Nordstrom, Inc. (JWN): history, ownership, mission, how it works & makes money

A Brief History of Nordstrom

Nordstrom, Inc., a leading fashion retailer, has undergone significant changes and developments as of 2024. The company operates a multi-channel platform that includes Nordstrom full-line stores, Nordstrom Rack, and its digital commerce sites. In recent years, Nordstrom has faced various challenges and opportunities that have shaped its current financial landscape.

Financial Performance Overview

As of August 3, 2024, Nordstrom reported total net sales of $7,006 million for the six months ended, reflecting a 4.2% increase compared to $6,726 million for the same period in 2023. The company's net sales for the second quarter of 2024 were $3,785 million, up from $3,662 million in the prior year, marking a 3.4% increase.

Store Count and Operations

As of August 3, 2024, Nordstrom operated a total of 370 stores, including 93 Nordstrom full-line stores and 269 Nordstrom Rack locations. This is an increase from 351 stores in the previous year, highlighting the company's strategy to expand its market presence.

Challenges and Strategic Initiatives

Nordstrom has faced challenges such as the wind-down of its Canadian operations, which negatively impacted sales. The company recorded $309 million in charges related to this exit. However, Nordstrom has also focused on enhancing its digital presence and optimizing its operations, including the implementation of RFID technology to improve inventory management.

Key Financial Metrics

For the second quarter of 2024, Nordstrom achieved an EBIT of $190 million, resulting in an EBIT margin of 5.0%. This compares to an EBIT of $192 million and a margin of 5.3% in the second quarter of 2023. The adjusted EBIT for the second quarter of 2024 was $244 million, translating to an adjusted EBIT margin of 6.4%.

Outlook for Fiscal Year 2024

Nordstrom anticipates a total revenue range for fiscal 2024, including retail sales and credit card revenues, of a 1.0% decline to a 1.0% growth compared to the 53-week fiscal 2023. This outlook is influenced by various factors, including changes in consumer behavior and the ongoing optimization of its business model.

As of August 3, 2024, Nordstrom's liquidity position remains strong, with $679 million in cash and cash equivalents and an additional $771 million of liquidity available on its revolving credit facility. The company has maintained compliance with its debt covenants and continues to pursue strategic initiatives to enhance shareholder value.

A Who Owns Nordstrom, Inc. (JWN)

Major Shareholders

As of March 19, 2024, the Nordstrom family, including Anne E. Gittinger and the Estate of Bruce A. Nordstrom, collectively owned approximately 30% of Nordstrom, Inc.'s common stock. Additionally, on September 3, 2024, these individuals, along with other members of the Bid Group, reported an aggregate ownership of about 43% of the common stock.

Shareholder Concentration

The concentration of ownership among a small number of shareholders may impact the ability of other shareholders to influence corporate matters. The Nordstrom family and the Bid Group's significant holdings provide them with considerable voting power, especially regarding decisions such as the election of directors and corporate governance.

Shareholder Rights Agreement

The Board of Directors has implemented a limited-duration shareholder rights agreement that dilutes the ownership of any person or group acquiring 10% or more of the outstanding shares of common stock. This agreement specifically grandfathered the ownership of the Nordstrom family as of the date of adoption.

Stock Performance and Financial Data

Ownership Structure

As of August 3, 2024, Nordstrom, Inc. had a total of 164.2 million shares issued and outstanding. The company’s common stock is traded on the New York Stock Exchange under the ticker symbol JWN.

Impact of Ownership on Corporate Governance

The significant ownership by the Nordstrom family and the Bid Group may discourage potential acquisition offers and influence corporate transactions, as their approval would likely be necessary for such actions.

Nordstrom, Inc. (JWN) Mission Statement

Overview of Mission Statement

The mission statement of Nordstrom, Inc. emphasizes the commitment to providing exceptional customer service, high-quality products, and a seamless shopping experience across all channels. The company aims to be a leading fashion retailer by focusing on the needs and preferences of its customers.

Financial Performance

As of the second quarter of 2024, Nordstrom reported net sales of $3.785 billion, reflecting a 3.4% increase compared to the same period in fiscal 2023. The net earnings for the same quarter were $122 million, or $0.74 per diluted share.

Key Financial Metrics

Strategic Focus

Nordstrom's strategic initiatives include enhancing digital capabilities, optimizing supply chain operations, and expanding the Nordstrom Rack store format. The company has reported a significant increase in digital sales, which constituted 37% of total sales in Q2 2024.

Market Position and Growth

Nordstrom continues to focus on growth through various channels and customer engagement strategies. The company opened 11 new Nordstrom Rack stores in the first half of 2024, contributing to the overall sales growth.

Customer Engagement

The company’s Anniversary Sale, a significant retail event, was noted for strong customer participation, particularly among its loyalty program members, with 75% of Icon and Ambassador Nordy Club members shopping the event.

Operational Efficiency

Nordstrom is actively working on improving its supply chain efficiency and inventory management systems. The implementation of RFID technology is expected to enhance product flow and reduce shrinkage.

Future Outlook

For fiscal 2024, Nordstrom anticipates a total revenue range of a 1.0% decline to a 1.0% growth compared to fiscal 2023, factoring in the impact of a 53rd week in the previous year.

How Nordstrom, Inc. (JWN) Works

Company Overview

Nordstrom, Inc. operates as a leading fashion retailer in the United States, primarily through its full-line stores and Nordstrom Rack outlets. The company emphasizes a blend of customer service and a digital shopping experience.

Financial Performance

As of the second quarter of 2024, Nordstrom reported total net sales of $3.785 billion, an increase of 3.4% compared to the same period in fiscal 2023.

Sales Breakdown

Net sales were categorized as follows:

Digital Sales and Performance

In Q2 2024, digital sales accounted for 37% of total net sales, representing a 6.2% increase compared to the same quarter in 2023.

Store Count and Expansion

As of August 3, 2024, Nordstrom operated:

Cost and Expenses

For the second quarter of 2024, the company reported:

Liquidity Position

As of August 3, 2024, Nordstrom had:

• Cash and cash equivalents: $679 million
• Available liquidity on Revolver: $771 million

Debt and Credit Facilities

Nordstrom's total debt as of August 3, 2024, was $2.615 billion, with a leverage ratio reflecting the company's creditworthiness.

Capital Expenditures

For the six months ended August 3, 2024, capital expenditures totaled $204 million, down from $225 million in the prior year.

Shareholder Returns

Dividends declared for the six months ended August 3, 2024, were $62 million, maintaining a dividend of $0.38 per share.

Conclusion of Financial Metrics

The company's financial performance reflects a commitment to operational optimization, with a focus on digital growth and customer engagement.

How Nordstrom, Inc. (JWN) Makes Money

Revenue Streams

Nordstrom, Inc. generates revenue primarily through the sales of apparel, shoes, cosmetics, and accessories across its Nordstrom and Nordstrom Rack brands. In the second quarter of 2024, the company reported total net sales of $3,785 million, a 3.4% increase from the same period in 2023. The breakdown of net sales for the quarter is as follows:

Digital Sales Performance

Digital sales accounted for 37% of total net sales in Q2 2024, reflecting a growth of 6.2% compared to the same quarter in 2023. The company continues to emphasize its digital platform, enhancing customer experience through improved search and product discovery features.

Gross Profit Analysis

For the second quarter of 2024, Nordstrom reported a gross profit of $1,384 million, representing 36.6% of net sales, up from 35.0% in Q2 2023. This increase is attributed to stronger regular price sales and effective inventory management.

Operating Expenses

Selling, General and Administrative (SG&A) expenses for Q2 2024 totaled $1,303 million, which is 34.4% of net sales. This represents an increase from $1,200 million in Q2 2023 (32.8% of net sales), primarily due to higher variable costs associated with increased sales volume and an impairment charge related to supply chain assets.

Net Earnings and Earnings Per Share

Nordstrom's net earnings for the second quarter of 2024 were $122 million, translating to a diluted earnings per share (EPS) of $0.72. This is a decrease from $137 million net earnings in Q2 2023, which had a diluted EPS of $0.84.

Credit Card Revenues

Nordstrom's credit card revenues, net, decreased to $109 million in Q2 2024 from $110 million in Q2 2023, mainly due to higher credit losses despite increased finance charges from higher outstanding balances.

Store Count and Expansion

As of August 3, 2024, Nordstrom operated 370 locations, an increase from 351 locations a year prior. This includes 93 Nordstrom stores, 269 Nordstrom Rack stores, and 6 Nordstrom Local service hubs.

Future Outlook

For fiscal 2024, Nordstrom anticipates a total revenue range of a 1.0% decline to a 1.0% growth compared to the previous year, considering various operational adjustments and market conditions.