þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Washington | 91-0515058 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1617 Sixth Avenue, Seattle, Washington | 98101 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer ¨ | ||
Non-accelerated filer ¨ | Smaller reporting company ¨ | ||
Emerging growth company ¨ |
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Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Net sales | $3,648 | $3,541 | $11,097 | $10,537 | |||||||||||
Credit card revenues, net | 100 | 88 | 280 | 239 | |||||||||||
Total revenues | 3,748 | 3,629 | 11,377 | 10,776 | |||||||||||
Cost of sales and related buying and occupancy costs | (2,435 | ) | (2,315 | ) | (7,311 | ) | (6,921 | ) | |||||||
Selling, general and administrative expenses | (1,208 | ) | (1,106 | ) | (3,562 | ) | (3,280 | ) | |||||||
Earnings before interest and income taxes | 105 | 208 | 504 | 575 | |||||||||||
Interest expense, net | (25 | ) | (28 | ) | (81 | ) | (104 | ) | |||||||
Earnings before income taxes | 80 | 180 | 423 | 471 | |||||||||||
Income tax expense | (13 | ) | (66 | ) | (107 | ) | (185 | ) | |||||||
Net earnings | $67 | $114 | $316 | $286 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | $0.40 | $0.68 | $1.88 | $1.72 | |||||||||||
Diluted | $0.39 | $0.67 | $1.85 | $1.70 | |||||||||||
Weighted-average shares outstanding: | |||||||||||||||
Basic | 168.8 | 166.6 | 168.1 | 166.7 | |||||||||||
Diluted | 172.4 | 168.8 | 171.0 | 168.8 |
Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Net earnings | $67 | $114 | $316 | $286 | |||||||||||
Foreign currency translation adjustment | (3 | ) | (11 | ) | (18 | ) | 9 | ||||||||
Post retirement plan adjustments, net of tax | 1 | — | 3 | 2 | |||||||||||
Cumulative effect of adopted accounting standard | — | — | (5 | ) | — | ||||||||||
Comprehensive net earnings | $65 | $103 | $296 | $297 |
November 3, 2018 | February 3, 2018 | October 28, 2017 | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $1,127 | $1,181 | $672 | ||||||||
Accounts receivable, net | 190 | 145 | 211 | ||||||||
Merchandise inventories | 2,614 | 2,027 | 2,434 | ||||||||
Prepaid expenses and other | 366 | 150 | 162 | ||||||||
Total current assets | 4,297 | 3,503 | 3,479 | ||||||||
Land, property and equipment (net of accumulated depreciation of $6,517, $6,105 and $5,952) | 3,858 | 3,939 | 3,940 | ||||||||
Goodwill | 249 | 238 | 238 | ||||||||
Other assets | 305 | 435 | 529 | ||||||||
Total assets | $8,709 | $8,115 | $8,186 | ||||||||
Liabilities and Shareholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $2,106 | $1,409 | $1,815 | ||||||||
Accrued salaries, wages and related benefits | 526 | 578 | 433 | ||||||||
Other current liabilities | 1,202 | 1,246 | 1,166 | ||||||||
Current portion of long-term debt | 8 | 56 | 57 | ||||||||
Total current liabilities | 3,842 | 3,289 | 3,471 | ||||||||
Long-term debt, net | 2,678 | 2,681 | 2,681 | ||||||||
Deferred property incentives, net | 465 | 495 | 510 | ||||||||
Other liabilities | 521 | 673 | 670 | ||||||||
Commitments and contingencies (Note 6) | |||||||||||
Shareholders’ equity: | |||||||||||
Common stock, no par value: 1,000 shares authorized; 168.9, 167.0 and 166.6 shares issued and outstanding | 3,029 | 2,816 | 2,785 | ||||||||
Accumulated deficit | (1,777 | ) | (1,810 | ) | (1,899 | ) | |||||
Accumulated other comprehensive loss | (49 | ) | (29 | ) | (32 | ) | |||||
Total shareholders’ equity | 1,203 | 977 | 854 | ||||||||
Total liabilities and shareholders’ equity | $8,709 | $8,115 | $8,186 |
Accumulated | ||||||||||||||||||
Other | ||||||||||||||||||
Common Stock | Accumulated | Comprehensive | ||||||||||||||||
Shares | Amount | Deficit | Loss | Total | ||||||||||||||
Balance at February 3, 2018 | 167.0 | $2,816 | ($1,810 | ) | ($29 | ) | $977 | |||||||||||
Cumulative effect of adopted accounting standards | — | — | 60 | (5 | ) | 55 | ||||||||||||
Net earnings | — | — | 316 | — | 316 | |||||||||||||
Other comprehensive loss | — | — | — | (15 | ) | (15 | ) | |||||||||||
Dividends ($1.11 per share) | — | — | (186 | ) | — | (186 | ) | |||||||||||
Issuance of common stock under stock compensation plans | 3.9 | 160 | — | — | 160 | |||||||||||||
Stock-based compensation | 0.9 | 53 | — | — | 53 | |||||||||||||
Repurchase of common stock | (2.9 | ) | — | (157 | ) | — | (157 | ) | ||||||||||
Balance at November 3, 2018 | 168.9 | $3,029 | ($1,777 | ) | ($49 | ) | $1,203 | |||||||||||
Accumulated | ||||||||||||||||||
Other | ||||||||||||||||||
Common Stock | Accumulated | Comprehensive | ||||||||||||||||
Shares | Amount | Deficit | Loss | Total | ||||||||||||||
Balance at January 28, 2017 | 170.0 | $2,707 | ($1,794 | ) | ($43 | ) | $870 | |||||||||||
Net earnings | — | — | 286 | — | 286 | |||||||||||||
Other comprehensive earnings | — | — | — | 11 | 11 | |||||||||||||
Dividends ($1.11 per share) | — | — | (185 | ) | — | (185 | ) | |||||||||||
Issuance of common stock under stock compensation plans | 0.7 | 25 | — | — | 25 | |||||||||||||
Stock-based compensation | 0.5 | 53 | — | — | 53 | |||||||||||||
Repurchase of common stock | (4.6 | ) | — | (206 | ) | — | (206 | ) | ||||||||||
Balance at October 28, 2017 | 166.6 | $2,785 | ($1,899 | ) | ($32 | ) | $854 |
Nine Months Ended | |||||||
November 3, 2018 | October 28, 2017 | ||||||
Operating Activities | |||||||
Net earnings | $316 | $286 | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization expenses | 498 | 479 | |||||
Amortization of deferred property incentives and other, net | (49 | ) | (62 | ) | |||
Deferred income taxes, net | 11 | (82 | ) | ||||
Stock-based compensation expense | 72 | 59 | |||||
Change in operating assets and liabilities: | |||||||
Accounts receivable | (45 | ) | (11 | ) | |||
Merchandise inventories | (526 | ) | (465 | ) | |||
Prepaid expenses and other assets | (78 | ) | (35 | ) | |||
Accounts payable | 554 | 419 | |||||
Accrued salaries, wages and related benefits | (50 | ) | (22 | ) | |||
Other current liabilities | (102 | ) | (53 | ) | |||
Deferred property incentives | 37 | 55 | |||||
Other liabilities | 4 | 29 | |||||
Net cash provided by operating activities | 642 | 597 | |||||
Investing Activities | |||||||
Capital expenditures | (429 | ) | (536 | ) | |||
Other, net | (19 | ) | 29 | ||||
Net cash used in investing activities | (448 | ) | (507 | ) | |||
Financing Activities | |||||||
Proceeds from long-term borrowings, net of discounts | — | 635 | |||||
Principal payments on long-term borrowings | (54 | ) | (658 | ) | |||
Increase (decrease) in cash book overdrafts | 34 | (3 | ) | ||||
Cash dividends paid | (186 | ) | (185 | ) | |||
Payments for repurchase of common stock | (155 | ) | (211 | ) | |||
Proceeds from issuances under stock compensation plans | 160 | 25 | |||||
Tax withholding on share-based awards | (19 | ) | (7 | ) | |||
Other, net | (28 | ) | (21 | ) | |||
Net cash used in financing activities | (248 | ) | (425 | ) | |||
Net decrease in cash and cash equivalents | (54 | ) | (335 | ) | |||
Cash and cash equivalents at beginning of period | 1,181 | 1,007 | |||||
Cash and cash equivalents at end of period | $1,127 | $672 | |||||
Supplemental Cash Flow Information | |||||||
Cash paid during the period for: | |||||||
Income taxes, net | $278 | $291 | |||||
Interest, net of capitalized interest | 95 | 106 |
November 3, 2018 | |||||||||||
As Reported | Revenue Standard Adjustment | Excluding Impact of Revenue Standard | |||||||||
Assets | |||||||||||
Merchandise inventories | $2,614 | $46 | $2,660 | ||||||||
Prepaid expenses and other | 366 | (130 | ) | 236 | |||||||
Other assets | 305 | 96 | 401 | ||||||||
Liabilities and Shareholders’ Equity | |||||||||||
Other current liabilities | 1,202 | (17 | ) | 1,185 | |||||||
Other liabilities | 521 | 110 | 631 | ||||||||
Accumulated deficit | (1,777 | ) | (81 | ) | (1,858 | ) |
Contract Liabilities | |||
Opening balance as of February 4, 2018 | $498 | ||
Balance as of May 5, 2018 | 460 | ||
Balance as of August 4, 2018 | 445 | ||
Ending balance as of November 3, 2018 | 450 |
Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Full-Price1 | $2,367 | $2,173 | $7,314 | $7,179 | |||||||||||
Off-Price1 | 1,281 | 1,178 | 3,783 | 3,519 | |||||||||||
Other1 | — | 190 | — | (161 | ) | ||||||||||
Total net sales | $3,648 | $3,541 | $11,097 | $10,537 | |||||||||||
Digital sales as % of total net sales2 | 26 | % | 23 | % | 30 | % | 26 | % |
November 3, 2018 | |||||
Quarter Ended | Nine Months Ended | ||||
Women’s Apparel | 32 | % | 33 | % | |
Shoes | 24 | % | 24 | % | |
Men’s Apparel | 16 | % | 16 | % | |
Women’s Accessories | 10 | % | 10 | % | |
Beauty | 11 | % | 11 | % | |
Kids’ Apparel | 4 | % | 4 | % | |
Other | 3 | % | 2 | % | |
Total | 100 | % | 100 | % |
Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Retail segment earnings before interest and income taxes1 | $171 | $152 | $701 | $696 | |||||||||||
Corporate/Other (loss) earnings before interest and income taxes1 | (66 | ) | 56 | (197 | ) | (121 | ) | ||||||||
Interest expense, net | (25 | ) | (28 | ) | (81 | ) | (104 | ) | |||||||
Earnings before income taxes | $80 | $180 | $423 | $471 |
November 3, 2018 | February 3, 2018 | October 28, 2017 | |||||||||
Secured | |||||||||||
Mortgage payable, 7.68%, due April 2020 | $12 | $17 | $20 | ||||||||
Other | — | 1 | 1 | ||||||||
Total secured debt | 12 | 18 | 21 | ||||||||
Unsecured | |||||||||||
Net of unamortized discount: | |||||||||||
Senior notes, 4.75%, due May 2020 | 500 | 500 | 499 | ||||||||
Senior notes, 4.00%, due October 2021 | 500 | 500 | 500 | ||||||||
Senior notes, 4.00%, due March 2027 | 349 | 349 | 349 | ||||||||
Senior debentures, 6.95%, due March 2028 | 300 | 300 | 300 | ||||||||
Senior notes, 7.00%, due January 2038 | 146 | 146 | 146 | ||||||||
Senior notes, 5.00%, due January 2044 | 894 | 892 | 891 | ||||||||
Other1 | (15 | ) | 32 | 32 | |||||||
Total unsecured debt | 2,674 | 2,719 | 2,717 | ||||||||
Total long-term debt | 2,686 | 2,737 | 2,738 | ||||||||
Less: current portion | (8 | ) | (56 | ) | (57 | ) | |||||
Total due beyond one year | $2,678 | $2,681 | $2,681 |
November 3, 2018 | February 3, 2018 | October 28, 2017 | |||||||||
Carrying value of long-term debt | $2,686 | $2,737 | $2,738 | ||||||||
Fair value of long-term debt | 2,700 | 2,827 | 2,840 |
Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Restricted stock units | $17 | $13 | $57 | $40 | |||||||||||
Stock options | 3 | 5 | 9 | 13 | |||||||||||
Other | 1 | 1 | 6 | 6 | |||||||||||
Total stock-based compensation expense, before income tax benefit | 21 | 19 | 72 | 59 | |||||||||||
Income tax benefit | (5 | ) | (7 | ) | (18 | ) | (22 | ) | |||||||
Total stock-based compensation expense, net of income tax benefit | $16 | $12 | $54 | $37 |
Nine Months Ended | |||||||||||||
November 3, 2018 | October 28, 2017 | ||||||||||||
Granted | Weighted-average grant-date fair value per unit | Granted | Weighted-average grant-date fair value per unit | ||||||||||
Restricted stock units | 2.2 | $49 | 1.9 | $42 | |||||||||
Stock options | — | — | 0.3 | $16 | |||||||||
Performance share units | — | — | 0.1 | $40 |
Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Net earnings | $67 | $114 | $316 | $286 | |||||||||||
Basic shares | 168.8 | 166.6 | 168.1 | 166.7 | |||||||||||
Dilutive effect of common stock equivalents | 3.6 | 2.2 | 2.9 | 2.1 | |||||||||||
Diluted shares | 172.4 | 168.8 | 171.0 | 168.8 | |||||||||||
Earnings per basic share | $0.40 | $0.68 | $1.88 | $1.72 | |||||||||||
Earnings per diluted share | $0.39 | $0.67 | $1.85 | $1.70 | |||||||||||
Anti-dilutive common stock equivalents | 1.8 | 10.0 | 5.5 | 10.8 |
• | successful execution of our customer strategy to provide a differentiated and seamless experience across all Nordstrom channels, |
• | timely and effective implementation of our plans to evolve our business model, including development of applications for electronic devices, improvement of customer-facing technologies, timely delivery of products purchased digitally, enhancement of inventory management systems, greater and more fluid inventory availability between our digital channels and retail store locations, increased reliance on third parties and greater consistency in marketing and pricing strategies, as well as our ability to manage the costs associated with this evolving business model, |
• | our ability to evolve our business model as necessary to respond to the business and retail environment, as well as fashion trends and consumer preferences, including changing expectations of service and experience in stores and online, |
• | our ability to properly balance our investments in existing and new store locations, especially our investments in our Nordstrom Men’s Store NYC and Nordstrom NYC and our Los Angeles market integration, |
• | successful execution of our information technology strategy, including engagement with third-party service providers, |
• | our ability to effectively utilize internal and third-party data in strategic planning and decision making, |
• | our ability to maintain or expand our presence, including timely completion of construction associated with new, relocated and remodeled stores and fulfillment and distribution centers, all of which may be impacted by third parties and consumer demand, |
• | efficient and proper allocation of our capital resources, |
• | effective inventory management processes and systems, fulfillment and supply chain processes and systems, disruptions in our supply chain and our ability to control costs, |
• | the impact of any systems or network failures, cybersecurity and/or security breaches, including any security breach of our systems or those of a third-party provider that results in the theft, transfer or unauthorized disclosure of customer, employee or Company information or compliance with information security and privacy laws and regulations in the event of such an incident, |
• | our ability to safeguard our reputation and maintain relationships with our vendors and third-party service providers, |
• | our ability to maintain relationships with and motivate our employees and to effectively attract, develop and retain our future leaders, |
• | our ability to realize the expected benefits, respond to potential risks and appropriately manage costs associated with our program agreement with TD, |
• | the effectiveness of planned advertising, marketing and promotional campaigns in the highly competitive and promotional retail industry, |
• | market fluctuations, increases in operating costs, exit costs and overall liabilities and losses associated with owning and leasing real estate, |
• | potential goodwill impairment charges, future impairment charges and fluctuations in the fair values of reporting units or of assets in the event projected financial results are not achieved within expected time frames, |
• | compliance with debt and operating covenants, availability and cost of credit, changes in our credit rating and changes in interest rates, |
• | the timing, price, manner and amounts of future share repurchases by us, if any, or any share issuances by us, |
• | the impact of the seasonal nature of our business and cyclical customer spending, |
• | the impact of economic and market conditions and the resultant impact on consumer spending and credit patterns, |
• | the impact of economic, environmental or political conditions in the U.S. and countries where our third-party vendors operate, |
• | weather conditions, natural disasters, health hazards, national security or other market and supply chain disruptions, including the effects of tariffs, or the prospects of these events and the resulting impact on consumer spending patterns or information technology systems and communications, |
• | our compliance with applicable domestic and international laws, regulations and ethical standards, including those related to employment and tax, and the outcome of claims and litigation and resolution of such matters, |
• | the impact of the current regulatory environment and financial system, health care, and tax reforms, |
• | the impact of changes in accounting rules and regulations, changes in our interpretation of the rules or regulations, or changes in underlying assumptions, estimates or judgments. |
• | Our early investments in digital capabilities are paying off. The combination of our digital capabilities with our local market assets have enabled us to be at the forefront of serving customers on their terms. We recently celebrated the 20th anniversary of Nordstrom.com, which has grown to approximately 2.5 million visitors per day and ranks among the top 10 e-commerce retailers in the United States. Our overall digital sales increased by 20% on a year-to-date basis and made up 30% of our business. |
• | Our generational investments continue to scale, contributing approximately half of our year-to-date sales increase. Nordstromrack.com/HauteLook is on track to exceed $1 billion in sales this year. Trunk Club has delivered sales growth of nearly 50% year-to-date, demonstrating successful efforts to improve the customer offer. We continued our expansion into Canada with three additional Nordstrom Racks and expect further synergies from having a Full-Price and Off-Price presence. In the Manhattan market, we’re building on our learnings from our men’s store opening last spring as we plan our Nordstrom NYC store opening in the fall of 2019. |
• | Our strategic brand partnerships enable us to offer compelling products to customers and strengthen our product margins. This includes collaborations with fashion influencers, such as Something Navy and Atlantic-Pacific, to provide inspiration and a sense of discovery for customers. In the third quarter, strategic brand sales grew 8%, making up approximately 45% of Full-Price sales. |
• | Our local market strategy leverages inventory, along with our digital and physical capabilities, to serve customers in new and relevant ways. Beginning in Los Angeles, our largest market, we have launched “Get It Fast”, a new feature that provides a significantly expanded view of merchandise selection that is available next day. In addition, we opened two additional Nordstrom Local neighborhood hubs, in Brentwood and downtown, to provide customers with more convenient access to our services. |
• | Our loyalty program is another way for us to leverage the strength of the Nordstrom brand and engage with customers in more personalized ways. In October, we introduced The Nordy Club, an evolution of our loyalty program that offers enhanced services and personalized experiences, as well as a faster earn rate for credit cardmembers. |
• | Comparable Sales – sales from stores that have been open at least one full year at the beginning of the year |
• | Comparable sales include sales from our online channels and actual returns. Comparable sales do not include our estimate for sales return reserve. |
• | Due to the 53rd week in 2017, our 2018 comparable sales are reported on a like-for-like basis with no impact from calendar shifts or revenue recognition |
• | Digital Sales – online sales and digitally assisted store sales which include Buy Online, Pickup in Store (“BOPUS”), Reserve Online, Try on in Store (Store Reserve) and Style Board, a digital selling tool |
• | Gross Profit – net sales less cost of sales and related buying and occupancy costs |
• | Inventory Turnover Rate – trailing 4-quarter cost of sales and related buying and occupancy costs divided by the trailing 4-quarter average inventory |
• | Full-Price – Nordstrom U.S. full-line stores, Nordstrom.com, Canada, Trunk Club, Jeffrey and Nordstrom Local |
• | Off-Price – Nordstrom U.S. Rack stores, Nordstromrack.com/HauteLook and Last Chance clearance stores |
Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Net sales by business1: | |||||||||||||||
Full-Price | $2,367 | $2,173 | $7,314 | $7,179 | |||||||||||
Off-Price | 1,281 | 1,178 | 3,783 | 3,519 | |||||||||||
Other | — | 190 | — | (161 | ) | ||||||||||
Total net sales | $3,648 | $3,541 | $11,097 | $10,537 | |||||||||||
Comparable sales increase (decrease) by business: | |||||||||||||||
Full-Price | 0.4 | % | (1.9 | %) | 1.9 | % | (0.9 | %) | |||||||
Off-Price | 5.8 | % | 0.8 | % | 3.4 | % | 2.0 | % | |||||||
Total Company | 2.3 | % | (0.9 | %) | 2.4 | % | 0.1 | % | |||||||
Digital sales as % of total net sales | 26 | % | 23 | % | 30 | % | 26 | % |
Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Gross profit | $1,213 | $1,226 | $3,786 | $3,616 | |||||||||||
Gross profit as a % of net sales | 33.3 | % | 34.6 | % | 34.1 | % | 34.3 | % | |||||||
November 3, 2018 | October 28, 2017 | ||||||||||||||
Inventory turnover rate | 4.56 | 4.39 |
Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Selling, general and administrative expenses | $1,208 | $1,106 | $3,562 | $3,280 | |||||||||||
Selling, general and administrative expenses as a % of net sales | 33.1 | % | 31.2 | % | 32.1 | % | 31.1 | % |
Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Earnings before interest and income taxes | $105 | $208 | $504 | $575 | |||||||||||
Earnings before interest and income taxes as a % of net sales | 2.9 | % | 5.9 | % | 4.5 | % | 5.5 | % |
Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Income tax expense | $13 | $66 | $107 | $185 | |||||||||||
Effective tax rate | 16.4 | % | 36.7 | % | 25.3 | % | 39.2 | % |
Quarter Ended | Nine Months Ended | ||||||||||||||
November 3, 2018 | October 28, 2017 | November 3, 2018 | October 28, 2017 | ||||||||||||
Basic | $0.40 | $0.68 | $1.88 | $1.72 | |||||||||||
Diluted | $0.39 | $0.67 | $1.85 | $1.70 |
Prior Outlook | Current Outlook | ||
Net sales | $15.4 to $15.5 billion | $15.5 to $15.6 billion | |
Comparable sales (percent) | 1.5 to 2 | Approximately 2 | |
Credit card revenues | Mid-teens growth | Mid-teens growth | |
EBIT (including impact of Estimated Non-recurring Charge) | — | $863 to $888 million | |
Earnings per diluted share (excluding the impact of any future share repurchases) | — | $3.27 to $3.37 | |
EBIT (excluding impact of Estimated Non-recurring Charge) | $925 to $960 million | $935 to $960 million | |
Earnings per diluted share (excluding the impact of Estimated Non-recurring Charge and any future share repurchases) | $3.50 to $3.65 | $3.55 to $3.65 |
• | The 53rd week in 2017 added approximately $220 to total net sales and was estimated to impact earnings per diluted share by $0.05. |
• | Fourth quarter EBIT is expected to reflect a favorable comparison of $16 from a one-time employee investment associated with last year’s tax reform. |
12 Fiscal Months Ended | |||||||
November 3, 2018 | October 28, 2017 | ||||||
Net earnings | $467 | $488 | |||||
Add: income tax expense1 | 276 | 376 | |||||
Add: interest expense | 124 | 139 | |||||
Earnings before interest and income tax expense | 867 | 1,003 | |||||
Add: rent expense, net | 251 | 237 | |||||
Less: estimated depreciation on capitalized operating leases2 | (134 | ) | (126 | ) | |||
Adjusted net operating profit | 984 | 1,114 | |||||
Less: estimated income tax expense | (365 | ) | (486 | ) | |||
Adjusted net operating profit after tax | $619 | $628 | |||||
Average total assets | $8,269 | $8,009 | |||||
Less: average non-interest-bearing current liabilities3 | (3,429 | ) | (3,211 | ) | |||
Less: average deferred property incentives and deferred rent liability3 | (625 | ) | (646 | ) | |||
Add: average estimated asset base of capitalized operating leases2 | 1,994 | 1,718 | |||||
Average invested capital | $6,209 | $5,870 | |||||
Return on assets4 | 5.6 | % | 6.1 | % | |||
Adjusted ROIC4 | 10.0 | % | 10.7 | % |
Nine Months Ended | |||||||
Fiscal year | November 3, 2018 | October 28, 2017 | |||||
Net cash provided by operating activities | $642 | $597 | |||||
Net cash used in investing activities | (448 | ) | (507 | ) | |||
Net cash used in financing activities | (248 | ) | (425 | ) |
Nine Months Ended | |||||||
November 3, 2018 | October 28, 2017 | ||||||
Net cash provided by operating activities | $642 | $597 | |||||
Less: capital expenditures | (429 | ) | (536 | ) | |||
Add (Less): change in cash book overdrafts | 34 | (3 | ) | ||||
Free Cash Flow | $247 | $58 |
Nine Months Ended | |||||||
November 3, 2018 | October 28, 2017 | ||||||
Net earnings | $316 | $286 | |||||
Add: income tax expense | 107 | 185 | |||||
Add: interest expense, net | 81 | 104 | |||||
Earnings before interest and income taxes | 504 | 575 | |||||
Add: depreciation and amortization expenses | 498 | 479 | |||||
Less: amortization of deferred property incentives | (60 | ) | (57 | ) | |||
Adjusted EBITDA | $942 | $997 |
Credit Ratings | Outlook | ||
Moody’s | Baa1 | Stable | |
Standard & Poor’s | BBB+ | Stable |
Base Interest Rate | Applicable Margin | |||
Euro-Dollar Rate Loan | LIBOR | 1.03 | % | |
Canadian Dealer Offer Rate Loan | CDOR | 1.03 | % | |
Base Rate Loan | various | 0.03 | % |
20181 | 20171 | ||||||
Debt | $2,686 | $2,738 | |||||
Add: estimated capitalized operating lease liability2 | 2,011 | 1,896 | |||||
Adjusted Debt | $4,697 | $4,634 | |||||
Net earnings | $467 | $488 | |||||
Add: income tax expense3 | 276 | 376 | |||||
Add: interest expense, net | 111 | 135 | |||||
Earnings before interest and income taxes | 854 | 999 | |||||
Add: depreciation and amortization expenses | 686 | 644 | |||||
Add: rent expense, net | 251 | 237 | |||||
Add: non-cash acquisition-related charges | — | 10 | |||||
Adjusted EBITDAR | $1,791 | $1,890 | |||||
Debt to Net Earnings4 | 5.8 | 5.6 | |||||
Adjusted Debt to EBITDAR4 | 2.6 | 2.5 |
Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
August 2018 (August 5, 2018 to September 1, 2018)1 | 0.2 | $50.96 | 0.2 | $1,500 | |||||||||
September 2018 (September 2, 2018 to October 6, 2018) | 0.4 | $60.64 | 0.4 | $1,471 | |||||||||
October 2018 (October 7, 2018 to November 3, 2018) | 0.5 | $61.23 | 0.5 | $1,438 | |||||||||
Total | 1.1 | $59.58 | 1.1 |
Exhibit | Method of Filing | |||
Incorporated by reference from the Registrant’s Form 8-K filed on August 27, 2018, Exhibit 99.1 | ||||
Incorporated by reference from the Registrant’s Form 8-K filed on October 2, 2018, Exhibit 10.1 | ||||
Filed herewith electronically | ||||
Filed herewith electronically | ||||
Furnished herewith electronically | ||||
101.INS | XBRL Instance Document | Filed herewith electronically | ||
101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith electronically | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith electronically | ||
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | Filed herewith electronically | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith electronically | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith electronically | ||
NORDSTROM, INC. | |
(Registrant) | |
/s/ Anne L. Bramman | |
Anne L. Bramman | |
Chief Financial Officer | |
(Principal Financial Officer) | |
Date: | December 10, 2018 |
Date: | December 10, 2018 |
/s/ Blake W. Nordstrom | |
Blake W. Nordstrom Co-President of Nordstrom, Inc. |
Date: | December 10, 2018 |
/s/ Anne L. Bramman | |
Anne L. Bramman Chief Financial Officer of Nordstrom, Inc. |
• | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | December 10, 2018 |
/s/ Blake W. Nordstrom | |
Blake W. Nordstrom | |
Co-President of Nordstrom, Inc. | |
/s/ Anne L. Bramman | |
Anne L. Bramman | |
Chief Financial Officer of Nordstrom, Inc. |
Document And Entity Information - shares |
9 Months Ended | |
---|---|---|
Nov. 03, 2018 |
Nov. 28, 2018 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Nordstrom Inc. | |
Entity Central Index Key | 0000072333 | |
Document Type | 10-Q | |
Document Period End Date | Nov. 03, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --02-02 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 167,323,864 |
Condensed Consolidated Statements Of Earnings - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 03, 2018 |
Oct. 28, 2017 |
Nov. 03, 2018 |
Oct. 28, 2017 |
|
Income Statement [Abstract] | ||||
Net sales | $ 3,648 | $ 3,541 | $ 11,097 | $ 10,537 |
Credit card revenues, net | 100 | 88 | 280 | 239 |
Total revenues | 3,748 | 3,629 | 11,377 | 10,776 |
Cost of sales and related buying and occupancy costs | (2,435) | (2,315) | (7,311) | (6,921) |
Selling, general and administrative expenses | (1,208) | (1,106) | (3,562) | (3,280) |
Earnings before interest and income taxes | 105 | 208 | 504 | 575 |
Interest expense, net | (25) | (28) | (81) | (104) |
Earnings before income taxes | 80 | 180 | 423 | 471 |
Income tax expense | (13) | (66) | (107) | (185) |
Net earnings | $ 67 | $ 114 | $ 316 | $ 286 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.40 | $ 0.68 | $ 1.88 | $ 1.72 |
Diluted (in dollars per share) | $ 0.39 | $ 0.67 | $ 1.85 | $ 1.70 |
Weighted-average shares outstanding: | ||||
Basic (in shares) | 168.8 | 166.6 | 168.1 | 166.7 |
Diluted (in shares) | 172.4 | 168.8 | 171.0 | 168.8 |
Condensed Consolidated Statements of Comprehensive Earnings - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 03, 2018 |
Oct. 28, 2017 |
Nov. 03, 2018 |
Oct. 28, 2017 |
|
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Net earnings | $ 67 | $ 114 | $ 316 | $ 286 |
Foreign currency translation adjustment | (3) | (11) | (18) | 9 |
Post retirement plan adjustments, net of tax | 1 | 0 | 3 | 2 |
Cumulative effect of adopted accounting standard | 0 | 0 | (5) | 0 |
Comprehensive net earnings | $ 65 | $ 103 | $ 296 | $ 297 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Millions, $ in Millions |
Nov. 03, 2018 |
Feb. 03, 2018 |
Oct. 28, 2017 |
---|---|---|---|
Assets | |||
Accumulated depreciation | $ 6,517 | $ 6,105 | $ 5,952 |
Shareholders' equity | |||
Common stock, no par value (in dollars per share) | $ 0 | $ 0 | $ 0 |
Common stock, shares authorized | 1,000.0 | 1,000.0 | 1,000.0 |
Common stock, shares issued | 168.9 | 167.0 | 166.6 |
Common stock, shares outstanding | 168.9 | 167.0 | 166.6 |
Condensed Consolidated Statements Of Shareholders' Equity (Parenthetical) - $ / shares |
9 Months Ended | |
---|---|---|
Nov. 03, 2018 |
Oct. 28, 2017 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividends (in dollars per share) | $ 1.11 | $ 1.11 |
Basis Of Presentation |
9 Months Ended |
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Nov. 03, 2018 | |
Basis of Presentation [Abstract] | |
Basis Of Presentation | NOTE 1: BASIS OF PRESENTATION The accompanying Condensed Consolidated Financial Statements include the balances of Nordstrom, Inc. and its subsidiaries (the “Company”). All intercompany transactions and balances are eliminated in consolidation. The interim Condensed Consolidated Financial Statements have been prepared on a basis consistent in all material respects with the accounting policies described and applied in our 2017 Annual Report on Form 10-K (“Annual Report”), except as described in Note 2: Revenue, and reflect all adjustments of a normal recurring nature that are, in management’s opinion, necessary for the fair presentation of the results of operations, financial position and cash flows for the periods presented. The Condensed Consolidated Financial Statements as of and for the periods ended November 3, 2018 and October 28, 2017 are unaudited. The Condensed Consolidated Balance Sheet as of February 3, 2018 has been derived from the audited Consolidated Financial Statements included in our 2017 Annual Report. The interim Condensed Consolidated Financial Statements should be read together with the Consolidated Financial Statements and related footnote disclosures contained in our 2017 Annual Report. The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates and assumptions. Our business, like that of other retailers, is subject to seasonal fluctuations. Our sales are typically higher during our Anniversary Sale in July and the holidays in the fourth quarter. Our Anniversary Sale shifted to the second quarter in 2018 compared with the second and third quarters in 2017. Results for any one quarter are not indicative of the results that may be achieved for a full fiscal year. Estimated Non-recurring Charge During the third quarter of 2018, we recognized a non-recurring estimated credit-related charge (“Estimated Non-recurring Charge”) of $72, or $49 net of tax, resulting from some delinquent Nordstrom credit card accounts being charged higher interest in error. We estimate that less than 4% of Nordstrom cardmembers will receive a cash refund or credit to outstanding balances, with most receiving less than one hundred dollars. We have taken action, including the appropriate steps to address this issue and recorded an estimated charge representing our costs through the third quarter of 2018 which are comprised primarily of amounts we intend to refund to impacted cardmembers. The Estimated Non-recurring Charge increased our selling, general and administrative expenses on our Consolidated Statement of Earnings and other current liabilities on our Consolidated Balance Sheet. Of the $72 Estimated Non-recurring Charge, approximately $16 is a prior period misstatement recognized in the third quarter of 2018. As this out of period adjustment is not material to previously reported amounts in any prior periods, we recorded it all in the third quarter of 2018 instead of revising prior periods presented. Goodwill We continue to make investments in evolving the customer experience, with a strong emphasis on integrating technology across our business. To support these efforts, we have acquired two retail technology companies. During the first quarter of 2018, we recorded $11 of goodwill as a result of these acquisitions. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases, which was subsequently amended in July 2018 by ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). This ASU increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as right-of-use assets and lease liabilities. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification dictates whether lease expense is to be recognized based on an effective interest method or on a straight-line basis over the term of the lease. Additional qualitative and quantitative disclosures will be required to give financial statement users information on the amount, timing and judgments related to a reporting entity’s cash flows arising from leases. We plan to adopt this ASU in the first quarter of 2019 using the additional (and optional) transition method provided in ASU 2018-11, which would allow for application of the guidance at the beginning of the period in which it is adopted by recognizing a cumulative-effect adjustment to the opening balance of retained earnings. We expect the adoption of this standard will result in a material increase in noncurrent assets and noncurrent liabilities on our Consolidated Balance Sheet. We are currently evaluating additional impacts this guidance may have on our Consolidated Financial Statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other: Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment by eliminating step two from the goodwill impairment test. Under this new guidance, if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. This guidance is effective prospectively for fiscal years and interim periods within those years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests. We are currently evaluating the impact this guidance would have on our Consolidated Financial Statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement — Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This new guidance allows a reclassification from accumulated other comprehensive loss to accumulated deficit for certain tax effects resulting from the 2017 Tax Cuts and Jobs Act (“Tax Act”), which could not be recorded under prior guidance. We elected to early adopt this standard in the first quarter of 2018 and reclassified $5 of tax impacts resulting from the change in the federal corporate tax rate, decreasing the beginning accumulated deficit for the nine months ended November 3, 2018. In August 2018, the Securities and Exchange Commission (“SEC”) adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the Condensed Consolidated Statements of Shareholders’ Equity for interim financial statements. Under the amendments, an analysis of changes in each caption of shareholders’ equity presented in the Condensed Consolidated Balance Sheets must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which the Condensed Consolidated Statement of Comprehensive Earnings is required to be filed. This final rule is effective for us in the fourth quarter of 2018. With respect to the Condensed Consolidated Statements of Shareholders’ Equity, the SEC provided relief on the effective date until the first quarter of 2019. The adoption of this final rule will not have a material effect on our Consolidated Financial Statements. |
Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | NOTE 2: REVENUE During the first quarter of fiscal 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers, and all related amendments (“Revenue Standard”), using the modified retrospective adoption method. Results for reporting periods beginning in the first quarter of 2018 are presented under the new Revenue Standard while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605 — Revenue Recognition. Upon adoption, we recorded a net cumulative effect adjustment to decrease beginning accumulated deficit of $55. We do not expect the impact of adopting the new Revenue Standard to be material to our Consolidated Statement of Earnings for the year ended February 2, 2019. The impact of adoption on our Condensed Consolidated Balance Sheet for the period ended November 3, 2018 was as follows:
Revenue Recognition NET SALES We recognize sales revenue net of estimated returns and excluding sales taxes. Revenue from sales to customers shipped from our fulfillment centers, stores and directly from our vendors (“shipped revenues”), which includes shipping revenue when applicable, is recognized at shipping point, the point in time where control has transferred to the customer. Costs to ship orders to customers are expensed as a fulfillment activity at shipping point and commissions from sales at our full-line stores are expensed at the point of sale and both are recorded in selling, general and administrative expenses. Prior to 2018, shipped revenues were recognized upon estimated receipt by the customer and we recorded an estimated in-transit reserve for orders shipped prior to a period’s end, but not yet received by the customer. We reduce sales and cost of sales by an estimate of customer merchandise returns, which is calculated based on historical return patterns, and record a sales return reserve and an estimated returns asset. Our sales return reserve is classified in other current liabilities and our estimated returns asset, calculated based on the cost of merchandise sold, is classified in prepaid expenses and other on the Condensed Consolidated Balance Sheet. Due to the seasonality of our business, these balances typically increase with higher sales occurring in the last month of a period, such as the Anniversary Sale at the end of the second quarter, and decrease in the following period. Prior to 2018, the estimated cost of merchandise returned was netted with our sales return reserve in other current liabilities. CREDIT CARD REVENUES, NET Credit program revenues, net include our portion of the ongoing credit card revenue, net of credit losses, pursuant to the program agreement with TD Bank N.A. (“TD”). Upon adoption of the new Revenue Standard, the remaining unamortized balances of the investment in contract asset and deferred revenue associated with the sale of the credit card receivables to TD in 2015 and 2017 were eliminated as part of a cumulative-effect adjustment, reducing the opening balance of accumulated deficit for 2018. As a result, the asset amortization and deferred revenue recognition are no longer recorded in credit card revenues, net. Prior to 2018, the investment in contract asset was classified in prepaid expenses and other and other assets, while the deferred revenue was classified in other current liabilities and other liabilities on the Condensed Consolidated Balance Sheet. LOYALTY PROGRAM We evolved our customer loyalty program with the launch of The Nordy Club in October 2018, which incorporates a traditional point system and the favorite benefits of our previous program, while providing customers exclusive access to products and events, enhanced services, personalized experiences and more convenient ways to shop. Customers accumulate points based on their level of spending and type of participation. Upon reaching certain point thresholds, customers receive Nordstrom Notes (“Notes”), which can be redeemed for goods or services offered at Nordstrom full-line stores, Nordstrom.com, Nordstrom Rack and Nordstromrack.com/HauteLook. Nordstrom cardmembers can also earn rewards at Trunk Club. The Nordy Club member benefits will vary based on the level of customer spend, and include Personal Double Points days, shopping and fashion events and the ability to Reserve Online and Try In Store. Customers who participate in The Nordy Club loyalty program through our credit and debit cards receive additional benefits, and can vary depending on the level of spend, including early access to the Anniversary Sale, Nordstrom to You (an in-home stylist) and incremental accumulation of points towards Notes. For more information regarding The Nordy Club, visit Nordstrom.com/NordyClub. As our customers earn points and Notes in the loyalty program, a portion of underlying sales revenue is deferred. We recognize the revenue and related cost of sale when the Notes are ultimately redeemed. The amount of revenue deferred is based on an estimated stand-alone selling price of the points, Notes and other loyalty benefits, such as alterations, and included in other current liabilities on the Condensed Consolidated Balance Sheet. Other benefits of the loyalty program, including shopping and fashion events, are recorded in selling, general and administrative expenses as these are not a material right of the program. Our outstanding performance obligation for The Nordy Club consists primarily of unredeemed points and Notes and was $154 as of November 3, 2018. Almost all Notes are redeemed within six months of issuance. We record breakage revenue of unused points and unredeemed Notes based on expected customer redemption. We estimate, based on historical usage, that 6% of Notes will be unredeemed and recognized as revenue. Prior to 2018, we estimated the net cost of Notes that will be issued and redeemed and recorded this cost as rewards points were accumulated. These costs, as well as reimbursed alterations, were recorded in cost of sales as we provided customers with products and services for these rewards. GIFT CARDS We record deferred revenue from the sale of gift cards at the time of purchase. As gift cards are redeemed, we recognize revenue and reduce our contract liability. Though our gift cards do not have an expiration date, we include this deferred revenue in other current liabilities on the Condensed Consolidated Balance Sheet as customers can redeem gift cards at any time. As of November 3, 2018, our outstanding performance obligation for unredeemed gift cards was $296. Almost all gift cards are redeemed within two years of issuance. We record breakage revenue on unused gift cards based on expected customer redemption. We estimate, based on historical usage, that 2% will be unredeemed and recognized as revenue. Prior to 2018, gift card breakage was recorded in selling, general and administrative expenses and was estimated based on when redemption was considered remote. Contract Liabilities Under the new Revenue Standard, contract liabilities represent our obligation to transfer goods or services to customers and include deferred revenue for The Nordy Club (including points and Notes) and gift cards. Our contract liabilities are classified as current on the Condensed Consolidated Balance Sheet. Our contract liabilities are as follows:
The amount of revenue recognized from our beginning contract liability balance was $116 for the third quarter of 2018 and $272 for the nine months ended November 3, 2018. Disaggregation of Revenue The following table summarizes our disaggregated net sales:
1 We present our sales in the way that management views our results internally, including presenting 2018 under the new Revenue Standard and allocating our sales return reserve and the loyalty related adjustments to Full-Price and Off-Price. Amounts in 2018 related to adoption of the new Revenue Standard have not been recast for any prior periods due to the modified retrospective method of adoption. For 2017, Other primarily included unallocated sales return, in-transit and loyalty related adjustments necessary to reconcile sales by business to total net sales. If we applied the sales return reserve allocation and the loyalty related adjustments to the third quarter and nine months ended October 28, 2017, Full-Price net sales would increase $155 and decrease $115, Off-Price net sales would decrease $16 and $45 and Other net sales would decrease $139 and increase $160. We typically see timing shifts between the second and third quarters primarily due to the seasonal timing of the Anniversary Sale in July. 2 Digital sales are online sales and digitally assisted store sales which include Buy Online, Pickup in Store (“BOPUS”), Reserve Online, Try on in Store (Store Reserve) and Style Boards, a digital selling tool. The following table summarizes the percent of net sales by merchandise category:
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Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | NOTE 3: SEGMENT REPORTING We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments. In the first quarter of 2018, as a result of the evolution of our operations, our reportable segments have become progressively more integrated such that we have changed to one reportable “Retail” segment to align with how management operates and evaluates and views the results of our operations. Our principal executive officer, who is our chief operating decision maker (“CODM”), reviews results on a total company, Full-Price and Off-Price basis and uses earnings before interest and taxes as a measure of profitability. We completed the reporting and budgeting in the first quarter of 2018 to better align with how the CODM allocates resources and assesses business performance. As part of this evolution, we now allocate our previous Credit segment results across our other businesses while credit assets are included in Corporate/Other. Our Retail segment aggregates our two operating segments, Full-Price and Off-Price. Full-Price consists of Nordstrom U.S. full-line stores, Nordstrom.com, Canada, Trunk Club, Jeffrey and Nordstrom Local. Off-Price consists of Nordstrom U.S. Rack stores, Nordstromrack.com/HauteLook and Last Chance clearance stores. Our Full-Price and Off-Price operating segments both generate revenue by offering customers an extensive selection of high-quality, brand-name and private label merchandise, which includes apparel, shoes, cosmetics and accessories for women, men, young adults and children. We continue to focus on omni-channel initiatives by integrating the operations, merchandising and technology necessary to be consistent with our customers’ expectations of a seamless shopping experience regardless of channel or business. Full-Price and Off-Price have historically had similar economic characteristics and are expected to have similar economic characteristics and long-term financial performance in future periods. They also have other similar qualitative characteristics, including suppliers, method of distribution, type of customer and regulatory environment. Due to their similar qualitative and economic characteristics, we have aggregated our Full-Price and Off-Price operating segments into a single reportable segment. The following table sets forth information for our reportable segment:
1 We present our segment results in the way that management views our results internally, including allocating our sales return reserve and the loyalty related adjustments to Full-Price and Off-Price in 2018. Amounts in 2018 reflect the adoption of the new Revenue Standard, whereas 2017 amounts have not been recast due to the modified retrospective method of adoption described in Note 2: Revenue. If we applied the sales return reserve allocation and the loyalty related adjustments to the third quarter and nine months ended October 28, 2017, Retail segment earnings before interest and income taxes would increase $78 and $10 and Corporate/Other earnings before interest and income taxes would decrease $78 and Corporate/Other loss before interest and income taxes would increase $10. We typically see timing shifts between the second and third quarters primarily due to the seasonal timing of the Anniversary Sale in July. |
Debt And Credit Facilities |
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Debt And Credit Facilities | NOTE 4: DEBT AND CREDIT FACILITIES Debt A summary of our long-term debt, including capital leases, is as follows:
1 Other unsecured debt includes our deferred bond issue costs as of November 3, 2018. As of February 3, 2018 and October 28, 2017, Other included our Puerto Rico unsecured borrowing facility partially offset by deferred bond issue costs. During the first quarter of 2017, we issued $350 aggregate principal amount of 4.00% senior unsecured notes due March 2027 and $300 aggregate principal amount of 5.00% senior unsecured notes due January 2044. With the proceeds of these new notes, we retired our $650 senior unsecured notes that were due January 2018. We incurred $18 of net interest expense related to the refinancing, which included the write-off of unamortized balances associated with the debt discount, issue costs and fair value hedge adjustment resulting from the sale of our interest rate swap agreements in 2012. It also included a one-time payment of $24 to 2018 Senior Note holders under a make-whole provision, which represents the net present value of expected coupon payments had the notes been outstanding through the original maturity date. Credit Facilities As of November 3, 2018, we had total short-term borrowing capacity available of $800. In September 2018, we renewed our existing $800 senior unsecured revolving credit facility (“revolver”), extending the expiration from April 2020 to September 2023. Our revolver contains customary representations, warranties, covenants and terms, which are substantially similar to our 2015 revolver. Under the terms of our revolver, we pay a variable rate of interest and a commitment fee based on our debt rating. The revolver is available for working capital, capital expenditures and general corporate purposes. Provided that we obtain written consent from the lenders, we have the option to increase the revolving commitment by up to $200, to a total of $1,000, and two options to extend the revolving commitment by one year. The revolver requires that we maintain an adjusted debt to earnings before interest, income taxes, depreciation, amortization and rent (“EBITDAR”) leverage ratio of no more than four times. As of November 3, 2018, we were in compliance with this covenant. Our $800 commercial paper program allows us to use the proceeds to fund operating cash requirements. Under the terms of the commercial paper agreement, we pay a rate of interest based on, among other factors, the maturity of the issuance and market conditions. The issuance of commercial paper has the effect, while it is outstanding, of reducing available liquidity under the revolver by an amount equal to the principal amount of commercial paper. As of November 3, 2018, we had no issuances outstanding under our commercial paper program and no borrowings outstanding under our revolver. Our wholly owned subsidiary in Puerto Rico maintained a $52 unsecured borrowing facility to support our expansion into that market. Borrowings on this facility incurred interest at an annual rate based upon LIBOR plus 1.275% and also incurred a fee based on any unused commitment. During the third quarter, we fully repaid $47 outstanding on this facility, which was included in the current portion of long-term debt. In November 2018, subsequent to quarter end, this facility expired. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | NOTE 5: FAIR VALUE MEASUREMENTS We disclose our financial assets and liabilities that are measured at fair value in our Condensed Consolidated Balance Sheets by level within the fair value hierarchy as defined by applicable accounting standards: Level 1: Quoted market prices in active markets for identical assets or liabilities Level 2: Other observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs that cannot be corroborated by market data that reflect the reporting entity’s own assumptions Financial Instruments Not Measured at Fair Value Financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable and accounts payable, which approximate fair value due to their short-term nature, and long-term debt. We estimate the fair value of our long-term debt using quoted market prices of the same or similar issues and, as such, this is considered a Level 2 fair value measurement. The following table summarizes the carrying value and fair value estimate of our long-term debt, including current maturities:
Non-financial Assets Measured at Fair Value on a Nonrecurring Basis We also measure certain non-financial assets at fair value on a nonrecurring basis, primarily goodwill and long-lived tangible and intangible assets, in connection with periodic evaluations for potential impairment. We estimate the fair value of these assets using primarily unobservable inputs and, as such, these are considered Level 3 fair value measurements. There were no material impairment charges for these assets for the nine months ended November 3, 2018 and October 28, 2017. |
Commitments And Contingencies |
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Nov. 03, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | NOTE 6: COMMITMENTS AND CONTINGENCIES Plans for our Nordstrom NYC store, which we currently expect to open in 2019, ultimately include owning a condominium interest in a mixed-use tower and leasing certain nearby properties. As of November 3, 2018, we had approximately $289 of fee interest in land, which is expected to convert to the condominium interest once the store is constructed. We have committed to make future installment payments based on the developer meeting pre-established construction and development milestones. In the event that this project is not completed, the opening may be delayed and we may be subject to future losses or capital commitments in order to complete construction or to monetize our investment. |
Shareholders' Equity |
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Nov. 03, 2018 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | NOTE 7: SHAREHOLDERS’ EQUITY In February 2017, our Board of Directors authorized a new program to repurchase up to $500 of our outstanding common stock through August 31, 2018. There was $319 of unused capacity upon this program’s expiration. In August 2018, our Board of Directors authorized a program to repurchase up to $1,500 of our outstanding common stock, with no expiration date. Under the February 2017 program until it expired and then under the August 2018 program, we repurchased 2.9 shares of our common stock under both programs for an aggregate purchase price of $157 during the nine months ended November 3, 2018. We had $1,438 remaining in share repurchase capacity as of November 3, 2018. The actual timing, price, manner and amounts of future share repurchases, if any, will be subject to market and economic conditions and applicable SEC rules. In November 2018, subsequent to quarter end, we declared a quarterly dividend of $0.37 per share, which will be paid on December 11, 2018 to holders of record as of November 26, 2018. |
Stock-Based Compensation |
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | NOTE 8: STOCK-BASED COMPENSATION The following table summarizes our stock-based compensation expense:
The following table summarizes our grant allocations:
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | NOTE 9: EARNINGS PER SHARE The computation of earnings per share is as follows:
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Basis Of Presentation (Policies) |
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Basis of Presentation [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases, which was subsequently amended in July 2018 by ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). This ASU increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as right-of-use assets and lease liabilities. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification dictates whether lease expense is to be recognized based on an effective interest method or on a straight-line basis over the term of the lease. Additional qualitative and quantitative disclosures will be required to give financial statement users information on the amount, timing and judgments related to a reporting entity’s cash flows arising from leases. We plan to adopt this ASU in the first quarter of 2019 using the additional (and optional) transition method provided in ASU 2018-11, which would allow for application of the guidance at the beginning of the period in which it is adopted by recognizing a cumulative-effect adjustment to the opening balance of retained earnings. We expect the adoption of this standard will result in a material increase in noncurrent assets and noncurrent liabilities on our Consolidated Balance Sheet. We are currently evaluating additional impacts this guidance may have on our Consolidated Financial Statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other: Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment by eliminating step two from the goodwill impairment test. Under this new guidance, if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. This guidance is effective prospectively for fiscal years and interim periods within those years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests. We are currently evaluating the impact this guidance would have on our Consolidated Financial Statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement — Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This new guidance allows a reclassification from accumulated other comprehensive loss to accumulated deficit for certain tax effects resulting from the 2017 Tax Cuts and Jobs Act (“Tax Act”), which could not be recorded under prior guidance. We elected to early adopt this standard in the first quarter of 2018 and reclassified $5 of tax impacts resulting from the change in the federal corporate tax rate, decreasing the beginning accumulated deficit for the nine months ended November 3, 2018. In August 2018, the Securities and Exchange Commission (“SEC”) adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the Condensed Consolidated Statements of Shareholders’ Equity for interim financial statements. Under the amendments, an analysis of changes in each caption of shareholders’ equity presented in the Condensed Consolidated Balance Sheets must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which the Condensed Consolidated Statement of Comprehensive Earnings is required to be filed. This final rule is effective for us in the fourth quarter of 2018. With respect to the Condensed Consolidated Statements of Shareholders’ Equity, the SEC provided relief on the effective date until the first quarter of 2019. The adoption of this final rule will not have a material effect on our Consolidated Financial Statements. |
Net Sales | NET SALES We recognize sales revenue net of estimated returns and excluding sales taxes. Revenue from sales to customers shipped from our fulfillment centers, stores and directly from our vendors (“shipped revenues”), which includes shipping revenue when applicable, is recognized at shipping point, the point in time where control has transferred to the customer. Costs to ship orders to customers are expensed as a fulfillment activity at shipping point and commissions from sales at our full-line stores are expensed at the point of sale and both are recorded in selling, general and administrative expenses. Prior to 2018, shipped revenues were recognized upon estimated receipt by the customer and we recorded an estimated in-transit reserve for orders shipped prior to a period’s end, but not yet received by the customer. We reduce sales and cost of sales by an estimate of customer merchandise returns, which is calculated based on historical return patterns, and record a sales return reserve and an estimated returns asset. Our sales return reserve is classified in other current liabilities and our estimated returns asset, calculated based on the cost of merchandise sold, is classified in prepaid expenses and other on the Condensed Consolidated Balance Sheet. Due to the seasonality of our business, these balances typically increase with higher sales occurring in the last month of a period, such as the Anniversary Sale at the end of the second quarter, and decrease in the following period. Prior to 2018, the estimated cost of merchandise returned was netted with our sales return reserve in other current liabilities. |
Credit Card Revenues, Net | CREDIT CARD REVENUES, NET Credit program revenues, net include our portion of the ongoing credit card revenue, net of credit losses, pursuant to the program agreement with TD Bank N.A. (“TD”). Upon adoption of the new Revenue Standard, the remaining unamortized balances of the investment in contract asset and deferred revenue associated with the sale of the credit card receivables to TD in 2015 and 2017 were eliminated as part of a cumulative-effect adjustment, reducing the opening balance of accumulated deficit for 2018. As a result, the asset amortization and deferred revenue recognition are no longer recorded in credit card revenues, net. Prior to 2018, the investment in contract asset was classified in prepaid expenses and other and other assets, while the deferred revenue was classified in other current liabilities and other liabilities on the Condensed Consolidated Balance Sheet. |
Loyalty Program | LOYALTY PROGRAM We evolved our customer loyalty program with the launch of The Nordy Club in October 2018, which incorporates a traditional point system and the favorite benefits of our previous program, while providing customers exclusive access to products and events, enhanced services, personalized experiences and more convenient ways to shop. Customers accumulate points based on their level of spending and type of participation. Upon reaching certain point thresholds, customers receive Nordstrom Notes (“Notes”), which can be redeemed for goods or services offered at Nordstrom full-line stores, Nordstrom.com, Nordstrom Rack and Nordstromrack.com/HauteLook. Nordstrom cardmembers can also earn rewards at Trunk Club. The Nordy Club member benefits will vary based on the level of customer spend, and include Personal Double Points days, shopping and fashion events and the ability to Reserve Online and Try In Store. Customers who participate in The Nordy Club loyalty program through our credit and debit cards receive additional benefits, and can vary depending on the level of spend, including early access to the Anniversary Sale, Nordstrom to You (an in-home stylist) and incremental accumulation of points towards Notes. For more information regarding The Nordy Club, visit Nordstrom.com/NordyClub. As our customers earn points and Notes in the loyalty program, a portion of underlying sales revenue is deferred. We recognize the revenue and related cost of sale when the Notes are ultimately redeemed. The amount of revenue deferred is based on an estimated stand-alone selling price of the points, Notes and other loyalty benefits, such as alterations, and included in other current liabilities on the Condensed Consolidated Balance Sheet. Other benefits of the loyalty program, including shopping and fashion events, are recorded in selling, general and administrative expenses as these are not a material right of the program. Our outstanding performance obligation for The Nordy Club consists primarily of unredeemed points and Notes and was $154 as of November 3, 2018. Almost all Notes are redeemed within six months of issuance. We record breakage revenue of unused points and unredeemed Notes based on expected customer redemption. We estimate, based on historical usage, that 6% of Notes will be unredeemed and recognized as revenue. Prior to 2018, we estimated the net cost of Notes that will be issued and redeemed and recorded this cost as rewards points were accumulated. These costs, as well as reimbursed alterations, were recorded in cost of sales as we provided customers with products and services for these rewards. |
Gift Cards | GIFT CARDS We record deferred revenue from the sale of gift cards at the time of purchase. As gift cards are redeemed, we recognize revenue and reduce our contract liability. Though our gift cards do not have an expiration date, we include this deferred revenue in other current liabilities on the Condensed Consolidated Balance Sheet as customers can redeem gift cards at any time. As of November 3, 2018, our outstanding performance obligation for unredeemed gift cards was $296. Almost all gift cards are redeemed within two years of issuance. We record breakage revenue on unused gift cards based on expected customer redemption. We estimate, based on historical usage, that 2% will be unredeemed and recognized as revenue. Prior to 2018, gift card breakage was recorded in selling, general and administrative expenses and was estimated based on when redemption was considered remote. |
Revenue (Tables) |
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Impact Of Adoption Of New Revenue Standard | The impact of adoption on our Condensed Consolidated Balance Sheet for the period ended November 3, 2018 was as follows:
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Summary Of Contract Liabilities | Our contract liabilities are as follows:
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Disaggregated Net Sales | The following table summarizes our disaggregated net sales:
1 We present our sales in the way that management views our results internally, including presenting 2018 under the new Revenue Standard and allocating our sales return reserve and the loyalty related adjustments to Full-Price and Off-Price. Amounts in 2018 related to adoption of the new Revenue Standard have not been recast for any prior periods due to the modified retrospective method of adoption. For 2017, Other primarily included unallocated sales return, in-transit and loyalty related adjustments necessary to reconcile sales by business to total net sales. If we applied the sales return reserve allocation and the loyalty related adjustments to the third quarter and nine months ended October 28, 2017, Full-Price net sales would increase $155 and decrease $115, Off-Price net sales would decrease $16 and $45 and Other net sales would decrease $139 and increase $160. We typically see timing shifts between the second and third quarters primarily due to the seasonal timing of the Anniversary Sale in July. 2 Digital sales are online sales and digitally assisted store sales which include Buy Online, Pickup in Store (“BOPUS”), Reserve Online, Try on in Store (Store Reserve) and Style Boards, a digital selling tool. |
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Percent Of Net Sales By Merchandise Category Summary | The following table summarizes the percent of net sales by merchandise category:
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Segment Reporting (Tables) |
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Information By Reportable Segment | The following table sets forth information for our reportable segment:
1 We present our segment results in the way that management views our results internally, including allocating our sales return reserve and the loyalty related adjustments to Full-Price and Off-Price in 2018. Amounts in 2018 reflect the adoption of the new Revenue Standard, whereas 2017 amounts have not been recast due to the modified retrospective method of adoption described in Note 2: Revenue. If we applied the sales return reserve allocation and the loyalty related adjustments to the third quarter and nine months ended October 28, 2017, Retail segment earnings before interest and income taxes would increase $78 and $10 and Corporate/Other earnings before interest and income taxes would decrease $78 and Corporate/Other loss before interest and income taxes would increase $10. We typically see timing shifts between the second and third quarters primarily due to the seasonal timing of the Anniversary Sale in July. |
Debt And Credit Facilities (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Long-Term Debt | A summary of our long-term debt, including capital leases, is as follows:
1 Other unsecured debt includes our deferred bond issue costs as of November 3, 2018. As of February 3, 2018 and October 28, 2017, Other included our Puerto Rico unsecured borrowing facility partially offset by deferred bond issue costs |
Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 03, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Carrying Value And Fair Value Estimate Of Long-Term Debt | The following table summarizes the carrying value and fair value estimate of our long-term debt, including current maturities:
|
Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 03, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Stock-Based Compensation Expense | The following table summarizes our stock-based compensation expense:
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Summary Of Grants | The following table summarizes our grant allocations:
|
Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 03, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation Of Earnings Per Share | The computation of earnings per share is as follows:
|
Revenue (Impact Of Adoption Of New Revenue Standard) (Details) - USD ($) $ in Millions |
Nov. 03, 2018 |
Feb. 03, 2018 |
Oct. 28, 2017 |
---|---|---|---|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Merchandise inventories | $ 2,614 | $ 2,027 | $ 2,434 |
Prepaid expenses and other | 366 | 150 | 162 |
Other assets | 305 | 435 | 529 |
Other current liabilities | 1,202 | 1,246 | 1,166 |
Other liabilities | 521 | 673 | 670 |
Accumulated deficit | (1,777) | $ (1,810) | $ (1,899) |
Revenue Standard Adjustment [Member] | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Merchandise inventories | 46 | ||
Prepaid expenses and other | (130) | ||
Other assets | 96 | ||
Other current liabilities | (17) | ||
Other liabilities | 110 | ||
Accumulated deficit | (81) | ||
Excluding Impact of Revenue Standard [Member] | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Merchandise inventories | 2,660 | ||
Prepaid expenses and other | 236 | ||
Other assets | 401 | ||
Other current liabilities | 1,185 | ||
Other liabilities | 631 | ||
Accumulated deficit | $ (1,858) |
Revenue (Summary Of Contract Liabilities) (Details) - USD ($) $ in Millions |
Nov. 03, 2018 |
Aug. 04, 2018 |
May 05, 2018 |
Feb. 04, 2018 |
---|---|---|---|---|
Revenue from Contract with Customer [Abstract] | ||||
Contract liabilities | $ 450 | $ 445 | $ 460 | $ 498 |
Revenue (Disaggregated Net Sales) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Nov. 03, 2018 |
Oct. 28, 2017 |
Nov. 03, 2018 |
Oct. 28, 2017 |
||||||
Disaggregation of Revenue [Line Items] | |||||||||
Net sales | $ 3,648 | $ 3,541 | $ 11,097 | $ 10,537 | |||||
Disaggregated sales by category | 100.00% | 100.00% | |||||||
Digital Sales [Member] | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Disaggregated sales by category | [1] | 26.00% | 23.00% | 30.00% | 26.00% | ||||
Full-price [Member] | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Net sales | [2] | $ 2,367 | $ 2,173 | $ 7,314 | $ 7,179 | ||||
Full-price [Member] | Net sales increase/(decrease) affecting comparability [Member] | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Net sales | [2] | 155 | (115) | ||||||
Off-price [Member] | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Net sales | [2] | 1,281 | 1,178 | 3,783 | 3,519 | ||||
Off-price [Member] | Net sales increase/(decrease) affecting comparability [Member] | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Net sales | [2] | (16) | (45) | ||||||
Other [Member] | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Net sales | [2] | $ 0 | 190 | $ 0 | (161) | ||||
Other [Member] | Net sales increase/(decrease) affecting comparability [Member] | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Net sales | [2] | $ (139) | $ 160 | ||||||
|
Revenue (Percent Of Net Sales By Merchandise Category Summary) (Details) |
3 Months Ended | 9 Months Ended |
---|---|---|
Nov. 03, 2018 |
Nov. 03, 2018 |
|
Disaggregation of Revenue [Line Items] | ||
Disaggregated sales by category | 100.00% | 100.00% |
Women's Apparel [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated sales by category | 32.00% | 33.00% |
Shoes [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated sales by category | 24.00% | 24.00% |
Men's Apparel [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated sales by category | 16.00% | 16.00% |
Women's Accessories [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated sales by category | 10.00% | 10.00% |
Beauty [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated sales by category | 11.00% | 11.00% |
Kids' Apparel [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated sales by category | 4.00% | 4.00% |
Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Disaggregated sales by category | 3.00% | 2.00% |
Segment Reporting (Information By Reportable Segment) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Nov. 03, 2018 |
Oct. 28, 2017 |
Nov. 03, 2018 |
Oct. 28, 2017 |
||||
Segment Reporting Information [Line Items] | |||||||
Earnings (loss) before interest and income taxes | $ 105 | $ 208 | $ 504 | $ 575 | |||
Interest expense, net | (25) | (28) | (81) | (104) | |||
Earnings before income taxes | 80 | 180 | 423 | 471 | |||
Retail [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Earnings (loss) before interest and income taxes | [1] | 171 | 152 | 701 | 696 | ||
Retail [Member] | EBIT increase/(decrease) affecting comparability [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Earnings (loss) before interest and income taxes | 78 | 10 | |||||
Corporate/Other [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Earnings (loss) before interest and income taxes | [1] | $ (66) | 56 | $ (197) | (121) | ||
Corporate/Other [Member] | EBIT increase/(decrease) affecting comparability [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Earnings (loss) before interest and income taxes | $ 78 | $ 10 | |||||
|
Segment Reporting (Narrative) (Details) |
9 Months Ended |
---|---|
Nov. 03, 2018
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Number of operating segments | 2 |
Debt And Credit Facilities (Narrative) (Details) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Nov. 03, 2018
USD ($)
|
Oct. 28, 2017
USD ($)
|
Apr. 29, 2017
USD ($)
|
Nov. 03, 2018
USD ($)
|
Oct. 28, 2017
USD ($)
|
Feb. 03, 2018 |
|
Debt Instrument [Line Items] | ||||||
Proceeds from long-term borrowings | $ 0 | $ 635 | ||||
Principal payments on long-term borrowings | 54 | 658 | ||||
Interest expense, net | $ 25 | $ 28 | 81 | 104 | ||
Interest paid under the make-whole provision | $ 95 | $ 106 | ||||
Number of options to extend revolver | 2 | 2 | ||||
Commercial paper [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Total short-term borrowing capacity | $ 800 | $ 800 | ||||
Issuances or borrowings | $ 0 | $ 0 | ||||
2017 Refinancing [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Interest expense, net | $ 18 | |||||
Interest paid under the make-whole provision | 24 | |||||
Senior notes, 4.00%, due March 2027, net of unamortized discount [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Proceeds from long-term borrowings | 350 | |||||
Debt instrument interest rate | 4.00% | 4.00% | 4.00% | 4.00% | 4.00% | |
Maturity date | March 2027 | March 2027 | March 2027 | |||
Senior notes, 5.00%, due January 2044, net of unamortized discount [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Proceeds from long-term borrowings | 300 | |||||
Debt instrument interest rate | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | |
Maturity date | January 2044 | January 2044 | January 2044 | |||
Senior notes, 6.25%, due January 2018, net of unamortized discount [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument interest rate | 6.25% | 6.25% | 6.25% | 6.25% | 6.25% | |
Maturity date | January 2018 | January 2018 | January 2018 | |||
Principal payments on long-term borrowings | $ 650 | |||||
Unsecured revolving credit facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maturity date | September 2023 | |||||
Option to increase the maximum capacity of revolving credit facility | $ 200 | $ 200 | ||||
Maximum borrowing capacity with option | 1,000 | $ 1,000 | ||||
Debt covenant leverage ratio | 4 | |||||
Issuances or borrowings | 0 | $ 0 | ||||
Line of Credit [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity with option | 52 | $ 52 | ||||
Debt instrument interest rate | LIBOR plus 1.275% | |||||
Basis spread on variable rate | 1.275% | |||||
Full repayment of outstanding Puerto Rico unsecured borrowing facility | $ 47 |
Fair Value Measurements (Summary Of Carrying Value And Fair Value Estimate Of Long-Term Debt) (Details) - USD ($) $ in Millions |
Nov. 03, 2018 |
Feb. 03, 2018 |
Oct. 28, 2017 |
---|---|---|---|
Fair Value Measurements, Long-term Debt [Line Items] | |||
Carrying value of long-term debt | $ 2,686 | $ 2,737 | $ 2,738 |
Level 2 [Member] | |||
Fair Value Measurements, Long-term Debt [Line Items] | |||
Fair value of long-term debt | $ 2,700 | $ 2,827 | $ 2,840 |
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Nov. 03, 2018 |
Oct. 28, 2017 |
|
Fair Value Disclosures [Abstract] | ||
Impairment charges | $ 0 | $ 0 |
Commitments And Contingencies (Narrative) (Details) $ in Millions |
Nov. 03, 2018
USD ($)
|
---|---|
Manhattan full-line store [Member] | |
Property Assets Subject to Lien [Line Items] | |
Fee interest in land | $ 289 |
Shareholders' Equity (Narrative) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
1 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 10, 2018 |
Nov. 03, 2018 |
Oct. 28, 2017 |
Aug. 31, 2018 |
|
Retained Earnings Adjustments [Line Items] | ||||
Shares repurchased (in shares) | 2.9 | |||
Repurchase of common stock | $ 157 | $ 206 | ||
Remaining share repurchase capacity | 1,438 | |||
Subsequent Event [Member] | ||||
Retained Earnings Adjustments [Line Items] | ||||
Quarterly dividend declared and paid in subsequent quarter | $ 0.37 | |||
2017 Program [Member] | ||||
Retained Earnings Adjustments [Line Items] | ||||
Share repurchase authorization | $ 500 | |||
Expiration of unused share repurchase capacity | 319 | |||
2018 Program [Member] | ||||
Retained Earnings Adjustments [Line Items] | ||||
Share repurchase authorization | $ 1,500 |
Stock-Based Compensation (Summary Of Stock-Based Compensation Expense) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 03, 2018 |
Oct. 28, 2017 |
Nov. 03, 2018 |
Oct. 28, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense, before income tax benefit | $ 21 | $ 19 | $ 72 | $ 59 |
Income tax benefit | (5) | (7) | (18) | (22) |
Total stock-based compensation expense, net of income tax benefit | 16 | 12 | 54 | 37 |
Restricted stock units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense, before income tax benefit | 17 | 13 | 57 | 40 |
Stock options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense, before income tax benefit | 3 | 5 | 9 | 13 |
Other [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense, before income tax benefit | $ 1 | $ 1 | $ 6 | $ 6 |
Stock-Based Compensation (Summary Of Grants) (Details) - $ / shares shares in Millions |
9 Months Ended | |
---|---|---|
Nov. 03, 2018 |
Oct. 28, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock options granted (in shares) | 0.0 | 0.3 |
Weighted-average grant-date fair value per stock option (in dollars per share) | $ 0 | $ 16 |
Restricted stock units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Units granted (in shares) | 2.2 | 1.9 |
Weighted-average grant-date fair value per unit (in dollars per share) | $ 49 | $ 42 |
Performance share units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Units granted (in shares) | 0.0 | 0.1 |
Weighted-average grant-date fair value per unit (in dollars per share) | $ 0 | $ 40 |
Earnings Per Share (Computation Of Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 03, 2018 |
Oct. 28, 2017 |
Nov. 03, 2018 |
Oct. 28, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net earnings | $ 67 | $ 114 | $ 316 | $ 286 |
Basic shares (in shares) | 168.8 | 166.6 | 168.1 | 166.7 |
Dilutive effect of common stock equivalents (in shares) | 3.6 | 2.2 | 2.9 | 2.1 |
Diluted shares (in shares) | 172.4 | 168.8 | 171.0 | 168.8 |
Earnings per basic share (in dollars per share) | $ 0.40 | $ 0.68 | $ 1.88 | $ 1.72 |
Earnings per diluted share (in dollars per share) | $ 0.39 | $ 0.67 | $ 1.85 | $ 1.70 |
Anti-dilutive common stock equivalents (in shares) | 1.8 | 10.0 | 5.5 | 10.8 |
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