CLOSER TO YOU 2021 NORDSTROM INVESTOR EVENT FEBRUARY 4, 2021 FORWARD-LOOKING STATEMENTS
This presentation contains statements that are forward looking. These statements are based upon current expectations and assumptions that are subject to risks and uncertainties. We may not achieve the results projected in these forward-looking statements, and our actual results could materially differ because of factors discussed in this event, in the comments made during this presentation, and in the risk factors section of our Form 10-K, Form 10-Qs, and other reports and filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statement to reflect subsequent events, new information or future circumstances.
Free cash flow and return on invested capital are measures of performance which meet the definition of a non-GAAP financial measure. These measures should be used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are found on our investor relations site at www.investor.nordstrom.com.
2 AGENDA
STRATEGY AND DIGITAL-FIRST PLATFORM Erik Nordstrom, Chief Executive Officer
TECHNOLOGY Edmond Mesrobian, Chief Technology Officer
MERCHANDISING Pete Nordstrom, President & Chief Brand Officer
PANEL: STRATEGIC BRAND RELATIONSHIPS Moderator: Teri Bariquit, Chief Merchandising Officer
DIGITAL Ken Worzel, Chief Operating Officer
NORDSTROM RACK Geevy Thomas, President of Nordstrom Rack
Moderator: Neely Tamminga (DISTILL) PANEL: GOVERNANCE Erik Nordstrom, Pete Nordstrom, Brad Smith (Board Chairman)
ESG PRIORITIES AND FINANCIAL OVERVIEW Anne Bramman, Chief Financial Officer
Q&A Management Team
3 STRATEGY AND DIGITAL-FIRST PLATFORM ERIK NORDSTROM, CHIEF EXECUTIVE OFFICER THE RETAIL LANDSCAPE IS TRANSFORMING
DEMOGRAPHIC CONSUMER DIGITAL SHIFTS PREFERENCES ACCELERATION
5 DEMOGRAPHIC SHIFTS
Millennials expected to make up 50% of personal goods spending by 2024
6 Source: Boston Consulting Group CONSUMER PREFERENCES
2019 GROWTH
6.0% 5.5%
2.0%
Premium Mid-Tier Off-Price
Source: McKinsey
PRICE ALIGNED RISE OF POLARIZATION VALUES CASUALIZATION
7 DIGITAL ACCELERATION
ECOMMERCE PENETRATION 13.4% 90% of shopping is 7.1% digitally 17.2% influenced CAGR
2015 2020
Source: Census Bureau Source: Deloitte
RAPID ECOMMERCE SOCIAL MEDIA SEAMLESS EXPERIENCE GROWTH DRIVES DISCOVERY EXPECTED
8 OUR PURPOSE
Our purpose is to help customers feel good and look their best
9 WE ARE UNIQUELY POSITIONED TO SERVE CUSTOMERS ON THEIR TERMS
TWO POWERFUL, SERVICE INTEGRATED BEST PARTNER INTERCONNECTED IS IN OUR DIGITAL AND FOR THE BRANDS DNA PHYSICAL BEST BRANDS ASSETS
10 TWO POWERFUL, INTERCONNECTED BRANDS
STRONG, ACTIVE CUSTOMER BASE 35M 13M Active customers Loyalty members
CUSTOMERS 1.9B 133M Visits Purchase trips
UNMATCHED DIGITAL + PHYSICAL 50%+ 356 Digital penetration Locations
Customers, visits, and trips as of 2019 11 Location count includes 100 Nordstrom Stores, 249 Rack Stores, and 7 Nordstrom Locals; as of January 2021 DRIVINGINTEGRATED ENGAGEMENT DIGITAL AND THROUGH PHYSICAL SERVICES ASSETS
50%+
DIGITAL PHYSICAL 30% 24% Nordstrom.com Ship to Store 100 Nordstrom Stores Nordstrom.ca Ship from Store 7 Nordstrom Locals Nordstromrack.com Curbside Pickup 249 Nordstrom Racks Trunkclub.com Styling FY16 FY18 FY20E
JWN DIGITAL PENETRATION
12 Location count as of January 2021 SERVICE IS IN OUR DNA
SERVING CUSTOMERS ON THEIR OWN TERMS – WHEREVER, WHENEVER, HOWEVER
3x Customer lifetime value 5x Increase in spend per customer
VIRTUAL STYLING STORE PICKUP ALTERATIONS
13 As of 2019 BEST PARTNER FOR THE BEST BRANDS
EMERGING & SCALED PREFERRED DESIGNER NORDSTROM MADE DIGITAL BRANDS
14 A PIVOT TO MARKET SHARE CAPTURE AND PROFITABLE GROWTH
CLOSER TO YOU UNLOCKING THE FULL POTENTIAL OF OUR DIGITAL-FIRST PLATFORM
WIN IN OUR MOST BROADEN THE REACH OF INCREASE DIGITAL IMPORTANT MARKETS NORDSTROM RACK VELOCITY
LOW SINGLE-DIGIT EBIT MARGIN LOW TEENS $1B+ OPERATING REVENUE GROWTH ABOVE 6% ROIC CASH FLOW From 2019 Levels
15 See the Company's 2019 10-K for a reconciliation of the of non-GAAP measures from the most directly comparable GAAP financial measure MARKET STRATEGY IS OUR FUNDAMENTAL BUSINESS MODEL
16 STRONG RESULTS IN TOP 10 MARKETS
SEATTLE 4x Average selection BOSTON for Next-Day TORONTO NEW YORK SAN FRANCISCO CHICAGO PHILADELPHIA -1 Day Faster shipping WASHINGTON DC LOS ANGELES 20% Increased customer DALLAS acquisition ~200bps Sales growth
17 UNLOCKING THE FULL POTENTIAL OF OUR DIGITAL-FIRST PLATFORM
DEEPER INSIGHTS
NEW CUSTOMERS
CUSTOMERS MORE CHOICES
BETTER SERVICE
18 DEEPER INSIGHTS
CUSTOMER
INVENTORY PRODUCT
19 NEW CUSTOMERS
NORDSTROM RACK NORDSTROM
SHOPPING BRANDS PRICE SERVICE & BRANDS STYLE PRIORITY Bold and trendy Traditional and Timeless and Trendy and unique practical sophisticated Aspire to afford Style and quality designer Smart, savvy spender Desire luxury brands over brand and experiences
JWN SHARE OF SHOPPERS 26% 13% 30% 20%
20 MORE CHOICES
~300K 1.5M+ CURRENT FUTURE
Digital-First Assortment Expanded Partnership and Inventory Planning Models
21 BETTER SERVICE = CONVENIENCE + CONNECTION
KNOWS ME
ACCOUNTABLE
TRANSPARENT
KNOWLEDGEABLE RESPONSIVE PURCHASE / DELIVERY AVAILABILITY
PRODUCT
GOOD SERVICE AMAZING
CONVENIENCE IS THE GREAT SERVICE IS GOING ABOVE AND BEYOND, FOUNDATION OF GOOD SERVICE TO CONNECT WITH THEM, ON THEIR TERMS
22 EXTENDING OUR STRATEGY ACROSS MARKETS
TOP 5 TOP 10 TOP 20 2019 2020 2021 35% of sales 50%+ of sales 75% of sales
36 Nordstrom stores 56 Nordstrom stores 76 Nordstrom stores
5 Nordstrom Locals 7 Nordstrom Locals 7+ Nordstrom Locals
121 Rack stores 167 Rack stores
23 A PIVOT TO MARKET SHARE CAPTURE AND PROFITABLE GROWTH
CLOSER TO YOU UNLOCKING THE FULL POTENTIAL OF OUR DIGITAL-FIRST PLATFORM Deeper Insights | More Choices | New Customers | Better Service
WIN IN OUR MOST BROADEN THE REACH OF INCREASE DIGITAL IMPORTANT MARKETS NORDSTROM RACK VELOCITY
LOW SINGLE-DIGIT EBIT MARGIN LOW TEENS $1B+ OPERATING REVENUE GROWTH ABOVE 6% ROIC CASH FLOW From 2019 Levels
24 See the Company's 2019 10-K for a reconciliation of non-GAAP measures from the most directly comparable GAAP financial measure TECHNOLOGY EDMOND MESROBIAN, CHIEF TECHNOLOGY OFFICER OUR INTERCONNECTED, DIGITAL-FIRST PLATFORM
MERCHANDISING FULFILLMENT PLATFORM PLATFORM
EXPERIENCE PRODUCTIVITY PLATFORM PLATFORM
NORDSTROM ANALYTICAL PLATFORM 26 PREDICTIVE ANALYTICS POWER OUR DIGITAL-FIRST ENTERPRISE
PRESENT FUTURE
Reporting helps JWN Connected platforms improve quality & coverage powered by thousands of NORDSTROM near real-time predictions ANALYTICAL and insights Early signal detection that PLATFORM creates flexibility Drives smarter: Engagement
Availability
Assortment
27 LEVERAGING INSIGHTS AND PREDICTIONS TO GET CLOSER TO YOU
More Customer More Engagement Orders
PRODUCT Better Better NEW SERVICE Inventory Selection & CUSTOMERS Placement SELECTION
More Sales & Intelligence More Service & Convenience
MORE CHOICES BETTER SERVICE
Greatera Economic Opportunity
28 AN EXAMPLE OF LEVERAGING INSIGHTS TO ENHANCE PRODUCT DISCOVERY TODAY
LOOKS STYLE BOARDS RECOMMENDATIONS Combine machine learning Allow customers to receive Recommend product to customers algorithms and stylists to create personalized product, and outfit from brands they shop pre-curated outfits for recommendations from their customers salespeople
29 AN EXAMPLE OF REDEFINING PRODUCT DISCOVERY FOR TOMORROW
FASHION CUSTOMER HER RELEVANT PRODUCT MAP BLUEPRINT SEARCH DISCOVERY
EDGY SPORTY EDGY SPORTY STREET STREET
TRENDY ACTIVE TRENDY COOL COOL ACTIVE FASHIONISTA FASHIONISTA BOHO BOHO CASUAL CASUAL ROMANTIC ROMANTIC FORWARD RETRO FORWARD RETRO “Sophisticated flowy WILD WILD PREPPY PREPPY = HIPSTER + + dress for garden HIPSTER SEXY CLASSIC SEXY CLASSIC wedding no lace” CHIC FORMAL MODERN CHIC MODERN FORMAL ELEGANT ELEGANT MINIMALIST MINIMALIST
SIMPLE TRADITIONAL SIMPLE TRADITIONAL
30 UNLOCKING THE POTENTIAL OF OUR DIGITAL-FIRST PLATFORM
CUSTOMER
NORDSTROM ANALYTICAL PLATFORM INVENTORY PRODUCT
DATA CONNECTED NEAR-REALTIME PLANES COOPERATIVE PREDICTIONS AND PLATFORMS INSIGHTS
NORDSTROM ANALYTICAL PLATFORM
31 MERCHANDISING PETE NORDSTROM, PRESIDENT AND CHIEF BRAND OFFICER WINNING WITH THE CUSTOMER THROUGH PRODUCT
BREADTH NEWNESS Range that appeals to our Consistently delivering diverse customers updated offering
DRIVE DISCOVERY
PRICE IN STOCK AND RELEVANCE FOR THE Right price and competitive Right quantities available MODERN CUSTOMER on like items at the right locations
33 TRANSFORMING OUR MERCHANDISING APPROACH
DIGITAL- FIRST FLEXIBLE EXPANDED ASSORTMENT INVENTORY PARTNERSHIP PLANNING FLOW MODELS
34 DIGITAL-FIRST ASSORTMENT PLANNING
NORDSTROM: HOME
STORE-CENTRIC CURRENT FUTURE 3x Increase in customer choices
DIGITAL-FIRST 5x Sales growth
35 FLEXIBLE INVENTORY FLOW
FASTER INCREASED DELIVERY AVAILABILITY IN STORES
REDUCED BETTER SHOPPABILITY SHIPPING COST OF LARGE STORES
INCREASED HIGHER REGULAR PRICE SELECTION SELL-THROUGH
36 EXPANDED PARTNERSHIP MODELS
JWN OWNED DELIVER BROADER ASSORTMENT Private Label + Wholesale WHILE LIMITING RISK
PARTNER OWNED RESPOND QUICKLY TO Drop Ship + Concession EMERGING TRENDS
SHARED OWNERSHIP PROVIDE INCREASED VALUE TO OUR PARTNERS Revenue Share
37 EXPANDED PARTNERSHIP MODELS: BROADER ASSORTMENT
CURRENT FUTURE
JWN CUSTOMER ~5x CHOICES ~300K 1.5M+
Partner or Shared Private Label Private Label 5% 20% 10%
% OF JWN SALES Wholesale Partner or Shared Wholesale 85% 30% 50%
38 EXPANDED PARTNERSHIP MODELS: NORDSTROM MADE
5x Increase in spend per customer
3x Increase in trips per customer
500bps 10% 20% Higher CURRENT SALES FUTURE SALES merchandise margin
39 TRANSFORMING OUR MERCHANDISING APPROACH
DIGITAL- FIRST FLEXIBLE EXPANDED ASSORTMENT INVENTORY PARTNERSHIP PLANNING FLOW MODELS
40 DIGITAL KEN WORZEL, CHIEF OPERATING OFFICER A MULTI-BILLION-DOLLAR DIGITAL POWERHOUSE
STRONG TRACK RECORD OF GROWTH $5.5B 8.4 MILLION APP USERS
$1.5B 100% STORES ACCESSIBLE FOR PICKUP AND RETURNS 2012 2020
LEADING DIGITAL PRESENCE >50% 65% DIGITAL PURCHASES RETURNED TO STORES
~13% 13% Retail 75%+ OF DEMAND WITHIN 2-DAY, JWN 2012 JWN 2020 CLICK-TO-DELIVERY IN TOP MARKETS
42 Source: Census Bureau WINNING WITH THE CUSTOMER THROUGH PERSONALIZED DIGITAL EXPERIENCES
DISCOVERY
PERSONALIZED EXPERIENCES
CONNECTION CONVENIENCE
43 DISCOVERY: OFFER THE BROADEST ASSORTMENT DIGITALLY AND LEVERAGE DATA TO DELIVER PERSONALIZATION AT SCALE
CURRENT FUTURE
Store-First Assortment Digital-First Assortment
Store-Based Planning Digital-Based Planning
Majority JWN-Owned Inventory Mixture of Owned, Partner and Shared Ownership Models ASSORTMENT ~300K Customer Choices 1.5M+ Customer Choices
Nordstrom-Led Experiences Customer Insights-Led Experiences
Product and Brand Recommendations Product, Content and Communication that Entice, Based on Purchase and Browse History Inspire and Anticipate Customer Need CURATION One Shopping Experience for All Personalized Shopping Experience
44 CONVENIENCE: LEVERAGING JWN PLATFORM TO REDUCE CUSTOMER FRICTION AND INCREASE ENGAGEMENT ACROSS JWN
FULL INTEGRATION OF INVENTORY SINGLE TO MULTICHANNEL 5x 7x Customer Increase in customer PICK UP ANYWHERE lifetime value spend RETURN ANYWHERE
SINGLE TO MULTIBRAND 3x 4x TRANSACT SEAMLESSLY Customer Increase in customer ACROSS JWN lifetime value spend
45 CONNECTION: ENHANCING STYLING AND SELLING CAPABILITIES TO MAKE THE DIGITAL EXPERIENCE MORE PERSONAL
Salesperson Personalized In-Store Styling In-Home Styling Looks Videos Trunks Style Boards and Alterations and Alterations
LOW TOUCH MID TOUCH HIGH TOUCH “Inspired by a Stylist” “Influenced by a Stylist” “Led by a Stylist”
46 DELIVERING PERSONALIZED EXPERIENCES ACROSS THE SHOPPING JOURNEY
INGRID IS LOOKING WE UTILIZE WHAT WE TO CREATE A FOR A NEW JACKET KNOW ABOUT HER PERSONALIZED JOURNEY
Show her relevant looks in Instagram feed Instagram Current JWN Store Closet Interactions Highlight sustainably made items in product recs
Recommend she sets up in-store alterations JWN App Styling Reviews Usage Suggest contactless payment
Offer curbside when Alterations Pinterest items are ready
47 UNLOCKING THE POWER OF A SHARED DIGITAL PLATFORM
DELIVER ENHANCED PERSONALIZATION THROUGH A SINGLE VIEW OF THE CUSTOMER
INCREASE CONNECTIVITY ACROSS JWN DIGITAL AND CUSTOMERS PHYSICAL ASSETS
ENHANCE SCALE BY INCREASING ROI OF FUTURE INVESTMENTS
48 NORDSTROM RACK GEEVY THOMAS, PRESIDENT OF NORDSTROM RACK A COMPELLING VALUE PROPOSITION
USE STORE IMAGE (ON RIGHT)
COMPELLING LARGEST OFF-PRICE HIGH-QUALITY SIZEABLE, GROWING PRODUCT OFFERING DIGITAL PRESENCE STORE FOOTPRINT CUSTOMER BASE
~120K customer choices 2.2 million mobile app ~80% of stores in 22 million active downloads in 2019 off-mall locations customers in 2019 80%+ of top 200 brands shared across Nordstrom 6.7 million unique ~70% of stores in 6.6 million customers and Nordstrom Rack visits annually top 20 markets acquired in 2019
50 STRONG TRACK RECORD OF GROWTH AND DIGITAL LEADERSHIP
2014 2019
JWN CUSTOMER ACQUISITION ~45% ~60%
RACK STORE COUNT 168 248
TOTAL SALES $3.6B $5.2B
DIGITAL SALES $360M $1.3B
JWN TOTAL SALES CONTRIBUTION 27% 34%
51 Financials inclusive of Rack U.S. and NRHL; store count includes Rack U.S. and Canada Rack BROADENING OUR REACH
EXPAND ENHANCE DELIVER OUR OUR A SEAMLESS OFFERING CAPABILITIES EXPERIENCE
52 EXPAND OUR OFFERING: CORE AND GROWTH SEGMENTS
NORDSTROM RACK NORDSTROM
SHOPPING BRANDS PRICE SERVICE & BRANDS STYLE PRIORITY Bold and trendy Traditional and Timeless and Trendy and unique practical sophisticated Aspire to afford Style and quality designer Smart, savvy spender Desire luxury brands over brand and experiences
JWN SHARE OF SHOPPERS 26% 13% 30% 20%
53 EXPAND OUR OFFERING: REPOSITIONED STORE FLEET
NEW YORK DMA EXAMPLE TOP-LINE OPPORTUNITY
Customer
Traffic
Position each store to focus on the Units/transactions biggest customer segment opportunity.
Brand Hybrid Price
54 EXPAND OUR OFFERING: HIGH-GROWTH CATEGORIES
HOME, BEAUTY, KIDS and ACTIVE SALES TOP-LINE OPPORTUNITY
Share of Wallet
Traffic
Trips/Customer 20% $=2.5x 33%
OF TOTAL OF TOTAL 2019 SALES FUTURE SALES
55 ENHANCE OUR CAPABILITIES: MIGRATION TO JWN PLATFORM
TOP-LINE OPPORTUNITY
Transaction Volume EXPANDED SELECTION AVAILABLE ONLINE Transaction Speed
DELIVER PERSONALIZED Conversion EXPERIENCE Sales
SHARPEN MERCHANDISING OFFER
56 ENHANCE OUR CAPABILITIES: PRODUCT AVAILABILITY
TOP-LINE OPPORTUNITY
STORE DIGITAL RACK Trips INVENTORY + INVENTORY = INVENTORY Conversion
Average Transaction Size ENHANCE CUSTOMER EXPERIENCE THROUGH SHARED DIGITAL AND PHYSICAL INVENTORY 20% ~1 day Increase in Improvement in order selection fulfillment speed
57 DELIVER A SEAMLESS EXPERIENCE: MARKET STRATEGY
TOP-LINE OPPORTUNITY
Customers 2020 INITIATIVES Store Fulfill Trips Ship-to-store to all JWN stores Return to any JWN store SEAMLESS Transaction Size CUSTOMER EXPERIENCE 2021-2022 INITIATIVES Expanded order pickup capabilities (expected 2021) Shared in-market inventory (expected 2022)
58 BROADENING OUR REACH
EXPAND ENHANCE DELIVER OUR OUR A SEAMLESS OFFERING CAPABILITIES EXPERIENCE
59 ESG PRIORITIES & FINANCIAL OVERVIEW ANNE BRAMMAN, CHIEF FINANCIAL OFFICER ESG PRIORITIES MAINTAINING THE HIGHEST GOVERNANCE STANDARDS
BOARD SHAREHOLDER COMPENSATION STRATEGY RIGHTS AND RISK
62 LEAVE IT BETTER THAN WE FOUND IT
WE ARE STRIVING TO MEET OR EXCEED OUR STAKEHOLDERS’ EXPECTATIONS AND DELIVER ON OUR CORE INTENTION: LEAVE IT BETTER THAN WE FOUND IT
CORPORATE SOCIAL RESPONSIBILITY DIVERSITY AND INCLUSION
ENVIRONMENTAL SUSTAINABILITY Talent Culture
HUMAN CORPORATE RIGHTS PHILANTHOPY
Marketplace Leadership
63 FINANCIAL OVERVIEW DRIVE FINANCIAL OUTCOMES
LOW SINGLE-DIGIT EBIT MARGIN LOW TEENS $1B+ OPERATING REVENUE GROWTH ABOVE 6% ROIC CASH FLOW From 2019 Levels
Win in our most Grow operating income Improve working capital Reinvest in the business important markets faster than revenue efficiency Pay down debt Broaden the reach of Maintain SG&A discipline Reduce asset intensity Nordstrom Rack Return excess cash to Increase ROIC shareholders Increase digital velocity
Revenue includes net sales and credit card revenues EBIT margin based on percent of net sales 65 See the Company's 2019 10-K for a reconciliation of non-GAAP measures from the most directly comparable GAAP financial measure WHAT HAS CHANGED
PAST FUTURE
Four-Box Strategy A Fully Integrated Business
Market Strategy in One Market Market Strategy as JWN Business Model
Technology as Enabler Technology as Competitive Advantage
Store-First Merchandising Approach Digital-First Merchandising Approach
Siloed Operating Model Connected and Flexible Operating Model
High Fixed Cost Structure Re-Based Cost Structure
Fulfillment-Oriented Supply Chain Customer Experience-Oriented Supply Chain
Owned Inventory Expanded Partnership Models
Generational Investments Supply Chain and Technology Investments
66 ACCELERATE REVENUE GROWTH
$2B-$3B ~$16B-$18B
$3B-$4B Market Strategy
~$10.7B Rack Digital
2020E COVID Recovery Growth Drivers Future
WE EXPECT TO RETURN TO PRE-COVID SALES LEVELS, FOLLOWED BY SUSTAINABLE LOW SINGLE-DIGIT PERCENTAGE GROWTH THEREAFTER
67 EXPAND PROFIT MARGIN
EBIT MARGIN ABOVE 6% 2019 BASELINE SCENARIO 1 SCENARIO 2
Grow operating income REVENUE $15.5B $14.5B $15.5B faster than revenue
Maintain SG&A discipline EBIT MARGIN 5.1% 5%+ 6%+
Revenue includes net sales and credit card revenues 68 EBIT margin based on percent of net sales MAINTAIN SG&A DISCIPLINE
WORKING $ in Millions EXPENSE CAPITAL & CAPEX TOTAL CASH
PLANNED SAVINGS $200 - 250 $200 - 250
COVID-19 RESPONSE1 ~$170 ~$330 $500
ANNUAL TARGET $370 - 420 ~$330 $700 - 750
1 Net of COVID-19 related cash charges 69 See the Company's 2019 10-K for a reconciliation of non-GAAP measures from the most directly comparable GAAP financial measure IMPROVE RETURNS
2019 BASELINE SCENARIO 1 SCENARIO 2 Revenue REVENUE $15.5B $14.5B $15.5B EBIT Margin EBIT MARGIN 5.1% 5%+ 6%+
OPERATING CASH Working Capital $1.2B ~$1B $1B+ FLOW Capex Low ROIC 11% Low teens double-digit ROIC
Revenue includes net sales and credit card revenues EBIT margin based on percent of net sales 70 See the Company's 2019 10-K for a reconciliation of non-GAAP measures from the most directly comparable GAAP financial measure GENERATE CASH
Capex Intensity REINVEST IN THE BUSINESS of 3-4%
Steady Reduction PAY DOWN DEBT in Leverage Ratio
RETURN EXCESS CASH Be in Position to TO SHAREHOLDER Return Cash in 2021
71 REAFFIRMING Q4 EXPECTATIONS
Q4 SALES DECREASE IN LOW-20S PERCENT
POSITIVE EBIT
POSITIVE OPERATING CASH FLOW
EBIT MARGIN DELEVERAGE OF ~500 BPS Y/Y
72 EBIT margin based on percent of net sales 2021 EXPECTATIONS
25%+ REVENUE GROWTH
DIGITAL ~50% OF SALES
POSITIVE EBIT
LEVERAGE RATIO ~3X BY YEAR-END
Revenue includes net sales and credit card revenues 73 EBIT margin based on percent of net sales A PIVOT TO MARKET SHARE CAPTURE AND PROFITABLE GROWTH
CLOSER TO YOU UNLOCKING THE FULL POTENTIAL OF OUR DIGITAL-FIRST PLATFORM Deeper Insights | More Choices | New Customers | Better Service
WIN IN OUR MOST BROADEN THE REACH OF INCREASE DIGITAL IMPORTANT MARKETS NORDSTROM RACK VELOCITY
LOW SINGLE-DIGIT EBIT MARGIN LOW TEENS $1B+ OPERATING REVENUE GROWTH ABOVE 6% ROIC CASH FLOW From 2019 Levels
74 See the Company's 2019 10-K for a reconciliation of non-GAAP measures from the most directly comparable GAAP financial measure THANK YOU APPENDIX: MAINTAINING THE HIGHEST GOVERNANCE STANDARDS
BOARD SHAREHOLDER RIGHTS COMPENSATION STRATEGY AND RISK
• 9 of 11 current directors are • Annual election of all directors • Pay-for-performance philosophy • Company strategy oversight by guides executive compensation Board independent, with majority of • Majority vote standard for independent directors gender director elections • Stock ownership policy for • Risk oversight by Board and diverse directors and executive officers committees aligned with company • Each common share is entitled to • strategy Independent non-executive one vote • Executive compensation clawback Chairman policy • Regular risk management reports • Shareholders of 10%+ entitled to • to Board and committees Regular executive sessions of call special meeting • Firm hedging and pledging policies independent directors for executives • Compensation program designed • Annual say-on-pay advisory vote • to reduce undue risk Committees comprised only of • Independent compensation • Regular shareholder outreach and independent directors consultant engaged by • Annual strategy planning meeting • engagement Annual evaluations of Board Compensation Committee • Board oversight of Chief • Open communication with committees and directors Executive Officer and directors • Authority to hire independent management succession planning consultants and experts • A combined 99% director attendance across 6 Board meetings in FY 2020 • Term limits and mandatory retirement support Board refreshment • All Audit & Finance Committee members are SEC “Audit Committee Financial Experts”
76 APPENDIX: DIVERSE BOARD WITH RIGHT MIX OF SKILLS
KEY QUALIFICATIONS, SKILLS AND ATTRIBUTES ALIGNED WITH CORPORATE STRATEGY
SKILLS & EXPERIENCES BOARD COMPOSITION
100% Global / International Commerce 11
100% Senior Executive Management 11 5.6 0 - 5 Years 100% Customer-Focused Business 11 82% Years Independent Average 5 - 10 Years 100% Market / Customer Experience 11 Tenure >10 Years Strategic Planning 11 100% Board Committee Business Transformation 10 91% Audit
82% Online Scale / Growth 9 60%
73% Retail Industry 8 Comp. 45% 40 - 50 64% Financial Literacy 7 50% 56 Gender / Average 50 - 60 Ethnic CGN 64% Risk Management 7 Age 60+ Diversity 50% 64% Technology 7 Tech. 28% Supply Chain 3 75%
77