.5 %
Selling, general and administrative expenses34.4 %32.8 %35.0 %34.3 %
Earnings (loss) before interest and income taxes5.0 %5.3 %2.4 %(1.0 %)


NORDSTROM, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited; amounts in millions)
August 3, 2024February 3, 2024July 29, 2023
Assets
Current assets:
Cash and cash equivalents$679 $628 $885 
Accounts receivable, net277 334 246 
Merchandise inventories2,144 1,888 1,979 
Prepaid expenses and other current assets348 286 400 
Total current assets3,448 3,136 3,510 
Land, property and equipment (net of accumulated depreciation of $8,507, $8,251 and $8,254)
3,063 3,177 3,181 
Operating lease right-of-use assets1,353 1,359 1,381 
Goodwill249 249 249 
Other assets530 523 480 
Total assets$8,643 $8,444 $8,801 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable$1,533 $1,236 $1,434 
Accrued salaries, wages and related benefits289 244 375 
Current portion of operating lease liabilities247 240 224 
Other current liabilities1,149 1,102 1,264 
Current portion of long-term debt— 250 249 
Total current liabilities3,218 3,072 3,546 
Long-term debt, net2,615 2,612 2,609 
Noncurrent operating lease liabilities1,370 1,377 1,392 
Other liabilities492 535 580 
Commitments and contingencies
Shareholders’ equity:
Common stock, no par value: 1,000 shares authorized; 164.2, 162.4 and 161.7 shares issued and outstanding
3,458 3,418 3,388 
Accumulated deficit(2,518)(2,578)(2,717)
Accumulated other comprehensive gain8 8 3 
Total shareholders’ equity948 848 674 
Total liabilities and shareholders’ equity$8,643 $8,444 $8,801 


NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; amounts in millions)
Six Months Ended
August 3, 2024July 29, 2023
Operating Activities
Net earnings (loss)$83 ($67)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization expenses305 285 
Canada wind-down costs— 220 
Asset impairment51 — 
Right-of-use asset amortization92 86 
Deferred income taxes, net(27)(17)
Stock-based compensation expense41 28 
Other, net(12)(47)
Change in operating assets and liabilities:
Merchandise inventories(157)(78)
Other current and noncurrent assets9 (81)
Accounts payable172 99 
Accrued salaries, wages and related benefits45 89 
Lease liabilities(130)(134)
Other current and noncurrent liabilities56 82 
Net cash provided by operating activities528 465 
Investing Activities
Capital expenditures(204)(225)
Decrease in cash and cash equivalents resulting from Canada deconsolidation— (33)
Proceeds from the sale of assets and other, net10 29 
Net cash used in investing activities(194)(229)
Financing Activities
Principal payments on long-term debt(250)— 
Change in cash book overdrafts30 18 
Cash dividends paid(62)(61)
Payments for repurchase of common stock— (1)
Proceeds from issuances under stock compensation plans9 13 
Other, net(10)(7)
Net cash used in financing activities(283)(38)
Net increase in cash and cash equivalents51 198 
Cash and cash equivalents at beginning of period628 687 
Cash and cash equivalents at end of period$679 $885 


NORDSTROM, INC.
ADJUSTED EBIT, ADJUSTED EBITDA, ADJUSTED EBIT MARGIN AND ADJUSTED EPS
(NON-GAAP FINANCIAL MEASURES)
(unaudited; amounts in millions, except per share amounts)
The following are key financial metrics and, when used in conjunction with GAAP measures, we believe they provide useful information for evaluating our core business performance, enable comparison of financial results across periods and allow for greater transparency with respect to key metrics used by management for financial and operational decision-making. Adjusted EBIT, adjusted EBITDA, adjusted EBIT margin and adjusted EPS exclude certain items that we do not consider representative of our core operating performance. The financial measure calculated under GAAP which is most directly comparable to adjusted EBIT and adjusted EBITDA is net earnings (loss). The financial measure calculated under GAAP which is most directly comparable to adjusted EBIT margin is net earnings as a percent of net sales. The financial measure calculated under GAAP which is most directly comparable to adjusted EPS is diluted EPS.
Adjusted EBIT, adjusted EBITDA, adjusted EBIT margin and adjusted EPS are not measures of financial performance under GAAP and should be considered in addition to, and not as a substitute for, net earnings, net earnings as a percent of net sales, operating cash flows, earnings per share, earnings per diluted share or other financial measures performed in accordance with GAAP. Our method of determining non-GAAP financial measures may differ from other companies’ financial measures and therefore may not be comparable to methods used by other companies.
The following is a reconciliation of net earnings (loss) to adjusted EBIT and adjusted EBITDA and net earnings as a percent of net sales to adjusted EBIT margin:
Quarter EndedSix Months Ended
August 3, 2024July 29, 2023August 3, 2024July 29, 2023
Net earnings (loss)$122 $137 $83 ($67)
Income tax expense (benefit)42 29 33 (54)
Interest expense, net26 26 53 54 
Earnings (loss) before interest and income taxes190 192 169 (67)
Supply chain asset impairment and other54 — 54 — 
Canada wind-down costs— — — 309 
Adjusted EBIT244 192 223 242 
Depreciation and amortization expenses150 141 302 285 
Amortization of developer reimbursements(15)(17)(29)(35)
Adjusted EBITDA$379 $316 $496 $492 
Net sales$3,785 $3,662 $7,006 $6,726 
Net earnings (loss) as a % of net sales
3.2 %3.8 %1.2 %(1.0 %)
EBIT margin %5.0 %5.3 %2.4 %(1.0 %)
Adjusted EBIT margin %6.4 %5.3 %3.2 %3.6 %
The following is a reconciliation of diluted EPS to adjusted EPS:
Quarter EndedSix Months Ended
August 3, 2024July 29, 2023August 3, 2024July 29, 2023
Diluted EPS$0.72 $0.84 $0.49 ($0.42)
Supply chain asset impairment and other0.32 — 0.32 — 
Canada wind-down costs— — — 1.91 
Income tax impact on adjustments1
(0.08)— (0.08)(0.58)
Adjusted EPS$0.96 $0.84 $0.73 $0.91 
1 The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate for the respective non-GAAP adjustment.


NORDSTROM, INC.
SUMMARY OF NET SALES
(unaudited; amounts in millions)
Our Nordstrom brand includes Nordstrom.com, Nordstrom U.S. stores and Nordstrom Local. Nordstrom also included Canada operations prior to March 2, 2023, inclusive of Nordstrom.ca, Nordstrom Canadian stores and Nordstrom Rack Canadian stores and ASOS | Nordstrom prior to December 2023. Our Nordstrom Rack brand includes NordstromRack.com, Nordstrom Rack U.S. stores and Last Chance clearance stores. The following table summarizes net sales for the quarter and six months ended August 3, 2024, compared with the quarter and six months ended July 29, 2023:
Quarter EndedSix Months Ended
August 3, 2024July 29, 2023August 3, 2024July 29, 2023
Net sales:
Nordstrom$2,514 $2,491 $4,554 $4,518 
Nordstrom Rack1,271 1,171 2,452 2,208 
Total net sales$3,785 $3,662 $7,006 $6,726 
Net sales increase (decrease):
Nordstrom0.9 %(10.1 %)0.8 %(10.7 %)
Nordstrom Rack8.8 %(4.1 %)11.1 %(7.9 %)
Total Company3.4 %(8.3 %)4.2 %(9.8 %)
Digital sales as % of total net sales1
37 %36 %35 %36 %
1 Sales conducted through a digital platform such as our websites or mobile apps. Digital sales may be self-guided by the customer, as in a traditional online order, or facilitated by a salesperson using a virtual styling or selling tool. Digital sales may be delivered to the customer or picked up in our Nordstrom stores, Nordstrom Rack stores or Nordstrom Local service hubs. Digital sales also includes a reserve for estimated returns.


NORDSTROM, INC.
FISCAL YEAR 2024 FORWARD-LOOKING NON-GAAP MEASURES
(NON-GAAP FINANCIAL MEASURES)
(unaudited)
Our adjusted EBIT as a percent of net sales (“adjusted EBIT margin”) and adjusted EPS outlook for fiscal year 2024 excludes the impacts from certain items that we do not consider representative of our core operating performance. These items include charges primarily related to a supply chain asset impairment in the second quarter of 2024 and accelerated technology depreciation to be recognized in the second half of fiscal 2024.
The following is a reconciliation of expected net earnings as a percent of net sales to expected adjusted EBIT margin included within our Fiscal Year 2024 Outlook:
52 Weeks Ending February 1, 2025
LowHigh
Expected net earnings as a % of net sales1.7%2.0%
Income tax expense0.6%0.7%
Interest expense, net0.7%0.7%
Expected EBIT as a % of net sales3.0%3.4%
Supply chain asset impairment and other0.4%0.4%
Accelerated technology depreciation0.2%0.2%
Expected adjusted EBIT margin3.6%4.0%
The following is a reconciliation of expected diluted EPS to expected adjusted EPS included within our Fiscal Year 2024 Outlook:
52 Weeks Ending February 1, 2025
LowHigh
Expected diluted EPS$1.40 $1.70 
Supply chain asset impairment and other0.32 0.32 
Accelerated technology depreciation0.15 0.15 
Income tax impact on adjustments(0.12)(0.12)
Expected adjusted EPS $1.75 $2.05 


NORDSTROM, INC.
ADJUSTED RETURN ON INVESTED CAPITAL (“ADJUSTED ROIC”)
(NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts in millions)
We believe that Adjusted ROIC is a useful financial measure for investors in evaluating the efficiency and effectiveness of the capital we have invested in our business to generate returns over time. Our Adjusted ROIC calculation excludes certain items that we do not consider representative of our core operating performance.
Adjusted ROIC is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, return on assets, net earnings, total assets or other GAAP financial measures. Our method of calculating a non-GAAP financial measure may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The financial measure calculated under GAAP which is most directly comparable to Adjusted ROIC is return on assets. The following shows the components to reconcile the return on assets calculation to Adjusted ROIC:
Four Quarters Ended
August 3, 2024July 29, 2023
Net earnings$284 $32 
Income tax expense (benefit)100 (22)
Interest expense137 137 
Earnings before interest and income tax expense521 147 
Operating lease interest1
88 85 
Non-operating related adjustments2
60 380 
Adjusted net operating profit669 612 
Adjusted estimated income tax expense3
(186)(141)
Adjusted net operating profit after tax$483 $471 
Average total assets$8,675 $8,986 
Average noncurrent deferred property incentives in excess of operating lease right-of-use (ROU) assets4
(137)(177)
Average non-interest bearing current liabilities(2,949)(3,149)
Non-operating related adjustments2
143 184 
Adjusted average invested capital$5,732 $5,844 
Return on assets3.3 %0.4 %
Adjusted ROIC8.4 %8.1 %
1 Operating lease interest is a component of operating lease cost recorded in occupancy costs. We add back operating lease interest for purposes of calculating adjusted net operating profit for consistency with the treatment of interest expense on our debt.
2 Non-operating related adjustments primarily included supply chain impairment charges and the wind-down of our Canadian operations. See the Adjusted EBIT and Adjusted EBITDA section, as well as our 2023 Annual Report, for detailed information on certain non-operating related adjustments.
3 Adjusted estimated income tax expense is calculated by multiplying the adjusted net operating profit by the adjusted effective tax rate (which removes the impact of non-operating related adjustments) for the trailing twelve-month periods ended August 3, 2024 and July 29, 2023. The adjusted effective tax rate is calculated by dividing adjusted income tax expense by adjusted earnings before income taxes for the same trailing twelve-month periods.
4 For leases with property incentives that exceed the ROU assets, we reclassify the amount from assets to other current liabilities and other liabilities on the Condensed Consolidated Balance Sheets. The current and noncurrent amounts are used to reduce average total assets above, as this better reflects how we manage our business.


NORDSTROM, INC.
ADJUSTED DEBT TO EBITDAR (NON-GAAP FINANCIAL MEASURE)
(unaudited; dollars in millions)
Adjusted debt to earnings before interest, income taxes, depreciation, amortization and rent (“EBITDAR”) is one of our key financial metrics and we believe that our debt levels are best analyzed using this measure, as it provides a reflection of our creditworthiness which could impact our credit ratings and borrowing costs. This metric is calculated in accordance with our Revolver covenant and is a key component in assessing whether our revolving credit facility is secured or unsecured, as well as our ability to make dividend payments and share repurchases.
Adjusted debt to EBITDAR is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, debt to net earnings, net earnings, debt or other GAAP financial measures. Our method of calculating a non-GAAP financial measure may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The financial measure calculated under GAAP which is most directly comparable to Adjusted debt to EBITDAR is debt to net earnings. The following shows the components to reconcile the debt to net earnings calculation to Adjusted debt to EBITDAR:
August 3, 2024
Debt$2,615 
Operating lease liabilities1,617 
Adjusted debt$4,232 
Four Quarters Ended August 3, 2024
Net earnings$284 
Income tax expense100 
Interest expense, net103 
Earnings before interest and income taxes487 
Depreciation and amortization expenses604 
Operating lease cost1
286 
Amortization of developer reimbursements2
63 
Other Revolver covenant adjustments3
100 
Adjusted EBITDAR$1,540 
Debt to Net Earnings9.2 
Adjusted debt to EBITDAR2.7 
1 Operating lease cost is fixed rent expense, including fixed common area maintenance expense, net of developer reimbursement amortization.
2 Amortization of developer reimbursements is a non-cash reduction of operating lease cost and is therefore added back to operating lease cost for purposes of our Revolver covenant calculation.
3 Other adjusting items to reconcile net earnings to Adjusted EBITDAR as defined by our Revolver covenant include interest income, certain non-cash charges and other gains and losses where relevant. For the four quarters ended August 3, 2024, other Revolver covenant adjustments primarily included supply chain impairment charges and interest income, partially offset by Canada wind-down adjustments. See the Adjusted EBIT and Adjusted EBITDA section, as well as our 2023 Annual Report, for detailed information on certain non-operating related adjustments.


NORDSTROM, INC.
FREE CASH FLOW (NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts in millions)
Free Cash Flow is one of our key liquidity measures and, when used in conjunction with GAAP measures, we believe it provides investors with a meaningful analysis of our ability to generate cash from our business.
Free Cash Flow is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, operating cash flows or other financial measures prepared in accordance with GAAP. Our method of calculating a non-GAAP financial measure may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The financial measure calculated under GAAP which is most directly comparable to Free Cash Flow is net cash provided by operating activities. The following is a reconciliation of net cash provided by operating activities to Free Cash Flow:
Six Months Ended
August 3, 2024July 29, 2023
Net cash provided by operating activities$528 $465 
Capital expenditures(204)(225)
Change in cash book overdrafts30 18 
Free Cash Flow$354 $258 

INVESTOR CONTACT:
James Duies
Nordstrom, Inc.
InvRelations@Nordstrom.com
MEDIA CONTACT:Stephanie Corzett
Nordstrom, Inc.
NordstromPR@Nordstrom.com