Segment Reporting

12 Months Ended

Feb. 01, 2025

Segment Reporting [Abstract]

Segment Reporting

NOTE 15: SEGMENT REPORTING

Segments

During the fourth quarter of 2024, we adopted ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. As a result, all reporting periods are presented under the new standard and prior period segment disclosures have been reclassified to conform to the current period presentation.

We have one reportable “Retail” segment to align with how management operates and evaluates the results of our operations. Our chief executive officer, who is our chief operating decision maker, reviews results on a consolidated basis, accompanied by information about our two operating segments, Nordstrom and Nordstrom Rack. The CODM uses EBIT for the purpose of allocating resources and evaluating financial performance, primarily by monitoring actual results versus the annual plans, and making strategic decisions.

Our Retail reportable segment aggregates our two operating segments, Nordstrom and Nordstrom Rack. As of February 1, 2025, Nordstrom consists of Nordstrom.com, Nordstrom U.S. stores and Nordstrom Local. Nordstrom also included Canada operations prior to March 2, 2023, inclusive of Nordstrom.ca, Nordstrom Canadian stores and Nordstrom Rack Canadian stores, and ASOS | Nordstrom prior to December 2023. Nordstrom Rack consists of NordstromRack.com, Nordstrom Rack U.S. stores and Last Chance clearance stores.

Our Nordstrom and Nordstrom Rack operating segments both generate revenue by offering customers an extensive selection of high-quality third-party and private-brand merchandise for women, men, young adults and children, with a focus on apparel, shoes, beauty, accessories and home goods. 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. Nordstrom and Nordstrom Rack have historically had similar economic characteristics and financial performance over the long-term, which we expect to continue in the future. 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 Nordstrom and Nordstrom Rack operating segments into a single reportable segment.

Amounts in variable SG&A primarily relate to variable shipping and fulfillment, direct selling, customer service, marketing, loyalty and gift cards. Our variable SG&A expenses are dependent on our sales volume and our channel mix. Amounts in fixed SG&A include expenses primarily related to information technology, employee benefits, loss prevention, non-variable supply chain, selling and store costs, other general overhead and fixed expenses and certain allocated corporate expenses. Allocated corporate expenses are comprised of certain overhead expenses incurred by the Company which are not directly incurred by our Nordstrom and Nordstrom Rack operating segments as a part of their normal operations and primarily include finance, accounting, HR and other administrative expenses.

Amounts in the Unallocated Corporate/Other column include unallocated corporate expenses and assets (including unallocated assets in corporate headquarters, consisting primarily of cash, land, buildings, equipment and deferred tax assets), inter-segment eliminations and other adjustments to segment results necessary for the presentation of consolidated financial results in accordance with GAAP. We do not allocate interest expense, net, income taxes or unusual and infrequent items to our Retail segment.

Accounting Policy

We present our segment results in the way that management views our results internally and the accounting policies of the operating segments are the same as those described in Note 1: Nature of Operations and Summary of Significant Accounting Policies.

The following table sets forth information about our reported segment revenues and significant expense categories included within EBIT:

Fiscal year	2024	2023	2022
Net sales	$14,557	$14,219	$15,092
Less:
Cost of sales and services	(8,241)	(8,176)	(8,786)
Buying and occupancy costs	(1,148)	(1,114)	(1,184)
Variable SG&A	(2,633)	(2,575)	(2,872)
Fixed SG&A1	(1,663)	(1,499)	(1,531)
Retail segment EBIT	872	855	719
Unallocated corporate and other expenses2	(377)	(604)	(254)
Earnings before interest and income taxes	$495	$251	$465

1 Includes credit card revenues, net and expenses associated with our credit card program as we present our credit card operation EBIT within Fixed SG&A in the Retail Segment to align with how management views the business.

2 Canada wind-down costs are included within unallocated corporate and other expenses for 2023.

The following table sets forth other information for our reportable segment:

	Retail Segment	Unallocated Corporate/Other	Total
Fiscal year 2024
Net sales	$14,557	$—	$14,557
Credit card revenues, net	459	—	459
Depreciation and amortization1	(249)	(354)	(603)
Interest expense, net	—	(102)	(102)
Capital expenditures	(215)	(301)	(516)
Assets	5,922	3,044	8,966
Fiscal year 2023
Net sales	$14,219	$—	$14,219
Credit card revenues, net	474	—	474
Depreciation and amortization1	(263)	(323)	(586)
Interest expense, net	—	(104)	(104)
Capital expenditures	(244)	(325)	(569)
Assets	5,622	2,822	8,444
Fiscal year 2022
Net sales	$15,092	$—	$15,092
Credit card revenues, net	438	—	438
Depreciation and amortization1	(316)	(288)	(604)
Interest expense, net	—	(128)	(128)
Capital expenditures	(154)	(319)	(473)
Assets	5,968	2,777	8,745

1 The amounts of depreciation and amortization are included within the other segment expense captions, such as buying and occupancy and SG&A.

For information about disaggregated revenues, see Note 3: Revenue.