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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)


☑			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 1, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to___________

Commission file number 001-15059

Nordstrom, Inc.

(Exact name of registrant as specified in its charter)


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)

Registrant’s telephone number, including area code (206) 628-2111

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, without par value	JWN	New York Stock Exchange
Common stock purchase rights		New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


☑	Large accelerated filer	☐	Accelerated filer
☐	Non-accelerated filer	☐	Smaller reporting company
		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

Nordstrom, Inc. and subsidiaries 1

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If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

As of August 2, 2024, the aggregate market value of the Registrant’s voting and non-voting stock held by non-affiliates of the Registrant was approximately $2.7 billion using the closing sales price on that day of $21.13. On March 14, 2025, 166,898,470 shares of common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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TABLE OF CONTENTS
		Page
Forward-Looking Statements		4
Definitions of Commonly Used Terms		7

PART I
Item 1.	Business.	8
Item 1A.	Risk Factors.	12
Item 1B.	Unresolved Staff Comments.	21
Item 1C.	Cybersecurity.	22
Item 2.	Properties.	23
Item 3.	Legal Proceedings.	25
Item 4.	Mine Safety Disclosures.	25

PART II
Item 5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.	26
Item 6.	[Reserved]	28
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	28
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	42
Item 8.	Financial Statements and Supplementary Data.	43
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	73
Item 9A.	Controls and Procedures.	73
Item 9B.	Other Information.	75
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	75

PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	75
Item 11.	Executive Compensation.	79
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.	105
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	108
Item 14.	Principal Accountant Fees and Services.	109

PART IV
Item 15.	Exhibit and Financial Statement Schedules.	110

Exhibit Index		111
Signatures		114
Consent of Independent Registered Public Accounting Firm		115

Nordstrom, Inc. and subsidiaries 3

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements regarding matters that are not historical facts and are based on our management’s beliefs and assumptions and on information currently available to our management. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. In some cases, forward-looking statements can be identified by terms such as “may,” “will,” “should,” “could,” “goal,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” “pursue,” “going forward” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, trends in our operations and the following:

Strategic and Operational

•successful execution of our customer strategy to provide customers superior service, products and experiences, online, through our fulfillment capabilities and in stores,

•timely and effective implementation and execution of our evolving business model, including:

◦winning at our market strategy by providing a differentiated and seamless experience, which consists of the integration of our digital and physical assets, development of supply chain capabilities and timely delivery of products,

◦broadening the reach of Nordstrom Rack, including delivering great brands at great prices and leveraging our digital and physical assets,

◦enhancing our platforms and processes to deliver core capabilities to drive customer, employee and partner experiences both digitally and in stores,

•our ability to effectively manage our merchandise strategy, including our ability to offer compelling assortments and optimize our inventory to ensure we have the right product mix and quantity in each of our channels and locations, allowing us to get closer to our customers,

•our ability to effectively allocate and scale our marketing strategies and resources, as well as realize the expected benefits of Nordstrom Media Network, The Nordy Club, advertising and promotional campaigns,

•our ability to respond to the evolving retail environment, including new fashion trends, environmental considerations and our customers’ changing expectations of service and experience in stores and online, and our development and outcome of new market strategies and customer offerings,

•our ability to mitigate the effects of any disruptions in the global supply chain, including factory closures, transportation challenges or stoppages of certain imports, and rising prices of raw materials and freight expenses,

•our ability to control costs through effective inventory management and supply chain processes and systems,

•the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement or the failure to satisfy the conditions to the completion of the Merger, including the failure to obtain the Requisite Shareholder Approvals or the occurrence of a Below Investment Grade Rating Event (as defined in the Merger Agreement),

•the potential impacts of the Merger Agreement and the pendency of the Merger on our business, results of operations, financial condition and stock price, including the potential impact on our relationships with customers, vendors, suppliers, landlords, service providers, other business partners, and the diversion of management’s attention from ongoing business operations,

•while the Merger Agreement is in effect, we are subject to restrictions on our business activities,

•litigation related to the Merger could prevent or delay completion of the Merger or otherwise negatively affect our business and operations,

•the Merger may not be completed in the time frame expected by the parties or at all, and significant delay or the failure to complete the Merger could adversely affect our business,

•the Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events, and may result in unanticipated difficulties or expenditures relating to the proposed transaction,

•the Merger might not be completed if the Parent Parties fail to obtain the financing to complete the proposed transaction or if we do not have a sufficient amount of cash on hand to complete the proposed transaction,

•the Merger may adversely affect our ability to retain or recruit key employees,

•the Merger may adversely affect our ability to compete effectively in our industry and markets, and investor and consumer confidence in our business could decline,

•our ability to acquire, develop and retain qualified and diverse talent by providing appropriate training, compelling work environments and competitive compensation and benefits, especially in areas with increased market compensation, all in the context of any labor shortage and competition for talent,

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•our ability to realize expected benefits, anticipate and respond to potential risks and appropriately manage costs associated with our credit card revenue sharing program and to manage risks associated with our transition of the servicing functions under that program,

•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 or if our strategic direction changes,

Data, Cybersecurity and Information Technology

•successful execution of our information technology strategy, including engagement with third-party service providers,

•the impact of any system 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 that results in the interruption of business processes or causes financial loss, and our compliance with information security and privacy laws and regulations, as well as third-party contractual obligations in the event of such an incident,

Reputation and Relationships

•our ability to maintain our reputation and relationships with our customers, employees, vendors, landlords and third-party partners,

•our ability to act responsibly and with transparency with respect to our environmental, social and governance practices and initiatives, meet any communicated targets, goals or milestones and adapt to evolving reporting requirements and stakeholder sentiment,

•our ability to market our brand and distribute our products through a variety of third-party publisher or platform channels, as well as access mobile operating system and website identifiers for personalized delivery of targeted advertising,

•the impact of a concentration of stock ownership on our shareholders’ ability to influence corporate matters,

Investment and Capital

•efficient and proper allocation of our capital resources,

•our ability to properly balance our investments in technology, Supply Chain Network facilities and existing and new store locations, including the expansion of our market strategy,

•our ability to maintain or expand our presence, including timely completion of construction associated with Supply Chain Network facilities and new, relocated and remodeled stores, as well as any potential store closures, all of which may be impacted by third parties, consumer demand and other natural or man-made disruptions, and government responses to any such disruptions,

•market fluctuations, increases in operating costs, exit costs and overall liabilities and losses associated with owning and leasing real estate,

•compliance with debt and operating covenants, availability and cost of credit, changes in our credit ratings and changes in interest rates,

•the actual timing, price, manner and amounts of future share repurchases, dividend payments or share issuances, if any, subject to the discretion of our Board of Directors, contractual commitments, market and economic conditions and applicable SEC rules,

Economic and External

•the length and severity of epidemics or pandemics, or other catastrophic events, and the related impact on customer behavior, store and online operations and supply chain functions, as well as our future consolidated financial position, results of operations and cash flows,

•the impact of the seasonal nature of our business and cyclical customer spending,

•the impact of economic and market conditions, including inflation and measures to control inflation, and resulting changes to customer purchasing behavior, unemployment and bankruptcy rates, and the resulting impact on consumer spending and credit patterns,

•the impact of economic, environmental or political conditions,

•the impact of changing consumer traffic patterns at shopping centers and malls,

•financial insecurity or potential insolvency experienced by our vendors, suppliers, developers, landlords, competitors or customers,

•weather conditions, natural disasters, climate change, national security concerns, global conflicts, civil unrest, other market and supply chain disruptions, the effects of tariffs, or the prospects of such events, and the resulting impact any of these events may have on business operations, consumer spending patterns or information technology systems and communications,

Legal and Regulatory

•our, and the third parties’ we do business with, compliance with applicable domestic and international laws, regulations and ethical standards, minimum wage, employment and tax, information security and privacy, consumer credit and environmental regulations and the outcome of any claims, litigation and regulatory investigations and resolution of such matters,

•the impact of changes in policy or laws relating to consumer credit, the current regulatory environment, the financial system and tax reforms,

•the impact of accounting rule and regulation changes, or our interpretation of those changes, or changes in underlying assumptions, estimates or judgments.

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These and other factors, including those factors we discuss in Part I, Item 1A. Risk Factors, could affect our financial results and cause our actual results to differ materially from any forward-looking information we may provide. Given these risks, uncertainties and other factors, undue reliance should not be placed on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing, and these estimates and assumptions may prove to be incorrect. This Annual Report on Form 10-K should be read completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify our forward-looking statements by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

All references to “we,” “us,” “our,” or the “Company” mean Nordstrom, Inc. and its subsidiaries. On March 2, 2023, Nordstrom Canada commenced a wind-down of its business operations (see Note 2: Canada Wind-down in Item 8) and as of this date, Nordstrom Canada was deconsolidated from Nordstrom, Inc.’s financial statements. Nordstrom Canada results prior to March 2, 2023 are included in the Company’s Consolidated Financial Statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the filing date of this Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

The content of any websites and materials named, hyperlinked or otherwise referenced in this Annual Report on Form 10-K are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to such websites and materials are intended to be inactive textual references only. The information on these websites is not part of this Annual Report on Form 10-K.

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DEFINITIONS OF COMMONLY USED TERMS


Term			Definition
2024 Annual Report			Annual Report on Form 10-K filed on March 21, 2025
Adjusted EPS			Adjusted earnings (loss) per diluted share (a non-GAAP financial measure)
Adjusted ROIC			Adjusted return on invested capital (a non-GAAP financial measure)

AFC			Audit and Finance Committee of the Board of Directors
ASU			Accounting Standards Update

CCAA			Companies’ Creditors Arrangement Act
CEO			Chief Executive Officer
CGNC			Corporate Governance and Nominating Committee of the Board of Directors
CPCC			Compensation, People and Culture Committee of the Board of Directors
CTIO			Chief Technology and Information Officer
Digital sales			Sales conducted through a digital platform such as our websites or mobile apps. Digital sales may be self-guided by the customer, as in a traditional online order, or facilitated by a salesperson using a virtual styling or selling tool. Digital sales may be delivered to the customer or picked up in our Nordstrom stores, Nordstrom Rack stores or Nordstrom Local service hubs. Digital sales also includes a reserve for estimated returns.
EBIT			Earnings (loss) before interest and income taxes
EBIT margin			Earnings (loss) before interest and income taxes as a percent of net sales
EBITDA			Earnings (loss) before interest, income taxes, depreciation and amortization
EBITDAR			Earnings (loss) before interest, income taxes, depreciation, amortization and rent, as defined by our Revolver covenant
EIP			2019 Equity Incentive Plan
EMBP			Executive Management Bonus Plan
EPS			Earnings (loss) per share
ESPP			Employee Stock Purchase Plan
Exchange Act			Securities Exchange Act of 1934, as amended
Family Group			Certain members of the Nordstrom family including Erik Nordstrom, Peter Nordstrom, James Nordstrom and other members of the Nordstrom family, and related trusts and investment vehicles
FASB			Financial Accounting Standards Board
Fiscal year 2025			52 fiscal weeks ending January 31, 2026
Fiscal year 2024			52 fiscal weeks ending February 1, 2025
Fiscal year 2023			53 fiscal weeks ending February 3, 2024
Fiscal year 2022			52 fiscal weeks ending January 28, 2023


GAAP			U.S. generally accepted accounting principles

GMV			Gross merchandise value
Gross profit			Net sales less cost of sales and related buying and occupancy costs
HSR Act			Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
IRC			Internal Revenue Code
Leverage Ratio			The sum of our funded debt and operating lease liabilities divided by the preceding twelve months of Adjusted EBITDAR as defined by our Revolver covenant


Term			Definition
Liverpool			El Puerto de Liverpool, S.A.B. de C.V.
LTI			Long-Term Incentives
Merger			The Company merging with and into Navy Acquisition Co., Inc., with the Company continuing as the surviving corporation in the merger and becoming a wholly owned subsidiary of Norse Holdings, Inc.
Merger Agreement			The Agreement and Plan of Merger the Company entered into with Norse Holdings, Inc. and Navy Acquisition Co., Inc. on December 22, 2024
MD&A			Management’s Discussion and Analysis of Financial Condition and Results of Operations
NAV			Net asset value
NDCP			Nordstrom Deferred Compensation Plan
NEO			Named Executive Officer
NMN			Nordstrom Media Network, where we use our first-party data and marketing infrastructure to drive cooperative marketing with vendors across both offsite and onsite marketing platforms
Nordstrom			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 Canada			Nordstrom Canada Retail, Inc., Nordstrom Canada Holdings, LLC and Nordstrom Canada Holdings II, LLC
Nordstrom Local			Nordstrom Local service hubs, which offer order pickups, returns, alterations and other services
Nordstrom Rack			NordstromRack.com, Nordstrom Rack U.S. stores and Last Chance clearance stores
The Nordy Club			Our customer loyalty program
NYSE			New York Stock Exchange
Operating Lease Cost			Fixed rent expense, including fixed common area maintenance expense, net of developer reimbursement amortization
Parent Parties			The Family Group and Liverpool
PCAOB			Public Company Accounting Oversight Board (United States)
Property incentives			Developer and vendor reimbursements
PSU			Performance share unit
Revolver			Senior revolving credit facility
Rights Plan			Our limited-duration Shareholder Rights Agreement adopted by the Board of Directors
ROU asset			Operating lease right-of-use asset
RSU			Restricted stock unit
SEC			Securities and Exchange Commission
SERP			Unfunded defined benefit Supplemental Executive Retirement Plan
SG&A			Selling, general and administrative expenses
Supply Chain Network			Fulfillment centers that primarily process and ship orders to our customers, distribution centers that primarily process and ship merchandise to our stores and other facilities and omni-channel centers that both fulfill customer orders and ship merchandise to our stores
TD			Toronto-Dominion Bank, N.A.

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PART I

Item 1. Business.

DESCRIPTION OF BUSINESS

Overview

The Company was founded in 1901 as a retail shoe business in Seattle, Washington, under the guiding principle that success would come by offering customers the very best service, selection, quality and value. We aspire to be the best fashion retailer in a digitally connected world by leveraging the strength of the Nordstrom and Nordstrom Rack banners, our digital and physical properties and our interconnected business model. We offer 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. No matter how customers choose to shop, we are committed to delivering superior service, products and experiences — including alterations, order pickup, dining and styling — to make shopping fun, personalized and convenient. We have one reportable segment, which aggregates our two operating segments, Nordstrom and Nordstrom Rack.

Nordstrom is a leading destination for a breadth of products across brands, styles and prices, complemented by unmatched services and experiences. As of February 1, 2025, Nordstrom includes the following physical and digital properties:

•92 Nordstrom stores

•Nordstrom.com website and mobile application

•six Nordstrom Locals

Beginning in April 2024, Nordstrom launched our digital Marketplace, an expansion of our online assortment using unowned inventory models, which allows us to offer greater selection of products, brands and sizes. On March 2, 2023, Nordstrom Canada commenced a wind-down of its business operations. See Note 2: Canada Wind-down in Item 8 for more information.

Nordstrom Rack is a premier off-price destination with an industry-leading digital presence, offering great brands at great prices. Nordstrom Rack purchases merchandise from many of the same brands carried at Nordstrom and also serves as an outlet for clearance merchandise from the Nordstrom banner. As of February 1, 2025, Nordstrom Rack includes the following physical and digital properties:

•277 Nordstrom Rack stores

•NordstromRack.com website and mobile application

•two Last Chance clearance stores

We continue to expand Nordstrom Rack’s physical footprint — we opened 23 new Nordstrom Rack stores across the U.S. in 2024 and expect to open a similar number of stores in 2025. Nordstrom Rack stores serve as our primary source of new customers, who often migrate to the Nordstrom banner over time.

We believe one of our key advantages lies in our ability to leverage an integrated network of physical and digital assets across both Nordstrom and Nordstrom Rack banners. This creates flexibility and convenience for our customers, no matter how they choose to shop — online or in stores. In 2024, we launched store fulfillment of Rack digital orders and the ability to buy online and pick up in stores in over 100 Nordstrom Rack stores. We are well positioned to support our customers with a scalable platform that has been built to support continued growth.

Our omni-channel platform positions us closer to the customer and allows us to drive customer engagement through better service and greater access to product. In addition, our fleet of stores helps us engage with customers by offering unique events and services such as personal styling, order pickup, returns and alterations at convenient locations. Our interconnected model is proving that it works — the average customer who shops across both banners, in both stores and online, spends over twelve times more than a customer shopping a single channel or banner.

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Proposed Merger

In April 2024, we announced that our Board of Directors had established a special committee of independent and disinterested directors (the “Special Committee”) in response to interest expressed by Erik B. Nordstrom, our Chief Executive Officer, and Peter E. Nordstrom, our President and Chief Brand Officer, in pursuing a potential transaction in which Nordstrom, Inc. would become a private company in conjunction with the Board’s exploration of possible avenues to enhance shareholder value. On September 4, 2024, the Special Committee confirmed receipt of a proposal from Erik and Peter Nordstrom, certain other members of the Nordstrom family and Liverpool to acquire all of the outstanding shares of the Company, other than shares held by them. On December 22, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Norse Holdings, Inc., a Delaware corporation (“Parent”), and Navy Acquisition Co. Inc., a Washington corporation and a direct, wholly-owned subsidiary of Parent (“Acquisition Sub”). The Merger Agreement provides that, on the terms and subject to the conditions of the Merger Agreement, Acquisition Sub will merge with and into Nordstrom, Inc., with Nordstrom, Inc. continuing as the surviving corporation and becoming a wholly-owned subsidiary of Parent. This transaction is expected to close in the first half of 2025, subject to certain approvals and conditions, including, among others, approval of the Merger Agreement by our shareholders. Under the terms of the Merger Agreement, upon the closing of the transaction, our shareholders will receive $24.25 in cash for each share of common stock they hold on the transaction closing date, without interest and less any required tax withholdings. In addition, prior to and contingent upon the closing, Nordstrom, Inc. may declare a special dividend of up to $0.25 per share (based on the amount of available cash on hand of Nordstrom, Inc. and its subsidiaries). Upon completion of the Merger, our shares of common stock will be delisted on the NYSE, and Nordstrom, Inc. will become a private company.

For a summary of the transaction, please refer to our Form 8-K filed with the SEC on December 23, 2024.

Products

In order to offer merchandise that our customers want, we purchase from a wide variety of high-quality domestic and foreign suppliers. Additionally, we utilize unowned inventory models that go beyond traditional wholesale arrangements and provide a broader and deeper assortment across our categories. We also have arrangements with agents and contract manufacturers to produce our private-brand merchandise.

Nordstrom Rack invests in pack and hold inventory, which involves the strategic purchase of merchandise from some of our top brands in advance of the upcoming selling seasons or to minimize inventory gaps from supply chain disruptions. This allows us to buy larger quantities of relevant items when available, then hold a portion to deploy in periods with high demand, tight supply, new store openings or system constraints. This inventory is typically held for six months on average.

Return Policy

We have a fair and reasonable approach to returns, handling them on a case-by-case basis with the ultimate objective of customer satisfaction. Almost all merchandise can be returned by mail or at any store location. Our goal is to take care of our customers, which includes making returns and exchanges easy, whether in stores or online. At our Nordstrom banner, where we offer free shipping on purchases and returns, we have no formal policy on how long we accept returns for purchases made. Purchases made from Marketplace have specific return windows designated by the vendors. We generally accept returns of apparel, footwear, accessories and home products with the original price tag and sales receipt up to 30 days from the date of purchase at Nordstrom Rack stores and up to 40 days from the date of order at NordstromRack.com.

Loyalty Program

The Nordy Club is our customer loyalty program that incorporates a traditional point and benefit system, 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, which can be redeemed for goods or services across Nordstrom, including Marketplace, and Nordstrom Rack. The Nordy Club benefits vary based on the level of customer spend, and include bonus points days and shopping and fashion events.

We offer customers access to a variety of payment products and services, including a selection of Nordstrom-branded Visa® credit cards, as well as a Nordstrom-branded private-label credit card for Nordstrom purchases. When customers use a Nordstrom-branded credit or debit card, they also participate in The Nordy Club and receive additional benefits, which can vary depending on the level of spend, including early access to the Anniversary Sale, enhanced alterations and stylist benefits and incremental accumulation of points toward Nordstrom Notes.

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Supply Chain Network

We are continually optimizing and enhancing our Supply Chain Network facilities and inventory management systems to support our omni-channel capabilities and provide greater access to merchandise selection and faster delivery. As of February 1, 2025, our Supply Chain Network consists of:

•two fulfillment centers that primarily process and ship orders to our customers

•six distribution centers that primarily process and ship merchandise to our stores and other facilities

•one omni-channel center that both fulfills customer orders and ships merchandise to our stores

In addition, our existing fleet of Nordstrom and Nordstrom Rack stores enables pickup and returns of online orders and facilitates a broader assortment to our digital customers. We select locations and customize inventory allocations to enable merchandise to flow more efficiently and quickly to our customers. Nordstrom online purchases are primarily shipped to our customers from our fulfillment centers but may also be shipped from our Nordstrom stores, distribution centers or omni-channel center. Nordstrom in-store purchases are primarily fulfilled from that store’s inventory, but when inventory is unavailable at that store, it may also be shipped to our customers from our fulfillment centers, distribution centers, omni-channel center or from other Nordstrom stores. Nordstrom Rack online purchases are shipped to our customers from our fulfillment centers, distribution centers or over 100 Nordstrom Rack stores. Both Nordstrom and Nordstrom Rack selectively use vendor dropship to supplement online offerings, which are then shipped directly from the vendor to the end customer, or can be bought online and picked up in store.

In the future, we plan to add Nordstrom Rack inventory and fulfillment to our first large-scale omni-channel center in Riverside, California, which currently supports our Nordstrom customers in the West Coast region. Our smaller local omni-channel hub in Torrance, California ceased operations in the third quarter of 2022 as we scaled our Riverside location to support demand in that region. In 2024, we relocated our San Bernardino, California fulfillment center operations to our West Coast omni-channel center.

EMPLOYEES

We believe that creating a best-in-class customer experience begins with creating an environment that celebrates and supports all our employees. As we strive to attract and retain the best talent in the industry, we are committed to cultivating a workplace culture where our employees feel included, supported and confident bringing their full selves to work.

As of February 1, 2025, we employed approximately 55,000 employees. Approximately 80% of employees support our stores and approximately 10% support our Supply Chain Network. Due to the seasonal nature of our business, the number of temporary employees may vary, and peaks during our Anniversary Sale and holiday seasons. In connection with these peak shopping seasons, our employee count may increase by over 5% to meet the needs of the business.

Inclusion and Belonging

We are committed to fostering a welcoming and inclusive environment for everyone, with an emphasis on creating fair and consistent practices and policies that benefit our people, our customers and our brand partners. Our purpose is simple: to help customers feel good and look their best. We have learned from generations of experience that building diverse teams representing all our customers is the most effective way to fulfill this purpose and grow a successful business.

Our efforts to create a fair, consistent and inclusive workplace for everyone are supported by a dedicated team within human resources that collaborates with business leaders to develop and implement strategies and practices that benefit all employees. In addition, this work is supported by consistent reviews with Erik Nordstrom, our Chief Executive Officer, and Lisa Price, our Chief Human Resources Officer. Progress toward our ambitions is tracked and reviewed regularly by our executive team and Board of Directors.

We have several internal initiatives designed to facilitate belonging and connection among our teams. One way we foster a culture of inclusion is through our employee-led, company-sponsored Employee Resource Groups. In 2024, eight groups served our employees, providing company-wide programming to advance understanding and celebrate voices from across our organization. All employees are welcome to join any Employee Resource Group.

We strive to attract and retain the best talent in the industry, which is why we continue to partner with organizations that invest in improved pathways for fashion, design and retail talent for everyone. Investments in 2024 include the Fashion Scholarship Fund, the National Retail Federation Foundation’s Student Program and Harlem’s Fashion Row and their nonprofit ICON360’s annual HBCU Professor Retreat, which facilitates discussions on talent pipelines, teaching methods and industry opportunities.

To learn more about our efforts and initiatives, please refer to our 2023 Impact Report and other information available on our website at NordstromCares.com. The information contained or referred to on our website is not deemed to be incorporated by reference into this 2024 Annual Report unless otherwise expressly noted.

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Employee Safety and Well-being

The health and safety of our customers, employees and communities are a responsibility we take very seriously. We continue to offer a variety of mental, emotional and physical wellness resources to support our employees, including mental health support and free counseling services through our Employee Assistance Programs.

We seek to listen to and learn from employees across our organization through our open-door policy, conducting regular listening sessions and utilizing our annual Voice of the Employee survey. We regularly review survey results against industry benchmarks to hold ourselves accountable as we continue to improve and evolve our workplace environment.

We remain committed to creating a culture where employees feel they can bring their whole selves to work and achieve their career goals through ongoing growth and development opportunities and fair and transparent performance management and promotion processes.

Total Rewards

To support our goals to retain and attract talented employees, we review our benefits and compensation approach annually.

•Benefits: We offer a range of benefits to all employees upon meeting eligibility requirements, including health care, wellness programs, financial and retirement plans and time away. In addition, we increased our focus on total well-being through a multi-year strategy to bring our people new resources and tools, including mental health support.

•Compensation: We are committed to providing our employees with a great place to grow meaningful careers. We regularly review our pay in the markets in which we operate to ensure we are competitive, and we make updates accordingly throughout the year.

To ensure we offer a rewards package that aligns with the wants and needs of our employees, we routinely ask employees for their feedback in surveys throughout the year. We use the feedback to improve the overall experience of our employees.

CORPORATE SOCIAL RESPONSIBILITY

We believe we have a responsibility to support the communities where we operate and to support the health, safety and human rights of people in our supply chain.

Our Corporate Social Responsibility strategy focuses on environmental sustainability, product sustainability, human rights and corporate philanthropy. In 2024, we made meaningful progress in these areas. Specific highlights include:

•Environmental Sustainability: Through our beauty packaging takeback and recycling program, BEAUTYCYCLE, we aim to take back 100 tons of beauty packaging waste by 2025. As of 2024, we have collected more than 90 tons of beauty packaging, nearing our goal. We are working to reduce our emissions in line with our science-based targets.

•Human Rights: We are committed to creating safe and fair workplaces for the people who make our products and we conduct due diligence to help support human rights and responsible sourcing. Our Human Rights and Responsible Sourcing program is based on international standards, upholding our Partner Code of Conduct and using third-party assessments to engage our suppliers on relevant policies and programs. We strengthened our policies and programs during the year and assess them cyclically.

•Gender Equity: Promoting gender equity is part of our commitment to human rights, creating safe and fair workplaces for all workers in factories where we produce. By the end of 2025, we expect 90% or more of our Nordstrom Made product volume to be produced in facilities that invest in gender equity programs, and we are actively expanding production in factories that made this commitment. We are more than halfway to that goal.

•Charitable Giving: In our 14th year partnering with Shoes That Fit, we raised more than $1 million and donated more than 50,000 pairs of shoes to kids in our local communities. We launched our holiday giving campaign with our partners Big Brothers Big Sisters and Operation Warm, raising funds with our customers to foster mentoring relationships and to donate coats to kids who need them most. In total, our employees donated over $1.6 million to the causes they care about and volunteered over 34,000 hours.

To learn more about our corporate social responsibility efforts, see our 2023 Impact Report and other information available on NordstromCares.com. The information contained or referred to on our website is not deemed to be incorporated by reference into this 2024 Annual Report unless otherwise expressly noted.

TRADEMARKS

Our most notable trademarks include Nordstrom, Nordstrom Rack, Zella, Z by Zella, BP., Open Edit, Chelsea28, Caslon, Halogen, Tucker + Tate, Treasure & Bond, 14th & Union, Leith, Abound, Harper Canyon and Melrose and Market. Each of our trademarks is renewable indefinitely, provided it is still used in commerce at the time of the renewal.

SEASONALITY

Our business, like that of other retailers, is subject to seasonal fluctuations and cyclical trends in consumer spending. Our sales are typically higher in our second quarter, which usually includes most of our Anniversary Sale, and in the fourth quarter due to the holidays. One week of our Anniversary Sale shifted to the second quarter in 2024 from the third quarter in 2023.

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Results for any one quarter are not indicative of the results that may be achieved for a full fiscal year. We plan our merchandise purchases and receipts to coincide with expected sales trends. For instance, our merchandise purchases and receipts increase prior to the Anniversary Sale and in the fall as we prepare for the holiday shopping season (typically from November through December). Consistent with our seasonal fluctuations, our working capital requirements have historically increased during the months leading up to the Anniversary Sale and the holidays as we purchase inventory in anticipation of increased sales.

COMPETITIVE CONDITIONS

We operate in a highly competitive business environment. We regularly compete with other international, national, regional and local retailers, including internet-based businesses, omni-channel department stores, online marketplaces, brands selling direct to consumers online and in-stores, specialty stores, off-price stores and boutiques, which carry similar lines of merchandise. Our specific competitors vary from market to market. We believe the keys to competing in our industry are what will always matter most to our customers: providing compelling product and outstanding service, both digitally and in stores, backed by people who care. This includes serving customers on their terms by providing a seamless digital and physical experience, offering compelling, curated and quality products across a range of price points, and strategically partnering with relevant and limited-distribution brands, all in top markets.

AVAILABLE INFORMATION

We file annual, quarterly and current reports, proxy statements and other documents with the SEC. The SEC maintains a website at SEC.gov that contains reports, proxy and information statements, and other information regarding issuers that file with the SEC.

Our website addresses are Nordstrom.com and NordstromRack.com. Our annual and quarterly reports on Form 10-K and Form 10-Q, current reports on Form 8-K, proxy statements, our executives’ statements of changes in beneficial ownership of securities on Form 4 and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available for free on or through our website as soon as reasonably practicable after we electronically file the report with or furnish it to the SEC. Interested parties may also access webcasts of quarterly earnings conference calls when held and other financial events through our website at investor.nordstrom.com.

We have a long-standing commitment to uphold a high level of ethical standards. In addition, we have adopted Codes of Business Conduct and Ethics for our employees, officers and directors and Corporate Governance Guidelines, which comply with the listing standards of the NYSE and SEC requirements. Our Codes of Business Conduct and Ethics, Corporate Governance Guidelines and Committee Charters for the following Board of Director Committees are available through our website:

•Audit and Finance

•Compensation, People and Culture

•Corporate Governance and Nominating

Any amendments to these documents, or waivers of the requirements they contain, will also be available on our website.

For printed versions of these items or any other inquiries, please contact:


Nordstrom Investor Relations
1617 Sixth Avenue
Seattle, Washington 98101

InvRelations@Nordstrom.com

Item 1A. Risk Factors.

Our business faces many risks. We believe the risks described below outline the items of most concern to us. In evaluating our Company, you should carefully consider the following factors, in addition to the other information in this 2024 Annual Report. Before you buy our common stock or invest in our debt, you should know that making such an investment involves risks including, but not limited to, the risks described below. Any one of the following risks could harm our business, financial condition, results of operations or reputation, each of which could cause our stock price to decline or a default on our debt payments, and you may lose all or a part of your investment. Additional risks, trends and uncertainties not presently known to us or that we currently believe are immaterial may also harm our business, financial condition, results of operations or reputation.

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STRATEGIC AND OPERATIONAL RISKS

If we are unable to successfully execute our customer strategy, grow our customer base or evolve our business model, it could negatively impact our business and future profitability and growth.

We believe our omni-channel market strategy is a powerful enabler for the business which allows us to better serve customers and provide greater access to product by leveraging all of our assets of people, product and place at the market level. As our business evolves, we must continue to scale our market strategy and focus on better serving our customers through winning in our most important markets, broadening the reach of Nordstrom Rack and increasing our digital velocity. Our market strategy focuses on our customers by seeking to provide a differentiated and seamless experience in a digital world by bringing all of our assets together in each market to serve customers when, where and how they want to shop. We aim to balance our assortment, increase the breadth of selection and continue to leverage our digital and physical assets to increase selection and improve profitability in our Nordstrom Rack banner. We are working to expand our inventory flexibility through unowned inventory models, including dropship, concession, marketplace and other strategies. Additionally, we are working to scale our NMN, which allows our brand partners to directly connect with our customers through on- and off-site media campaigns to drive traffic, sales and engagement.

Our customer focus requires us to build new supply chain capabilities and enhance existing ones, develop applications for electronic devices, improve customer-facing technology, deliver purchased products timely, enhance inventory management systems and allow greater and more fluid inventory availability between digital and retail locations through our market strategy. In addition, these strategies will require further expansion of and reliance on data science and analytics. This business model has a highly variable cost structure and will continue to require investments in cross-channel operations and supporting technologies. There are also inherent risks associated with the investment in new technologies, such as generative artificial intelligence, and such operational and supporting technologies can be subject to failure, disruption or unavailability and increased vulnerability to cyberattacks and other cyber incidents.

If we do not successfully implement our customer strategy, including thoroughly understanding and delivering on our customers’ needs and wants, effectively integrating our digital operations and stores and scaling our market strategy, strengthening our brand awareness, expanding our supply chain initiatives and efficiently getting product to our customers, we may fall short of our customers’ expectations, which would impact our brand, reputation, profitability and growth. Also, if customers shift between shopping at our store and digital channels, or between our Nordstrom and Nordstrom Rack banners, at a different pace than we anticipate, we may need to quickly modify initiatives and investments. If we do not have or devote the resources necessary to execute upon these strategies, our business could be negatively impacted.

Our business could suffer if we do not appropriately assess and react to competitive market forces and changes in customer behavior.

The retail environment is rapidly evolving. Customer shopping preferences continue to shift, including increasing expectations for faster delivery of product. In addition, the retail environment is under significant pressure from non-traditional retailers, including online marketplaces and rental and recommerce companies. We regularly compete with other international, national, regional and local retailers, including internet-based businesses, omni-channel department stores, online marketplaces, brands selling direct to consumers online and in-stores, specialty stores, off-price stores and boutiques, which carry similar lines of merchandise. Digital channels continue to facilitate comparison shopping, intensifying competition in the retail market, and marketing digitally is controlled by a few key platforms. If we fail to adequately anticipate or respond to customer behavior and expectations, or changing market dynamics, we may lose market share or our ability to remain competitive, causing our sales and profitability to suffer, and may potentially impact the valuation of our goodwill and result in a non-cash impairment charge. If the efficiency and allocation of loyalty marketing, advertising and promotional campaigns that attract customers through various programs and media, including digital media and print, is unsuccessful in influencing consumer behavior in our digital channels and stores, or if our competitors are more effective with their programs than we are, our growth and profitability could suffer. We also may not gather accurate and relevant data or effectively utilize that data, which may impact our strategic planning, marketing and loyalty programs and our overall decision making.

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Our customer relationships and sales may be negatively impacted if we do not anticipate and respond to consumer preferences and fashion trends or manage inventory levels appropriately.

Our ability to predict or respond to constantly changing fashion trends, demographics, consumer preferences and spending patterns significantly impacts our sales and operating results. We must effectively manage our merchandise mix to curate an assortment that offers newness and greater selection at various price points. Some merchandise may take several months from the time we place a purchase order to the time it is received, and our ability to accelerate or modify that timeline or purchase order contents may be limited. If we do not identify and respond to emerging trends in consumer spending and preferences quickly enough, identify the right partners that align with our customer strategy, broaden or expand our category offering fast enough or in the right areas or develop, evolve and retain our team’s talent, mindset and technical skills to support changing operating models, we may harm our ability to retain our existing customers or attract new customers. We also store a certain level of pack-and-hold inventory to deploy in periods with high demand, tight supply or system constraints. As a result, we are vulnerable to shifts in consumer demand and misjudgments in the assortment and timing of merchandise purchases, which may impact our ability to sell through this inventory in future periods. Ensuring we optimize our inventory and improve the planning and management of inventory through use of data and analytics is critical to serving the customer, driving growth and maximizing profitability. If we purchase too much inventory, we may be forced to sell our merchandise at lower average margins by taking significant markdowns, which could harm our business. Conversely, if we fail to purchase enough merchandise, or inventory does not arrive fast enough or as expected, we may lose opportunities for additional sales and potentially harm relationships with our customers.

Any inability to mitigate global labor and merchandise pricing pressures or disruptions may negatively impact our profitability.

Our profitability depends in part on our ability to anticipate and react to operating volatility, including the cost and availability of labor and merchandise. Increases in product and/or delivery costs, including changes in tariffs and the price of raw materials to us and our vendors that are directly or indirectly related to the production and distribution of our products or increases in energy, labor or fuel and transportation costs, may translate to higher sales prices, which may then impact customer demand. In the near term, we are focused on improving our internal network and processes by diversifying our carrier capacity, gaining better end-to-end visibility of inventory and increasing velocity and throughput in our Supply Chain Network. If we are unable to respond effectively to ongoing pricing pressures or labor shortages, or offset such costs, there could be a material adverse impact on our business and financial results.

Our employees are key to supporting our business and operations effectively, and increased labor costs put pressure on our operating expenses. When wage rates or benefit levels increase in particular markets, increasing our wages or benefits has negatively impacted and may continue to negatively impact our earnings. Conversely, failing to offer competitive wages or benefits could adversely affect our ability to attract or retain sufficient or quality employees, causing increased turnover and our customer service to suffer. Excessive turnover may result in higher costs associated with finding, hiring and training new employees.

Any impediment to our inventory optimization may impact our ability to drive growth and meet customer demand, affecting future results and profitability. Shortages in certain materials and increasing pricing pressures in the highly competitive retail environment have contributed, and may in the future continue to contribute, to fluctuations in the quality, availability and price of our merchandise. The availability of raw materials or inventory to the U.S. may hinder our ability to meet customer demand. Our vendors and other suppliers may experience similar fluctuations or restrictions, which may subject us to the effects of their price increases. Additionally, if we do not gather complete, accurate and timely competitive pricing data, or adequately utilize this data to implement an effective pricing strategy, our ability to successfully compete could be negatively impacted, causing our sales, profitability and results of operations to suffer.

Improvements to our processes and systems for our Supply Chain Network, inventory, buying, vendor payment and accounting could adversely affect our business if not successfully executed.

Our business depends on accuracy throughout our product flow process. We are making investments to streamline and standardize our Supply Chain Network, inventory, buying, vendor payments and accounting capabilities through changes in technology, such as the utilization of generative artificial intelligence-enabled methodologies and processes. If we encounter challenges associated with change management, inventory integrity and implementation of associated information technology or adoption of new processes, features or capabilities, our ability to continue to successfully execute or evolve our strategy with changes in the retail environment could be adversely affected. Or, if we are unable to maintain accurate, reliable and effective inventory tracking systems, such as our use of radio frequency identification technology, which are critical to our integrated omni-channel business strategy, it may adversely impact our sales and profitability and may result in canceled orders and increased costs relative to our current expectations.

If we do not effectively attract, retain, train and develop talent and future leaders, our business may suffer.

We rely on the experience of our senior management, who have specific knowledge relating to us and our industry that is difficult to replace, to execute our business strategies and objectives. We have succession plans in place and our Board of Directors reviews these succession plans. If our succession plans do not adequately cover significant and unanticipated turnover, the loss of the services of any of these individuals, or any resulting negative perceptions or reactions, could damage our reputation and our business.

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Additionally, our success depends on the talents and abilities of our workforce in all areas of our business, especially personnel that can adapt to complexities and grow their skillsets across the changing environment. Our ability to successfully execute our customer strategy depends on attracting, developing and retaining qualified talent with diverse sets of skills, especially functional and technology specialists that directly support our strategies. We have a large workforce, and our ability to meet our labor needs is subject to various external factors such as regional minimum wage and benefits requirements, market pressures, prevailing wage rates, benefit mix, unemployment levels, changing demographics, economic conditions and a dynamic regulatory environment.

We have experienced, and may continue to experience, increased employee attrition due to an intense competition for talent, a competitive wage environment and labor shortages. In the Seattle metropolitan area, where our corporate headquarters are located, we regularly compete for talent with many larger technology-focused companies, which may increase market compensation, especially for certain employee groups. If we are unable to sustain employee satisfaction or offer competitive compensation and benefits, appropriate training and development or a compelling work environment, our culture may be adversely affected, our reputation may be damaged and we may incur costs related to turnover.

If earnings from our Nordstrom-branded credit cards decline, our financial and operational results may be negatively impacted.

The program agreement with TD was originally consummated on terms that allow us to maintain customer-facing activities, while TD facilitates issuance of Nordstrom-branded payment methods and provides payment processing services. In October 2024, we amended our program agreement to transition customer-facing activities to TD. If we do not successfully respond to potential risks and appropriately manage potential costs associated with the program agreement with TD, including risks relating to the transition of servicing functions to TD, or if this transition negatively impacts the customer service associated with our cards, resulting in harm to our business reputation and competitive position, our operations, cash flows and earnings could be adversely affected.

The Merger Agreement and the pendency of the Merger could have a material adverse effect on our business, results of operations, financial condition and stock price.

On December 22, 2024, the Company entered into the Merger Agreement with Parent and Acquisition Sub. The Merger Agreement provides that, on the terms and subject to the conditions of the Merger Agreement, Acquisition Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation in the merger and becoming a wholly owned subsidiary of Parent. At the effective time of the Merger closing, each outstanding share of Company common stock owned immediately prior to the effective time of the Merger (other than shares owned by the Company, Parent, or their respective wholly owned subsidiaries, the shares to be contributed to Parent by Liverpool and the Family Group, and shares held by shareholders who have complied with all the provisions of the Washington Business Corporation Act concerning dissenters’ rights), will be canceled and converted into the right to receive $24.25 per share of our Company’s common stock in cash, without interest and less any required tax withholdings. The Merger Agreement is subject to certain conditions, including, among others, approval of the Merger Agreement by our shareholders.

During the period between the signing of the Merger Agreement and the closing of the Merger, our business is exposed to certain inherent risks due to the announcement or pendency of the Merger which may impact our business relationships, financial condition and operating results. Some of these risk factors include:

•difficulties maintaining relationships with customers, vendors, suppliers, landlords, service providers and other business partners, who may defer decisions about working with us or seek to delay or change existing business relationships with us,

•distraction of our current employees as a result of the Merger, which could result in a decline in their productivity or cause distractions in the workplace,

•our inability to attract new employees or retain current employees may be exacerbated due to the Merger and uncertainties related to the Merger,

•diversion of significant management time and resources related to the Merger and transactions related to the Merger,

•impact of costs related to the completion of the Merger and the transactions related to the Merger,

•unanticipated difficulties or expenditures relating to the proposed transaction,

•our inability to solicit other acquisition proposals, pursue alternative business opportunities, make strategic changes to our business and other restrictions on our ability to conduct our business pursuant to the Merger Agreement, and

•other developments beyond our control, including, but not limited to, changes in domestic or global economic conditions that may affect the timing or success of the Merger.

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While the Merger Agreement is in effect, we are subject to restrictions on our business activities.

While the Merger Agreement is in effect, we are generally required to conduct our business in the ordinary course. However, we are restricted from taking certain actions without Parent’s consent. These limitations include, among other things, restrictions on our ability to amend our organizational documents, acquire other businesses and assets, dispose of our assets, make investments, repurchase, reclassify or issue securities, make loans, incur indebtedness, make capital expenditures, enter into, amend or terminate certain contracts, change accounting policies or procedures, initiate or settle certain litigation, change tax classifications and elections, or take certain actions relating to intellectual property. These restrictions, although subject to certain limited exceptions, could prevent us from pursuing strategic business opportunities and taking extraordinary actions with respect to our business during this period.

Litigation related to the Merger could prevent or delay completion of the Merger or otherwise negatively affect our business and operations.

Putative shareholder complaints, including shareholder class action complaints, and other complaints or actions may be filed against us, our Board of Directors, and others in connection with the transactions contemplated by the Merger Agreement. The outcome of litigation is uncertain, and we may not be successful in defending against such future claims. Lawsuits may be filed against us, our Board of Directors, the other parties to the Merger Agreement, or others, which could delay or prevent the Merger and otherwise adversely affect our business, results of operations and financial condition.

The Merger may not be completed within the expected timeframe, or at all, and significant delay or the failure to complete the Merger could adversely affect our business.

We cannot assure that our business, our relationships or our financial condition will not be adversely affected if the Merger is not consummated within the expected timeframe, or at all. The consummation of the Merger is subject to certain conditions, including obtaining the Requisite Shareholder Approvals and the absence of a Below Investment Grade Rating Event (as defined in the Merger Agreement). In addition, each party is entitled to certain rights to terminate the Merger Agreement, including that we or Parent may terminate the Merger Agreement if the Merger is not consummated on or before September 22, 2025 (which date may be automatically extended in certain circumstances pursuant to the terms of the Merger Agreement).

While it is currently anticipated that the Merger will be consummated in the first half of 2025, we cannot assure you that these conditions will

be satisfied in a timely manner or at all, that an effect, event, development, or change will not transpire that could delay or prevent these

conditions from being satisfied, or that we or Parent will not terminate the Merger Agreement if entitled to do so. For instance, the Merger

might not be completed if the Parent Parties fail to obtain the financing to complete the proposed transaction or if we do not have a sufficient

amount of cash on hand to complete the proposed transaction.

Failure to complete the Merger within the expected timeframe, or at all, could adversely affect our business and the market price of our common stock in several ways, including the following:

•to the extent that the current market price of our stock reflects an assumption that the Merger will be completed, it may be negatively impacted because of a failure to complete the Merger within the expected timeframe or at all,

•investor and consumer confidence in our business could decline, litigation could be brought against us, relationships with vendors, service providers, investors, landlords, and other business partners may be adversely impacted, and we may be unable to retain key personnel,

•we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other costs in connection with the Merger and the transactions contemplated by the Merger for which we may receive little or no benefit if the Merger is not completed. Many of these fees and costs will be payable by us even if the Merger is not completed and may relate to activities that we would not have undertaken other than to complete the Merger,

•failure to complete the Merger may result in negative publicity and a negative impression of us in the investment and vendor community, and

•if the Merger Agreement is terminated in certain circumstances, we must pay a termination fee to the Parent Parties.

The occurrence of any of these events individually or in combination could materially and adversely affect our business, results of operations, financial condition and the price of our common stock.

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DATA, CYBERSECURITY AND INFORMATION TECHNOLOGY RISKS

Even if we take appropriate measures to safeguard our information, network and environment from security breaches or unauthorized disclosures, our customers, employees and business could still be exposed to risk.

We and our third-party providers access, collect, store and transmit sensitive and confidential Company, customer and employee data and information, including consumer preferences and credit card information, all of which are subject to demanding and continuously evolving privacy and security laws and regulations. A number of jurisdictions where we do business have enacted or are considering new privacy and data protection laws, which impact our responsibilities with respect to this data, including California, Colorado, Connecticut, Utah and Virginia. In addition, advances in artificial intelligence technologies, which attackers may use, increase vulnerability to cyberattacks, cyber incidents or privacy incidents.

We have taken measures to help prevent a breach of our networks and environments and comply with cybersecurity and privacy requirements by implementing safeguards and procedures designed to protect the security, confidentiality and integrity of such information. In addition, we have strengthened our contracts to require, where possible, our third-party providers to implement administrative, physical and technical safeguards and procedures aligned to industry best practices.

Despite the fact that we have implemented measures to prevent intentional or inadvertent information security breaches and requested our third-party providers to do the same, these measures cannot completely eliminate cybersecurity risk. Like many companies, we, as well as several of our vendors, have suffered breaches of our cybersecurity in the past and are at risk for such breaches in the future. Security breaches and cyber incidents, whether at our Company, our third-party suppliers and service providers or other retailers, could expose us to loss, unauthorized release or disclosure of customer, employee or Company confidential information, litigation, investigation, regulatory enforcement action, penalties and fines, orders to stop any alleged noncompliant activity, information technology system failures or network disruptions, increased cyber-protection and remediation costs, financial losses, potential liability, or loss of customers’, employees’ or third-party providers’ trust and business, any of which could adversely impact our reputation, competitiveness and financial performance. Concerns about our data management practices, including the collection, use, retention, security or disclosure of personal information or other privacy-related matters, even if unfounded, could subject the Company to regulatory inquiries and damage our reputation, adversely affecting our operating results.

Our business may be impacted by information technology system failures or network disruptions.

Our ability to transact with customers and operate our business depends on the efficient operation of various internal and third-party information technology systems, including cloud computing, data centers, hardware, software and applications, to manage certain aspects of our Company, including online and in store transactions, logistics and communication, inventory and reporting systems. We seek to build resilient and secure systems, select reputable system vendors and implement procedures intended to enable us to protect our systems when we modify them. We test our systems to address vulnerabilities and train our employees regarding practices to protect the safety of our technology systems.

There are risks associated with developing, modifying or replacing information technology systems, including accurately capturing and maintaining data, realizing the expected benefit of the change and managing the potential disruption of the operation of the systems as the changes are implemented. Potential issues associated with implementing technology initiatives and the time and resources required to optimize the benefits of new elements of our systems and infrastructure could reduce the efficiency of our operations in the short term.

If we encounter an interruption or deterioration in critical systems or processes or experience the loss of critical data, which may result from security or cybersecurity threats or attacks, natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins or third-party or other disruptions, our business could be harmed both in the short-term and over a longer period. Depending on the severity of the failure, our disaster recovery plans may be inadequate or ineffective. These events could also damage our reputation, result in increased costs or loss of sales and require significant time and expense to remedy.

REPUTATION AND RELATIONSHIP RISKS

Our customer, employee, vendor, third-party partner, landlord and other stakeholder relationships could be negatively affected if we fail to maintain our corporate culture and reputation.

We have a well-recognized culture and reputation that consumers may associate with a high level of integrity, customer service and quality merchandise, and it is one of the reasons customers shop with us and employees choose us as a place of employment. We must continue to preserve our reputation, which is largely based on public perceptions. Any significant damage to our reputation, including damages arising from noncompliant business, data privacy, information security, diversity, environmental or social responsibility practices, news about our Company or factors outside our control or on social media, could diminish customer trust and result in changes in customer behavior, weaken our vendor relationships, reduce employee morale and productivity and lead to difficulties in recruiting and retaining qualified employees. Additionally, management may not accurately assess the impact of significant legislative changes, including those that relate to data privacy and security, employment matters, labor issues, environmental compliance and health care, impacting our relationship with our customers or our workforce and adversely affecting our sales and operations.

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There is also increased focus from both internal and external stakeholders on corporate social responsibility and sustainability matters. If we do not, or are perceived not to, act responsibly with respect to our practices and initiatives, meet any communicated targets, goals or milestones or lack transparency with our initiatives, our reputation could be damaged. We may also incur additional costs as we invest in new ways to operate to better support our communities and our customers or to report our outcomes and results.

In addition, the long-term reputational impact from winding down business operations in Canada, including the impact to our customers, employees, vendors and third-party partners and landlords, is unknown, and we may need to take actions that could increase our expenses and adversely affect the results of our operations.

Any of these risks individually or in combination could materially and adversely affect our business, results of operations, financial condition and the price of our Company common stock.

Our business depends on third parties for the production, supply and delivery of goods and/or services, and a disruption could result in lost sales or increased costs.

Supply Chain

Timely receipt of quality merchandise from third parties is critical to our business, as the majority of the goods we sell are produced by vendors in factories overseas. Our process to identify qualified vendors and access quality products in an efficient manner on acceptable terms and cost can be complex. Vendors and factors may also be subject to credit capacity limits that restrict shipments. In addition, we rely on a limited number of carriers to deliver our product to customers. Ongoing disruptions in the global supply chain, including factory closures, transportation challenges, rising freight expenses, violations of law or global standards with respect to human rights, quality and safety by any of our importers, manufacturers or distributors, or parties upstream within their respective supply chains, could result in delays in shipments and receipt of goods. These third parties may experience supply chain or port disruptions, stoppages of certain imports or other difficulties due to economic, business, political, environmental or epidemic conditions, or may shift their business models away from prior practice. Additionally, the countries in which merchandise is manufactured could become subject to new trade restrictions, including increased taxation on imported goods, customs restrictions, tariffs or quotas.

Any disruption, delay or change in our or our vendors’ supply chain, including increased transit times or costs, could negatively impact our inventory levels, delivery timelines and our ability to meet customer demand, which in turn may have a material adverse effect on our reputation, results of operations and liquidity. Our corporate social responsibility and sustainability goals, such as our goal to decrease greenhouse gas emissions in our operations and supply chain, may also be adversely impacted by these disruptions.

Other

We are party to contracts, transactions and business relationships with various third parties, including vendors, suppliers, service providers, landlords and lenders, who may have performance, payment and other obligations to us. If any of the third parties with whom we do business change the terms and conditions that govern their relationships with us due to changes in their business strategy, or become subject to bankruptcy, receivership or similar insolvency proceedings, our rights and benefits in relation to our contracts, transactions and business relationships with such third parties could be terminated, modified in a manner adverse to us or otherwise impaired, and we may be unable to arrange for alternate or replacement contracts, transactions or business relationships on terms as favorable as our existing contracts, transactions or business relationships, if at all. In such circumstance, our cash flows, financial condition and results of operations may be negatively impacted.

Our ability to effectively market our brands, sell product through third-party platforms and make our own apps available for customers relies heavily on a variety of third-party publishers, platforms and distribution channels. If the regulatory environment or these third parties limit or change the terms of marketing, distribution or use of data, it could adversely affect our results of operations.

We market our brands, sell product through third-party platforms, and make our own apps available to customers through a variety of third-party publisher and platform channels and our ability to market on any given platform or channel is subject to the policies of that party and regulatory requirements. Our dependency on the interoperability of our products with popular mobile operating systems, such as Android or iOS, websites, networks, technologies, products and standards that we do not control, coupled with their unilateral control of the terms of service and ongoing regulatory scrutiny associated with targeted advertising, could reduce or eliminate our ability to update our apps or sell product on these platforms. Any changes, bugs or technical issues in such systems or websites may limit our ability to effectively deliver our products, or to target or measure the effectiveness of our ads. If we do not pick the platforms relevant to our customers, if the platforms give preferential treatment to competitors, limit our ability to deliver, target or measure the effectiveness of ads, or if there is a sudden shift in platform preference, our ability to market our brand effectively could be negatively impacted. Furthermore, to the extent platform users do not opt-in to certain data collection and sharing practices, our ability to deliver, target or measure the effectiveness of ads or drive usage on our apps is impacted.

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The concentration of stock ownership in a small number of our shareholders may limit a shareholder’s ability to influence corporate matters and impact the price of our shares.

The Parent Parties hold aggregate beneficial ownership of approximately 43% of our common stock. As a result, these persons may be able to exercise considerable influence over matters requiring shareholder approval, including the election of directors or other matters impacting our management or corporate governance.

The corporate law of the State of Washington, where we are incorporated, provides that approval of a merger or similar significant corporate transaction requires the affirmative vote of two-thirds of a company’s outstanding shares. The interests of the Parent Parties may differ from the interest of our shareholders as a whole. The beneficial ownership of the Parent Parties may have the effect of discouraging offers to acquire us (including competing offers to the Merger from third parties), delaying or otherwise preventing a significant corporate transaction because the consummation of any such transaction would likely require their approval. As a result of these factors, the market price of our common stock may be affected.

INVESTMENT AND CAPITAL RISKS

If we fail to appropriately manage our capital, we may negatively impact our operations and shareholder return.

We utilize working capital to finance our operations, pay for capital expenditures, acquisitions and investments, manage our debt levels and return value to our shareholders through dividends and share repurchases. Sufficient cash and liquidity are necessary to fund our business. Changes in the credit and capital markets, including market disruptions, limited liquidity and interest rate fluctuations, may increase the cost of financing or restrict access to a potential source of liquidity. A deterioration in our capital structure or the quality and stability of our earnings could result in noncompliance with our debt covenants or a downgrade of our credit rating, constraining the financing available to us or limiting our ability to issue dividends or repurchase shares. In 2024, the three major rating agencies downgraded the Company’s credit rating. Any future reductions in our credit ratings could result in restricted access to financing and increased borrowing costs and could adversely impact our operations and financial condition. In addition, if we do not properly allocate our capital to maximize returns or we do not maintain financial flexibility, our operations, cash flows and returns to shareholders could be adversely affected.

Owning and leasing real estate exposes us to possible liabilities and losses.

We own or lease the land, buildings and equipment for all of our Supply Chain Network facilities, stores and corporate locations and are therefore subject to all of the risks associated with owning and leasing real estate. In particular, the value of the assets could decrease, their operating costs could increase or facilities or stores may not be opened as planned due to changes in the real estate market, demographic trends, site competition, dependence on third-party performance or overall economic environment. We are also potentially subject to liability for environmental conditions, exit costs associated with disposal of a store and commitments to pay base rent for the entire lease term or to operate a store for the duration of an operating covenant. In addition, the invalidity of, or default or termination under, any of our leases may accelerate required cash payments or interfere with our ability to use and operate all or a portion of certain of our facilities, which may have an adverse impact on our operations and results.

The investment in existing and new locations may not achieve our expected returns.

The locations of our Supply Chain Network facilities and existing stores, planned store openings and relocations are assessed based upon desirability, demographics and retail environment. In particular, we have expanded our omni-channel market strategy, where we leverage and connect our digital and physical assets within discrete geographic markets to seamlessly serve our customers within those markets and create synergies between our digital assets, Supply Chain Network and stores. Our expansion of this market strategy has allowed us to execute against one of our top priorities of improving Nordstrom Rack performance through the opening of new Nordstrom Rack stores. We must equip our locations with the proper processes, technology and tools for timely and accurate fulfillment and inventory replenishment. This involves certain risks, including properly balancing our capital investments between fulfillment capabilities, technology, digital channels, new stores, relocations and remodels, assessing the suitability of locations in new domestic and international markets and constructing, furnishing and supplying a facility or store in a timely and cost-effective manner, which may be affected by the actions of third parties, including, but not limited to, private entities and local, state or federal regulatory agencies.

Customers’ expectations regarding speed of delivery are evolving. If we do not effectively integrate our digital and physical assets as part of our market strategy, or select locations to optimize our market strategy, we could incur significantly higher costs and shipping times that do not meet customer expectations, which in turn could have a material adverse effect on our business. Sales through our digital channels or at our stores may not meet projections as we balance trends between digital and brick-and-mortar shopping channels, which could adversely affect our return on investment. If we do not properly allocate capital expenditures between locations, ensure timely completion of construction projects associated with Supply Chain Network facilities and new, relocated and remodeled stores or properly maintain any of our properties, customer expectations may not be met, we may lose sales and may incur additional expenses.

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ECONOMIC AND EXTERNAL MARKET RISKS

Our revenues and operating results are affected by the seasonal nature of our business and cyclical trends in consumer spending.

Additionally, factors such as changes in sales and operating income, changes in our market valuations, performance results for the general retail industry, news or announcements by us or our industry competitors or changes in analysts’ recommendations may cause volatility in the price of our common stock and our shareholder returns.

A downturn in economic conditions, currency fluctuations, inflation, unemployment and bankruptcy rates, changes in fiscal stimulus or interest rates and other external market factors have had and could have a significant adverse effect on our business and stock price.

During economic downturns or inflationary periods, fewer customers may shop, as these purchases may be seen as discretionary, and those who do shop may limit the amount of their purchases. Any reduced demand or changes in customer purchasing behavior may lead to lower sales, higher markdowns and an overly promotional environment or increased marketing and promotional spending.

Our stores located in shopping centers and malls have been and may be affected by consumer traffic at shopping centers and malls.

The majority of our stores are located within shopping centers and malls and may benefit from the abilities that we and other anchor tenants have to generate consumer traffic. A decline in shopping center traffic in favor of e-commerce, the development of new shopping centers and malls, the lack of availability of favorable locations within existing or new shopping centers and malls, the success of individual shopping centers and malls and the success or failure of other anchor tenants have impacted and may impact our ability in the future to maintain or grow our business, as well as our ability to open new stores, which could have an adverse effect on our financial condition or results of operations.

Like other retailers, our stores have been impacted by changing levels of theft or vandalism, which may affect consumer traffic in our stores and cause inventory shrinkage. Risk of loss or theft of assets, including inventory shrinkage, is inherent in the retail business. Loss or theft may be caused by error or misconduct of employees, customers, vendors or other third parties through organized retail crime and professional theft. If we experience higher rates of inventory shrinkage at stores located in shopping centers and malls, or if we are unable to effectively reduce the impact of loss or theft of assets, our operating results could be adversely affected. The severity or quantity of incidents, including perceptions and reactions, may result in reputational damage or loss of customer trust.

The results from our credit card operations could be adversely affected by changes in market conditions or laws.

Revenues earned under our program agreement with TD are indirectly subject to economic and market conditions that are beyond our control, including, but not limited to, interest rates, consumer credit availability, demand for credit, consumer debt levels, payment patterns, delinquency rates, frequency of fee waivers, frequency or volume of governmental stimulus, personal bankruptcy rates, employment trends, laws and other factors. Additionally, changes in net sales partially translate to program agreement revenues. Changes in economic, market or regulatory conditions, customer behavior or our mix of sales and program agreement revenues could impact our revenues and profitability.

Our business and operations could be materially and adversely affected by severe weather patterns, climate change, natural disasters, widespread pandemics, epidemics, civil unrest and other natural or man-made economic, political or environmental disruptions.

Disruptions, and government responses, could cause, among other things, decreases in consumer spending that could negatively impact our sales, declines in traffic in urban centers, staffing shortages in our Supply Chain Network facilities, stores or corporate offices, interruptions in the flow of merchandise to our stores, disruptions in the operations of our merchandise vendors or property developers, increased costs and a negative impact on our reputation and long-term growth plans, which could vary based on the length and severity of the disruption. Health pandemics and epidemics, have in the past and may in the future, impact consumer and government responses, which may have an adverse impact on global economic conditions and our business, results of operations and financial condition. We also have a significant amount of our total sales, stores and square footage on the West Coast of the United States, particularly in California, where we have experienced earthquakes, wildfires, flooding and power outages and shortages that increase our exposure to any market-disrupting conditions in this region.

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LEGAL AND REGULATORY RISKS

We are subject to certain laws, litigation, regulatory matters and ethical standards, and compliance or failure to comply with or adequately address developments as they arise could adversely affect our reputation and operations.

Our policies, procedures and practices and the technology we implement are intended to address applicable federal, state, local and foreign laws, tariffs, rules and regulations, as well as responsible business, social and environmental practices, all of which may change from time to time. If we, or the third parties we do business with, fail to comply with these requirements and/or changes to them, our business could be adversely impacted. In addition, noncompliance with applicable laws and regulations or failure to implement responsible business, social, environmental and supply chain practices could result in reputational damage, class action lawsuits, regulatory investigations, legal costs and penalties, charges and payments, civil and criminal liability, increased cost of regulatory compliance, loss of our ability to offer or accept credit and debit card payments from our customers, restatements of our financial statements, disruption of our business, loss of customers and loss of customer trust. Changes to existing and new privacy and data protection laws may increase compliance expenses and limit business opportunities and strategic initiatives, including customer engagement. Any required changes to our employment practices could result in the loss of employees, reduced sales, increased employment costs, low employee morale and harm to our business and results of operations. In addition, political and economic factors could lead to unfavorable changes in federal, state and foreign tax laws, which may affect our tax assets or liabilities and adversely affect our results of operations. We are also regularly involved in various litigation matters that arise in the ordinary course of business. Litigation or regulatory developments could adversely affect our business and financial condition.

Compliance with Section 404 of the Sarbanes-Oxley Act of 2002 requires management assessments of the effectiveness of our internal controls over financial reporting through documenting, testing, monitoring and enhancement of internal control over financial reporting. If we fail to implement or maintain adequate internal controls, we may not produce reliable financial reports or fail to prevent or detect financial fraud, which may adversely affect our financial position, investor confidence or our stock price.

Changes to accounting rules and regulations could affect our financial results or financial condition.

Accounting principles and related pronouncements, implementation guidelines and interpretations with regard to a wide variety of accounting matters that are relevant to our business, including, but not limited to, revenue recognition, inventory valuation, long-lived asset recoverability, income taxes and contingent liabilities, are highly complex and involve subjective assumptions, estimates and judgments. Changes in these rules and regulations, changes in our interpretation or our misapplication of the rules or regulations, changes in accounting policies or changes in underlying assumptions, estimates or judgments could adversely affect our financial performance or financial position.

Item 1B. Unresolved Staff Comments.

None.

Nordstrom, Inc. and subsidiaries 21

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Item 1C. Cybersecurity.

Nordstrom understands that establishing, executing and sustaining effective cybersecurity measures to secure our information systems and preserve the confidentiality, integrity and availability of our data is critical to the success of the business.

Management of Material Risks and Integrated Overall Risk Management

Our comprehensive risk management framework is intended to strategically incorporate cybersecurity risk management across the company, with the objective of ensuring that cybersecurity considerations underpin the decision-making processes at all organizational levels. Our risk management team collaborates closely across various Enterprise-wide business units to continually assess and address identified cybersecurity risks in alignment with business objectives. The CTIO regularly updates the Chief Financial Officer and Chief Executive Officer on material cybersecurity risks and events.

Engagement with Third Parties on Management of Cybersecurity Risk

Recognizing the dynamic nature of cybersecurity threats, Nordstrom collaborates with external experts, including assessors, consultants and examiners, to evaluate and test our cybersecurity risk preparedness. Regular exams, threat assessments and consultation on security enhancements with these third parties ensure that our cybersecurity strategies align with industry best practices.

Oversight of Third-party Risk

In the course of our business, we regularly exchange data and information with certain third parties in various ways, exposing us to risk related to the cybersecurity posture of and information management practices of those third parties. To try to mitigate this risk, we have implemented processes that may, depending upon the nature of the relationship with the third party, require security assessments and data integration design reviews prior to allowing our systems to connect with theirs. In addition, we seek to require these third parties to adhere to pre-established cybersecurity standards. Where applicable, we try to obtain contractual commitments with those third parties to ensure these security requirements are met.

Risks from Cybersecurity Threats

Nordstrom has not experienced any cybersecurity incident that has materially impacted, or that is reasonably likely to materially impact, our operations, financial condition or cash flows.

Cybersecurity Risk Management Personnel

Primary responsibility for assessing, monitoring, mitigating and managing our cybersecurity risks rests with our information security organization, currently led by our CTIO. The CTIO has over 25 years of experience leading technology teams in retail and in many highly regulated industries including Healthcare, Pharmaceuticals and Financial Services. Our CTIO supports a skilled information security organization that brings expertise in vulnerability management, incident response, penetration testing, regulatory compliance and other critical information security domains. Our information security team maintains certifications from recognized external security authorities such as ISC2, CompTIA, ISACA, GIAC, SANS, PCI and OffSec. The security program is assessed annually by a reputable third party to provide guidance for continuous improvement.

Monitoring and Responding to Cybersecurity Incidents

The security organization stays informed about the latest developments in cybersecurity, implements processes for regular monitoring of information systems and deploys relevant security measures. In the event of a cybersecurity incident, a formal incident response plan is in place for immediate actions and long-term strategies.

Board of Directors Oversight

The Board of Directors has oversight responsibilities regarding cybersecurity risk. At regularly scheduled meetings (at least quarterly), in addition to such additional interactions as may be necessary in specific circumstances, our Chief Executive Officer and CTIO update the Board on emerging cybersecurity risks and developments impacting Nordstrom.

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Item 2. Properties.

(Square footage amounts in thousands)

Square footage is the total floor area of a building, measured from the exterior of the building walls. The following table summarizes the Supply Chain Network and retail locations we own or lease and the total square footage by category as of February 1, 2025:


	Number of Locations
	Supply Chain Network	Nordstrom	Nordstrom Rack	Total Square Footage
Leased buildings on leased land	1	18	278	13,139
Owned buildings on leased land	—	54	—	9,919
Owned buildings on owned land	8	24	1	8,250
Partly owned and partly leased	—	2	—	544
Total	9	98	279	31,852

The following table summarizes our Supply Chain Network and retail store count and square footage activity:


	Count		Square Footage
Fiscal year	2024	2023		2024	2023
Total, beginning of year	369	368		32,381	33,693
Openings:

Nordstrom	—	—		—	—
Nordstrom Rack	23	19		648	531
Relocations, remodels or changes	—	—		—	(8)
Closures	(6)	(18)		(1,177)	(1,835)
Total, end of year	386	369		31,852	32,381

Nordstrom, Inc. and subsidiaries 23

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The following table lists our Supply Chain Network and retail store count and square footage by state as of February 1, 2025:


	Supply Chain Network		Nordstrom		Nordstrom Rack		Total
	Count	Square Footage	Count	Square Footage	Count	Square Footage	Count	Square Footage

Alabama	—	—	—	—	1	27	1	27
Alaska	—	—	—	—	1	35	1	35
Arizona	—	—	1	235	11	365	12	600
California	3	1,671	26	3,669	68	2,349	97	7,689
Colorado	—	—	2	387	8	268	10	655
Connecticut	—	—	2	341	1	36	3	377
Delaware	—	—	1	127	1	32	2	159
Florida	1	221	6	1,031	19	621	26	1,873
Georgia	—	—	2	383	6	214	8	597
Hawaii	—	—	1	195	2	78	3	273
Idaho	—	—	—	—	1	37	1	37
Illinois	—	—	4	947	17	623	21	1,570
Indiana	—	—	1	134	3	85	4	219
Iowa	2	1,529	—	—	1	35	3	1,564
Kansas	—	—	1	219	3	90	4	309
Kentucky	—	—	—	—	1	33	1	33
Louisiana	—	—	—	—	3	90	3	90
Maine	—	—	—	—	1	30	1	30
Maryland	1	451	3	603	6	219	10	1,273
Massachusetts	—	—	3	452	7	266	10	718
Michigan	—	—	2	430	5	178	7	608
Minnesota	—	—	2	380	4	134	6	514
Missouri	—	—	2	342	2	69	4	411
Nebraska	—	—	—	—	1	30	1	30
Nevada	—	—	1	207	4	132	5	339
New Jersey	—	—	4	817	8	284	12	1,101
New Mexico	—	—	—	—	1	34	1	34
New York	—	—	5	838	7	244	12	1,082
North Carolina	—	—	2	300	4	134	6	434
Ohio	—	—	3	549	8	282	11	831
Oklahoma	—	—	—	—	2	67	2	67
Oregon	1	374	2	363	7	243	10	980
Pennsylvania	1	976	2	381	7	240	10	1,597
Rhode Island	—	—	—	—	1	38	1	38
South Carolina	—	—	—	—	3	101	3	101
Tennessee	—	—	1	145	4	117	5	262
Texas	—	—	8	1,413	23	760	31	2,173
Utah	—	—	2	277	4	130	6	407
Virginia	—	—	2	452	7	268	9	720
Washington	—	—	6	1,270	12	442	18	1,712
Washington D.C.	—	—	—	—	2	66	2	66
Wisconsin	—	—	1	150	2	67	3	217
Total	9	5,222	98	17,037	279	9,593	386	31,852

Our headquarters are located in Seattle, Washington, where our offices consist of both leased and owned space.

As of March 21, 2025, we have announced 20 Nordstrom Rack store openings and one Nordstrom store closure in 2025 and one Nordstrom Rack store opening in 2026. Additionally, subsequent to year-end, we closed one Nordstrom Local service hub and plan to reopen it as a storefront dedicated to personal styling.

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Item 3. Legal Proceedings.

We are subject from time to time to various claims and lawsuits arising in the ordinary course of business, including lawsuits alleging violations of state and/or federal wage and hour and other employment laws, privacy and other consumer-based claims. Some of these lawsuits may include certified classes of litigants, or purport or may be determined to be class or collective actions and seek substantial damages or injunctive relief, or both, and some may remain unresolved for several years. We believe the recorded accruals in our Consolidated Financial Statements are adequate in light of the probable and estimable liabilities.

On March 2, 2023, Nordstrom Canada commenced a wind-down of its business operations pursuant to a CCAA proceeding overseen by the Ontario Superior Court of Justice. See Note 2: Canada Wind-down in Part II for more information.

As of the date of this report, we do not believe any other currently identified claim, proceeding or litigation, either alone or in the aggregate, will have a material impact on our results of operations, financial position or cash flows. Since these matters are subject to inherent uncertainties, our view of them may change in the future.

Item 4. Mine Safety Disclosures.

None.

Nordstrom, Inc. and subsidiaries 25

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PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.

(Dollar and share amounts in millions, except per share amounts and where otherwise noted)

MARKET AND SHAREHOLDER INFORMATION

Our common stock, without par value, is traded on the NYSE under the symbol “JWN.” The approximate number of record holders of common stock as of March 14, 2025 was 4,286. On this date, we had 166,898,470 shares of common stock outstanding.

DIVIDENDS

The following table summarizes our historical dividends declared and paid per share:


Fiscal year	2024	2023
1st Quarter	$0.19	$0.19
2nd Quarter	0.19	0.19
3rd Quarter	0.19	0.19
4th Quarter	0.19	0.19
Full Year	$0.76	$0.76

Any future determination to pay cash dividends and the amount of dividends will be at the discretion of the Board of Directors and will be dependent upon our financial condition, operating results, capital requirements, contractual commitments and such other factors as the Board of Directors deems relevant (see Liquidity in Item 7 and Note 11: Shareholders’ Equity in Item 8).

SHARE REPURCHASES

We repurchased no shares of common stock during the fourth quarter of 2024 and we had $438 remaining in share repurchase capacity as of February 1, 2025.

See Note 11: Shareholders’ Equity in Item 8 for more information about our August 2018 and May 2022 share repurchase programs. While the Merger Agreement is in effect, we are prohibited from repurchasing shares of our common stock, including under the May 2022 program, without the prior written consent of Parent. The actual timing, price, manner and amounts of future share repurchases, if any, will be subject to the discretion of the Board of Directors, contractual commitments, market and economic conditions and applicable SEC rules.

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STOCK PRICE PERFORMANCE

The following graph compares the cumulative total return of Nordstrom common stock, Standard & Poor’s Retail Index (“S&P Retail”), Standard & Poor’s 500 Index (“S&P 500”) and Nordstrom’s peer group for each of the last five fiscal years ended February 1, 2025. S&P Retail is composed of 15 retail companies representing an industry group of the S&P 500. Our peer group is consistent with the retail peer group that we include in the Compensation Discussion and Analysis section of Item 11 in Part III and is weighted by the market capitalization of each component. The following graph assumes an initial investment of $100 each in Nordstrom common stock, S&P Retail, S&P 500 and Nordstrom’s peer group on February 1, 2020 and assumes reinvestment of dividends.


End of fiscal year1	2019	2020	2021	2022	2023	2024
Nordstrom common stock	$100	$98	$61	$53	$54	$75
S&P Retail	$100	$141	$150	$124	$174	$228
S&P 500	$100	$117	$142	$132	$164	$202
Nordstrom’s peer group	$100	$112	$122	$130	$144	$175

1 Dollar amounts are in ones.

Nordstrom, Inc. and subsidiaries 27

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Item 6. [Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(Dollar and share amounts in millions, except per share amounts and where otherwise noted)

The following MD&A provides a narrative of our financial performance and is intended to promote understanding of our results of operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, Item 8: Financial Statements and Supplementary Data and generally discusses the results of operations for fiscal year 2024 compared with 2023. For our comparison and discussion of 2023 and 2022, see Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II of our 2023 Annual Report. For our discussion of market risk information for 2023, see Item 7A: Quantitative and Qualitative Disclosures About Market Risk in Part II of our 2023 Annual Report. The following discussion and analysis contains forward-looking statements and should also be read in conjunction with Item 1A: Risk Factors in Part I, as well as other cautionary statements and risks described elsewhere in this 2024 Annual Report, before deciding to purchase, hold or sell shares of our common stock.


Overview			29
Results of Operations			30
Liquidity			35
Capital Resources			38
Critical Accounting Estimates			40
Recent Accounting Pronouncements			41

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OVERVIEW

In 2024, we reported net earnings of $294, or 2.0% of net sales, $1.74 per diluted share and EBIT of $495, or 3.4% of net sales. Excluding charges related primarily to a supply chain asset impairment in the second quarter, accelerated technology depreciation in the third and fourth quarters, and privatization fees in the fourth quarter, adjusted EBIT was $593 or 4.1% of net sales, and adjusted EPS was $2.17 for 2024.

Total Company net sales increased 2.4% compared with 2023, including a negative impact of approximately $190, or 130 basis points, from the 53rd week in 2023, and total Company comparable sales increased 3.6%. In 2024, women’s apparel, active, men’s apparel, kids and shoes had the strongest growth compared with 2023.

We remain committed to delivering profitable growth while improving the customer experience. Our results reflect our focus throughout 2024 on our three priorities: driving Nordstrom banner growth, operational optimization and building on momentum at Nordstrom Rack.

Driving Nordstrom banner growth – We are committed to driving growth at the Nordstrom banner, with a focus on digital-led growth supported by stores, aiming to further enable our customers to shop when and where they want. In our Nordstrom stores, we continued our efforts to provide a more consistent offering of the brands that matter most to our customers across our entire store fleet. This includes ensuring that we have the newness, relevance and depth of merchandise that our customers value, including our Nordstrom private brands, which were relaunched earlier this year. Our efforts to drive Nordstrom banner growth are taking hold, resulting in comparable sales growth of 3% in 2024 and over 5% in the fourth quarter as we had investments during the year to improve the offering of our customers’ favorite brands. For our customers that prefer to shop online, we aim to make the experience seamless and engaging through technology. In the first quarter of 2024, we launched our digital Marketplace on Nordstrom.com, which allows customers to shop more products and sizes from their favorite brands while providing more access to new and emerging labels. We currently have over 400 sellers offering a wide selection to our customers and we expect to continue to scale our Marketplace business in 2025.

Operational optimization – We are focused on optimizing our operations, including in our supply chain, to drive improvements in customer experience through faster delivery and moving product efficiently through our network to provide relevance and freshness. We continued to make progress against our supply chain initiatives during 2024, lowering our per unit costs and strengthening our inventory integrity while delivering a better experience to our customers through a consistent flow of fresh merchandise. We also expanded the penetration of our RFID technology across our locations, which increased our real time visibility into our inventory health and integrity while enhancing the customer experience through improved inventory accuracy, and our inventory shrinkage improved over last year.

Building on momentum at Nordstrom Rack – We continued to expand our reach and convenience for customers by opening 23 new Nordstrom Rack stores in 2024 and expect to open a similar number of stores in 2025. We believe new Rack stores are a great investment, with returns that exceed our cost of capital and have a short payback period. Expanding our network of stores also brings our omni-channel services closer to the customer, giving them more reasons and opportunities to engage with us. In 2024, we launched store fulfillment of Rack digital orders and the ability to buy online and pick up in over 100 Nordstrom Rack stores. Our Rack business continues to be a differentiator in off-price retail, enabling our customers to shop when and how they want. Our strategy and focus on great brands at great prices continued to deliver results with increases in traffic, conversion and customers during the fourth quarter of 2024.

We maintained the momentum we built throughout the year, which resulted in full-year sales and profitability coming in at the high end of our expectations. We are proud of the efforts that we undertook in 2024, as well as the outcomes that enhanced the customer experience and drove improved financial results. We are committed to delivering profitable growth while improving the customer experience, and we expect 2025 to be a year of continued momentum toward the long-term strength and durability of our business.

Pending Merger

In December 2024, Nordstrom, Inc. announced that it had reached an agreement with members of the Nordstrom family and Liverpool to acquire all of the outstanding common shares of Nordstrom, Inc. not already beneficially owned by the Nordstrom family and Liverpool. The transaction is expected to close in the first half of 2025, subject to certain conditions, including approval by shareholders. Upon completion, the Company’s common stock will be delisted on the NYSE, and Nordstrom, Inc. will become a private Company. See Note 1: Nature of Operations and Summary of Significant Accounting Policies in Item 8 for additional information.

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RESULTS OF OPERATIONS

In our ongoing effort to enhance the customer experience, we are focused on providing a seamless retail experience across our Company. We continue to invest in integrating our operations, merchandising and technology across our stores and online in both our Nordstrom and Nordstrom Rack banners. By connecting our digital and physical assets across Nordstrom and Nordstrom Rack, we are able to better serve customers when, where and how they want to shop. We have one Retail reportable segment and analyze our results on a total Company basis, using customer, market share, operational and net sales metrics.

We operate on a 52/53-week fiscal year ending on the Saturday closest to January 31st. References to 2024 and any other year included within this document are based on a 52-week fiscal year, except for fiscal year 2023, which was a 53-week fiscal year.

We monitor a number of key operating metrics to evaluate our performance. In addition to net sales, net earnings and other results under GAAP, other key operating metrics we use are GMV, comparable sales and inventory turnover rate.

•GMV: calculated as the total dollar value of owned and unowned inventory sold through our digital platforms and stores, including the impact of estimated future customer returns and deferred revenue from The Nordy Club points and Notes. We use GMV as an indicator of the scale and growth of our operations and the impact of our unowned inventory models.

•Comparable Sales: calculated as the total dollar value of owned and unowned inventory sold through our digital platforms and stores, which are added to the comparable sales base after they have been open for 13 full months or more, and removed in the month of their closure. Comparable sales are net of actual returns. Due to the 53rd week in 2023, we calculate our 2024 comparable sales growth using a realigned 2023 52-week period. We use comparable sales to evaluate the performance of our business without the impact of recently opened or closed stores.

•Inventory Turnover Rate: calculated as the trailing four-quarter merchandise cost of sales divided by the trailing 13-month average inventory. Inventory turnover rate is an indicator of our success in optimizing inventory volumes in accordance with customer demand. Merchandise inventories prior to February 4, 2024 were calculated under the retail inventory method. Effective February 4, 2024, we changed our accounting method to the weighted average cost method, and recorded the cumulative effect of this change in accounting principle in beginning accumulated deficit on our Consolidated Balance Sheet as of February 4, 2024 (see Note 1: Nature of Operations and Summary of Significant Accounting Policies in Item 8).

Additionally, we use Operational GMV, calculated as the total dollar value of owned and unowned inventory sold through our digital platforms and stores, excluding the impact of estimated future customer returns and deferred revenue from The Nordy Club points and Notes, to measure incentive compensation. Refer to Item 11. Executive Compensation in Part III for additional information.

Net Sales

The following table summarizes net sales:


Fiscal year	2024		2023
Net sales:
Nordstrom	$9,390		$9,436
Nordstrom Rack	5,167		4,783
Total net sales	$14,557		$14,219

Net sales increase (decrease):
Nordstrom	(0.5	%)	(8.2	%)
Nordstrom Rack	8.0	%	(0.6	%)
Total Company	2.4	%	(5.8	%)

Digital sales:
As a % of total net sales	36	%	36	%
Digital sales increase (decrease)	2.3	%	(10.5	%)

GMV increase (decrease):
Nordstrom	0.6	%	(8.5	%)
Total Company	3.1	%	(6.1	%)

Total Company net sales and GMV increased for fiscal year 2024, compared with 2023. Full fiscal year 2023 results included approximately 130 basis point positive impact and approximately $190 in additional net sales related to the 53rd week. Women’s apparel, active and men’s apparel had the strongest growth compared with 2023. Total Company digital sales increased for fiscal year 2024, compared with 2023. Comparable sales increased 3.6% in 2024 compared with 2023.

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Nordstrom net sales decreased and GMV increased compared with 2023, which reflected a decrease in the number of items sold, while the average selling price per item sold remained flat. Full fiscal year 2023 results included an approximately 120 basis point positive impact related to the 53rd week. Nordstrom comparable sales increased 3.0% in 2024 compared with 2023.

Nordstrom Rack net sales increased compared with 2023, which reflected an increase in both the number of items sold and the average selling price per item sold. Full fiscal year 2023 results included an approximately 150 basis point positive impact related to the 53rd week. Nordstrom Rack comparable sales increased 4.7% in 2024 compared with 2023.

See Note 3: Revenue in Item 8 for information about disaggregated revenues.

Credit Card Revenues, Net

Credit card revenues, net decreased $15 compared with 2023, primarily due to higher credit losses, partially offset by an increase in finance charges from higher outstanding balances.

Gross Profit

The following table summarizes gross profit:


Fiscal year	2024		2023
Gross profit	$5,161		$4,916
Gross profit as a % of net sales	35.5	%	34.6	%
Inventory turnover rate	3.51		3.58

In 2024, gross profit increased $245 and 90 basis points as a rate of net sales compared with 2023, primarily due to higher sales and merchandise margin expansion driven by increased inventory productivity and improved shrinkage, partially offset by higher labor costs.

Ending inventory as of February 1, 2025 increased 11%, compared with February 3, 2024, versus a 2% decrease in sales in the fourth quarter of 2024, compared with 2023. The increase in inventory levels compared with 2023 was driven primarily by growth in the top brands at both banners and higher in-transit inventory late in the fourth quarter.

Selling, General and Administrative Expenses

SG&A is summarized in the following table:


Fiscal year	2024		2023
SG&A	$5,125		$4,855
SG&A as a % of net sales	35.2	%	34.2	%

SG&A increased $270 and 105 basis points as a rate of net sales in 2024 compared with 2023, primarily due to higher labor costs and charges related to a supply chain asset impairment, accelerated technology depreciation and privatization fees. These charges are included in unallocated Corporate/Other expenses within Note 15: Segment Reporting in Item 8. In addition, the change in SG&A rate was partially offset by leverage on higher sales.

Canada Wind-down Costs

We recognized charges associated with the wind-down of Nordstrom Canada of $284 in the year ended February 3, 2024 (see Note 2: Canada Wind-down in Item 8).

Earnings Before Interest and Income Taxes

EBIT is summarized in the following table:


Fiscal year	2024		2023
EBIT	$495		$251
EBIT margin	3.4	%	1.8	%

EBIT increased $244 and 165 basis points as a rate of net sales in 2024 compared with 2023. The increase was primarily due to $284 of expenses associated with the wind-down of Canadian operations in 2023 and higher sales in 2024, partially offset by higher labor costs and charges related to a supply chain asset impairment, accelerated technology depreciation and privatization fees.

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Interest Expense, Net

Interest expense, net is summarized in the following table:


Fiscal year	2024	2023
Interest on long-term debt and short-term borrowings	$143	$150

Interest income	(33)	(33)
Capitalized interest	(8)	(13)
Interest expense, net	$102	$104

Interest expense, net decreased $2 in 2024 compared with 2023, primarily due to the retirement of our 2.30% senior notes in April 2024, partially offset by a decrease in capitalized interest.

Income Tax Expense

Income tax expense is summarized in the following table:


Fiscal year	2024		2023
Income tax expense	$99		$13
Effective tax rate	25.3	%	8.6	%

The following table illustrates the components of our effective tax rate:


Fiscal year	2024		2023
Statutory rate	21.0	%	21.0	%
State and local income taxes, net of federal income taxes	3.9	%	4.0	%
Federal credits	(1.8	%)	(4.7	%)
Non-deductible expenses	1.4	%	2.9	%
Stock-based compensation	1.1	%	5.1	%
Valuation allowance	—		6.6	%
Taxes on foreign operations	1.2	%	1.5	%
Excess tax over book loss on Canada wind-down	(2.0	%)	(18.2	%)
Resolution of prior period tax matters	—		(11.2	%)
Other, net	0.5	%	1.6	%
Effective tax rate	25.3	%	8.6	%

The increase in the effective tax rate for 2024, compared with 2023, was primarily due to additional tax benefits related to the wind-down of Canadian operations and the favorable resolution of certain tax matters recorded in 2023.

Earnings Per Share

EPS is as follows:


Fiscal year	2024	2023
Basic	$1.79	$0.83
Diluted	$1.74	$0.82

Diluted EPS increased $0.92 in 2024 compared with 2023, primarily due to higher sales in fiscal year 2024. Charges related to a supply chain asset impairment, accelerated technology depreciation and privatization fees decreased EPS by $0.43 per diluted share for fiscal year 2024. Charges related to the wind-down of Canadian operations and a supply chain asset impairment and related charge decreased EPS by $1.30 per diluted share for fiscal year 2023.

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Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT Margin and Adjusted EPS (Non-GAAP Financial Measures)

The following are key financial metrics and, when used in conjunction with GAAP measures, we believe they provide useful information to evaluate our core business performance and enable comparison of financial results across periods. They also allow for greater transparency with respect to key metrics used by management for financial and operational decision-making. Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT margin and Adjusted EPS exclude certain items that we do not consider representative of our core operating performance. The financial measure calculated under GAAP which is most directly comparable to Adjusted EBIT and Adjusted EBITDA is net earnings. The financial measure calculated under GAAP which is most directly comparable to Adjusted EBIT margin is net earnings as a percent of net sales. The financial measure calculated under GAAP which is most directly comparable to Adjusted EPS is diluted EPS.

Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT margin and Adjusted EPS are not measures of financial performance under GAAP and should be considered in addition to, and not as a substitute for, net earnings, net earnings as a percent of net sales, operating cash flows, earnings per share, earnings per diluted share or other financial measures performed in accordance with GAAP. Our method of determining non-GAAP financial measures may differ from other companies’ financial measures and therefore may not be comparable to methods used by other companies.

The following is a reconciliation of net earnings to Adjusted EBIT and Adjusted EBITDA and net earnings as a percent of net sales to Adjusted EBIT margin:


Fiscal year	2024		2023
Net earnings	$294		$134
Income tax expense	99		13
Interest expense, net	102		104
Earnings before interest and income taxes	495		251
Privatization fees1	18		—
Accelerated technology depreciation2	26		—
Supply chain asset impairment and other	54		32
Canada wind-down costs	—		284
Adjusted EBIT	593		567
Depreciation and amortization expenses	573		586
Amortization of developer reimbursements	(57)		(69)
Adjusted EBITDA	$1,109		$1,084

Net sales	$14,557		$14,219
Net earnings as a % of net sales	2.0	%	0.9	%
EBIT margin	3.4	%	1.8	%
Adjusted EBIT margin	4.1	%	4.0	%

1 Privatization fees include transaction-related expenses incurred in connection with the Merger. These fees are included in SG&A on the Consolidated Statement of Earnings.

2As a result of a strategic decision, we recognized a charge related to incremental accelerated depreciation for a technology asset. The charge is included in SG&A on the Consolidated Statement of Earnings, unallocated Corporate/Other expenses in Note 15: Segment Reporting and depreciation and amortization expenses on the Consolidated Statement of Cash Flows.

The following is a reconciliation of diluted EPS to Adjusted EPS:


Fiscal year	2024	2023
Diluted EPS	$1.74	$0.82
Privatization fees	0.11	—
Accelerated technology depreciation	0.16	—
Supply chain asset impairment and other	0.32	0.19
Canada wind-down costs	—	1.74
Income tax impact on adjustments1	(0.16)	(0.63)
Adjusted EPS	$2.17	$2.12

1 The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate for the respective non-GAAP adjustment.

Nordstrom, Inc. and subsidiaries 33

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Adjusted ROIC (Non-GAAP Financial Measure)

We believe that Adjusted ROIC is a useful financial measure for investors in evaluating the efficiency and effectiveness of the capital we have invested in our business to generate returns over time. Our Adjusted ROIC calculation excludes certain items that we do not consider representative of our core operating performance.

Adjusted ROIC is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, return on assets, net earnings, total assets or other GAAP financial measures. Our method of calculating a non-GAAP financial measure may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The financial measure calculated under GAAP which is most directly comparable to Adjusted ROIC is return on assets. The following shows the components to reconcile the return on assets calculation to Adjusted ROIC:


Fiscal year	2024		2023
Net earnings	$294		$134
Income tax expense	99		13
Interest expense	135		137
Earnings before interest and income tax expense	528		284

Operating lease interest1	92		86


Non-operating related adjustments2	98		316
Adjusted net operating profit	718		686
Adjusted estimated income tax expense3	(183)		(172)
Adjusted net operating profit after tax	$535		$514

Average total assets	$8,770		$8,766
Average noncurrent deferred property incentives in excess of ROU assets4	(120)		(157)
Average non-interest bearing current liabilities	(2,915)		(2,954)
Non-operating related adjustments5	40		394
Adjusted average invested capital	$5,775		$6,049

Return on assets	3.3	%	1.5	%
Adjusted ROIC	9.3	%	8.5	%

1 Operating lease interest is a component of operating lease cost recorded in occupancy costs. We add back operating lease interest for purposes of calculating adjusted net operating profit for consistency with the treatment of interest expense on our debt.

2 See the Adjusted EBIT and Adjusted EBITDA section for detailed information on certain non-operating related adjustments.

3 Adjusted estimated income tax expense is calculated by multiplying the adjusted net operating profit by the adjusted effective tax rate (which removes the impact of non-operating related adjustments) for the trailing twelve-month periods ended February 1, 2025 and February 3, 2024. The adjusted effective tax rate is calculated by dividing adjusted income tax expense by adjusted earnings before income taxes for the same trailing twelve-month periods.

4 For leases with property incentives that exceed the ROU assets, we reclassify the amount from assets to other current liabilities and other liabilities on the Consolidated Balance Sheets. The current and noncurrent amounts are used to reduce average total assets above, as this better reflects how we manage our business.

5 Non-operating related adjustments primarily included supply chain impairment charges and accelerated technology depreciation for the trailing twelve-month period ended February 1, 2025 and the wind-down of our Canadian operations for the trailing twelve-month period ended February 3, 2024.

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LIQUIDITY

We strive to maintain a level of liquidity sufficient to allow us to cover our seasonal cash needs and appropriate levels of short-term borrowing capacity. In the short term, our ongoing working capital and capital expenditure requirements, and any dividend payments or share repurchases, are generally funded through cash flows generated from operations. In addition, we have access to the commercial paper market and can draw on our Revolver for working capital, capital expenditures and general corporate purposes. Over the long term, we manage our cash and capital structure to maximize shareholder return, maintain our financial position, manage refinancing risk and allow flexibility for strategic initiatives. We regularly assess our debt and leverage levels, capital expenditure requirements, debt service payments, dividend payouts, share repurchases and other future investments.

We ended fiscal year 2024 with $1,035 in cash and cash equivalents and $771 of additional liquidity available on our Revolver. Cash and cash equivalents as of February 1, 2025, increased from $628 in 2023, driven by changes in working capital primarily driven by our amended 2024 TD program agreement and changes in compensation, partially offset by payments for capital expenditures and principal payments on long-term debt.

During the first quarter of 2024, we retired our 2.30% senior notes that were due in April 2024 using cash on hand (see Note 6: Debt and Credit Facilities in Item 8). We believe that our cash flows from operations are sufficient to meet our cash requirements for the next 12 months and beyond. Our cash requirements are subject to change as business conditions warrant and opportunities arise, and we may elect to raise additional funds in the future through the issuance of either debt or equity. Our operating cash flows could be impacted due to expected transaction costs related to the pending Merger. We do not believe that the Merger Agreement will prevent us from meeting our debt obligations, ongoing costs of operations, working capital needs or capital expenditure requirements.

The following is a summary of our cash flows by activity:


Fiscal year	2024	2023
Net cash provided by operating activities	$1,267	$621
Net cash used in investing activities	(488)	(571)
Net cash used in financing activities	(372)	(109)

Operating Activities

The majority of our operating cash inflows are derived from revenues. We also receive cash payments for property incentives from developers and vendors. Our operating cash outflows generally consist of payments to our merchandise vendors (net of vendor allowances) and shipping carriers, payments to our employees for wages, salaries and other employee benefits and payments to our landlords for rent. Operating cash outflows also include payments for income taxes and interest payments on our short-term and long-term borrowings.

Net cash provided by operating activities increased $646 between 2024 and 2023, due to changes in working capital primarily driven by our amended 2024 TD program agreement and changes in compensation in addition to higher net earnings.

Investing Activities

Our investing cash outflows include payments for capital expenditures, including technology, stores and supply chain improvements. Our investing cash inflows are generally from proceeds from sales of property and equipment. Activity also includes the purchase and sale of financial interests of certain private companies and venture capital funds, and return of investments.

Net cash used in investing activities decreased $83 between 2024 and 2023, primarily due to decreased capital expenditures and the decrease in cash and cash equivalents resulting from the deconsolidation of Canada in 2023 (see Note 2: Canada Wind-down in Item 8).

Nordstrom, Inc. and subsidiaries 35

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Capital Expenditures

Our capital expenditures, net are summarized as follows:


Fiscal year	2024		2023
Capital expenditures	$516		$569
Deferred property incentives1	(10)		(35)
Capital expenditures, net	$506		$534



Capital expenditures, net category allocation:
Technology	56	%	59	%
New stores, relocations, remodels and other	36	%	31	%
Supply chain	8	%	10	%
Total	100	%	100	%

1 Deferred property incentives are included in our net cash provided by operating activities in our Consolidated Statements of Cash Flows in Item 8. We operationally view the property incentives we receive from our developers and vendors as an offset to our capital expenditures.


Fiscal year	20251	2024		2023		2022		2021		2020
Capital expenditures as a % of net sales	2.5%-3.5%	3.6	%	4.0	%	3.1	%	3.5	%	3.7	%

1 Rate represents amounts forecasted in 2025.

Capital expenditures as a percentage of net sales in 2024 were in the range of our outlook, and decreased compared with 2023, primarily due to decreases in technology expenditures and cost efficiencies for Nordstrom Rack store openings. Going forward, we expect capital expenditure requirements on average to range from 2.5% to 3.5% of net sales and primarily support investments in technology and stores. We are committed to paying approximately $25 of capital expenditures as of the end of the year, which is included within our purchase obligation commitments in Note 13: Commitments and Contingencies in Item 8, which we expect to impact our liquidity in the next year.

Financing Activities

The majority of our financing activities include long-term debt or Revolver proceeds and/or payments, dividend payments and repurchases of common stock.

Net cash used in financing activities increased $263 between 2024 and 2023, primarily due to the retirement of our 2.30% senior notes due April 2024 using cash on hand (see Note 6: Debt and Credit Facilities in Item 8).

Share Repurchases

While the Merger Agreement is in effect, we are prohibited from repurchasing shares of our common stock, including under the stock repurchase program, without the prior written consent of Parent. At any other time, we determine the size and timing of share repurchases by analyzing a number of different factors, including our liquidity position, current market and economic conditions and alternative uses of capital, including those used to offset anticipated dilution from equity incentive plans. Share repurchases are made as conditions warrant in the open market and are then retired. We repurchased no shares of our common stock in 2024, compared with 0.03 shares repurchased for $1 in 2023, and had $438 remaining in share repurchase capacity as of February 1, 2025. The actual timing, price, manner and amounts of future share repurchases, if any, will be subject to the discretion of the Board of Directors, contractual commitments, market and economic conditions and applicable SEC rules (see Note 11: Shareholders’ Equity in Item 8).

Dividends

In determining the dividends to pay, we analyze our dividend payout ratio and dividend yield, while taking into consideration our current and projected operating performance and liquidity, subject to our Revolver covenants (see Note 6: Debt and Credit Facilities in Item 8). In 2024, we paid dividends of $124, or $0.76 per share, compared with $123, or $0.76 per share, in 2023 (see Note 11: Shareholders’ Equity in Item 8). While the Merger Agreement is in effect, we are prohibited from declaring dividends on our common stock other than regular quarterly dividends not to exceed $0.19 per share, a stub period dividend contingent upon the closing of the Merger, and a special dividend prior to and contingent upon the closing of the Merger. We expect a continuation of our 2024 dividend payment levels into 2025 pending the completion of the Merger, which is expected to close in the first half of 2025.

In February 2025, subsequent to year-end, we declared a quarterly dividend of $0.19 per share, which will be paid on March 26, 2025 to shareholders of record as of March 11, 2025.

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Cash Requirements

We have various commitments and other executory contracts that are disclosed in the following Notes to Consolidated Financial Statements in Item 8:

•Note 2: Canada Wind-down

•Note 5: Leases

•Note 6: Debt and Credit Facilities

•Note 8: Self-Insurance

•Note 9: Supplemental Executive Retirement Plan

•Note 12: Income Taxes

•Note 13: Commitments and Contingencies

Other commitments include $63 for deferred compensation and other accrued benefits, $10 of which is payable within one year.

Off-Balance Sheet Arrangements

In connection with our workers’ compensation programs, we have a standby letter of credit issued on our behalf with $13 available and $2 outstanding as of February 1, 2025 (see Note 8: Self-Insurance in Item 8). In addition, as of February 1, 2025 we have an outstanding standby letter of credit of $29 reducing our short-term borrowing capacity on our Revolver (see Note 6: Debt and Credit Facilities in Item 8). In management’s opinion, we have no off-balance sheet arrangements that have a material current or future effect on our financial condition or financial statements.

Free Cash Flow (Non-GAAP Financial Measure)

Free Cash Flow is one of our key liquidity measures and, when used in conjunction with GAAP measures, we believe it provides investors with a meaningful analysis of our ability to generate cash from our business.

Free Cash Flow is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, operating cash flows or other financial measures prepared in accordance with GAAP. Our method of calculating a non-GAAP financial measure may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The financial measure calculated under GAAP which is most directly comparable to Free Cash Flow is net cash provided by operating activities. The following is a reconciliation of net cash provided by operating activities to Free Cash Flow:


Fiscal year	2024	2023
Net cash provided by operating activities	$1,267	$621
Capital expenditures	(516)	(569)
Change in cash book overdrafts	(4)	2
Free Cash Flow	$747	$54

Nordstrom, Inc. and subsidiaries 37

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CAPITAL RESOURCES

Borrowing Capacity and Activity

As of February 1, 2025, we had no outstanding borrowings under the Revolver and a $29 outstanding standby letter of credit resulting in available short-term borrowing capacity of $771. As of February 1, 2025, we had no issuances outstanding under our commercial paper program. For more information about our credit facilities, see Note 6: Debt and Credit Facilities in Item 8.

Impact of Credit Ratings and Revolver Covenants

Changes in our credit ratings may impact our costs to borrow and whether our personal property secures our Revolver.

For our Revolver, the interest rate applicable to any borrowings we may enter into depends upon the type of borrowing incurred plus an applicable margin, which is determined based on our credit ratings. At the time of this report, our credit ratings and outlook were as follows:


	Credit Ratings	Outlook
Moody’s	Ba2	Stable
S&P Global Ratings	BB	Stable
Fitch Ratings	BB	Stable

Should the ratings assigned to our long-term debt improve, the applicable margin associated with any borrowings under the Revolver may decrease, resulting in a lower borrowing cost under this facility. Conversely, should the ratings assigned to our long-term debt worsen, the applicable margin associated with any borrowings under the Revolver may increase, resulting in a higher borrowing cost under this facility.

As of February 1, 2025, we were in compliance with all covenants. We have certain limitations with respect to the payment of dividends and share repurchases under our Revolver. For more information about our Revolver covenants, see Note 6: Debt and Credit Facilities in Item 8.

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Adjusted Debt to EBITDAR (Non-GAAP Financial Measure)

Adjusted debt to EBITDAR is one of our key financial metrics and we believe that our debt levels are best analyzed using this measure, as it provides a reflection of our creditworthiness, which could impact our credit ratings and borrowing costs. This metric is calculated in accordance with our Revolver covenant and is a key component in assessing whether our revolving credit facility is secured or unsecured, as well as our ability to make dividend payments and share repurchases. For more information regarding our Revolver, see Note 6: Debt and Credit Facilities in Item 8.

Adjusted debt to EBITDAR is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, debt to net earnings, net earnings, debt or other GAAP financial measures. Our method of calculating a non-GAAP financial measure may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The financial measure calculated under GAAP which is most directly comparable to Adjusted debt to EBITDAR is debt to net earnings. The following shows the components to reconcile the debt to net earnings calculation to Adjusted debt to EBITDAR:


			February 1, 2025
Debt			$2,618
Operating lease liabilities			1,665
Adjusted debt			$4,283

Four Quarters Ended February 1, 2025
Net earnings			$294
Income tax expense			99
Interest expense, net			102
Earnings before interest and income taxes			495

Depreciation and amortization expenses			573
Operating Lease Cost			291
Amortization of developer reimbursements1			57


Other Revolver covenant adjustments2			125
Adjusted EBITDAR			$1,541

Debt to Net Earnings			8.9
Adjusted debt to EBITDAR			2.8

1 Amortization of developer reimbursements is a non-cash reduction of Operating Lease Cost and is therefore added back to Operating Lease Cost for purposes of our Revolver covenant calculation.

2 Other adjusting items to reconcile net earnings to Adjusted EBITDAR as defined by our Revolver covenant include interest income, certain non-cash charges and other gains and losses where relevant. For the four quarters ended February 1, 2025, other Revolver covenant adjustments primarily included supply chain impairment charges, interest income and accelerated technology depreciation. See the Adjusted EBIT and Adjusted EBITDA section for detailed information on certain non-operating related adjustments.

Nordstrom, Inc. and subsidiaries 39

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CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with GAAP requires that we make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities during the reporting period. Uncertainties regarding such estimates and assumptions are inherent in the preparation of financial statements. Actual results may differ from these estimates and assumptions. The following discussion highlights the estimates we believe are critical and should be read in conjunction with the Notes to Consolidated Financial Statements in Item 8. Our management has discussed the development and selection of these critical accounting estimates with the Audit and Finance Committee of our Board of Directors, and the Audit and Finance Committee has reviewed our disclosures that follow.

Revenue

Sales Return Reserve

We reduce sales and cost of sales by an estimate of future customer merchandise returns, which is calculated based on historical and expected return patterns, and record a sales return reserve and an estimated returns asset. We record the impact of the sales return reserve separately in both our Nordstrom and Nordstrom Rack banners. The majority of our returns from both digital and physical sales come through our stores. Estimating future returns requires substantial judgment based on current and historical trends, and actual returns may vary from our estimates. A 10% change in the sales return reserve, net of the estimated returns asset, would impact our EBIT by approximately $18 for the year ended February 1, 2025.

The Nordy Club Loyalty Program and Gift Cards

We record breakage revenue for The Nordy Club, including unused points and unredeemed Nordstrom Notes, and gift cards based on historical and expected redemption trends. We have experienced an increase in redemption rates, leading to decreased breakage rates for The Nordy Club. A one percentage point change in our gift card breakage rate would impact our EBIT by approximately $44 for the year ended February 1, 2025.

Merchandise Inventories

Effective February 4, 2024, we changed our method of accounting for merchandise inventories from the retail inventory method to the weighted average cost method. Under this new method, merchandise inventories are stated at the lower of cost or net realizable value using the weighted average cost method. Under this method, the weighted average purchase price is calculated and applied to owned inventory units. We record reserves for excess and obsolete inventory based on specific identification of units with a current retail value below cost, plus an estimate of future markdowns below cost, which considers the age of inventory and historical trends. A 10% change in the excess and obsolete inventory reserve would impact our EBIT by approximately $13 for the year ended February 1, 2025.

We take physical inventory counts at our stores and Supply Chain Network locations and adjust for differences between recorded and counted amounts. Following each physical inventory cycle and using the most recent physical inventory count and historical results, we record an estimate for shrinkage as a percentage of weighted average cost until the next physical inventory count.

Impairment of Long-Lived Assets

These projections are inherently subject to uncertainties. While we believe the inputs and assumptions utilized in our future cash flows are reasonable, our estimates may change in the near term based on our current and future performance.

Income Taxes

We pay income taxes based on the tax statutes, regulations and case law of the various jurisdictions in which we operate. Our income tax expense and deferred tax assets and liabilities reflect our best estimate of current and future taxes to be paid. Income tax expense may be affected by numerous items, such as changes in tax law, changes in business operations, the results of tax audits and changes to our forecasts of income and loss due to economic and other conditions. Significant judgments and estimates are required in determining consolidated income tax expense.

Deferred tax assets and liabilities arise from differences between the financial reporting and tax basis of assets and liabilities and for operating loss and tax credit carryforwards. The deferred tax assets and liabilities are calculated using the enacted tax rates and laws expected to be in effect when the differences are expected to reverse. In evaluating the likelihood of realizing the benefit of our deferred tax assets, we consider all available evidence, including historical results and projected future taxable income. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage the underlying business.

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The benefits of uncertain tax positions are recorded in our financial statements only after determining it is more likely than not the uncertain tax positions would sustain challenge by taxing authorities. We are periodically audited by federal, state and foreign tax authorities related to our tax-filing positions. Although we believe our liabilities for uncertain tax positions are reasonable, because of the complexity of some of these uncertainties, the ultimate resolution may result in an outcome that is materially different from our current estimated liability. Furthermore, we are unable to reasonably estimate the timing of related future cash payments. Any differences will be reflected as increases or decreases to income tax expense in the period of resolution.

RECENT ACCOUNTING PRONOUNCEMENTS

For information about recent accounting pronouncements, see Note 1: Nature of Operations and Summary of Significant Accounting Policies in Item 8.

Nordstrom, Inc. and subsidiaries 41

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

(Dollars in millions)

INTEREST RATE RISK

For our long-term debt of $2,618, our exposure to interest rate risk is primarily limited to changes in fair value. As our debt is primarily fixed-rate, changes in interest rates do not materially impact our cash flows. However, changes in interest rates increase or decrease the fair value of our debt, depending on whether market rates are lower or higher than our fixed rates. As of February 1, 2025, the fair value of our long-term debt was $2,324 (see Note 6: Debt and Credit Facilities and Note 7: Fair Value Measurements in Item 8).

We are exposed to interest rate risk primarily from changes in short-term interest rates. Interest rate fluctuations can affect our interest income and interest expense. As of February 1, 2025, we had cash and cash equivalents of $1,035, which generate interest income at variable rates and no borrowings outstanding under our Revolver, for which we pay interest at a variable rate.

FOREIGN CURRENCY EXCHANGE RISK

The majority of our revenues, expenses and capital expenditures are transacted in U.S. Dollars. Our U.S. operations periodically enter into merchandise purchase orders denominated in British Pounds or Euros. From time to time, we may use forward contracts to hedge against fluctuations in foreign currency prices. As of February 1, 2025, our outstanding forward contracts did not have a material impact on our Consolidated Financial Statements.

As of February 1, 2025, activities associated with foreign currency exchange risk have not had a material impact on our Consolidated Financial Statements (see Note 1: Nature of Operations and Summary of Significant Accounting Policies in Item 8).

There have been no material changes in our primary risk exposures or management of market risks since the prior year.

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Item 8: Financial Statements and Supplementary Data.


Report of Independent Registered Public Accounting Firm			44
Consolidated Statements of Earnings			46
Consolidated Statements of Comprehensive Earnings			46
Consolidated Balance Sheets			47
Consolidated Statements of Shareholders’ Equity			48
Consolidated Statements of Cash Flows			49
Notes to Consolidated Financial Statements
Note 1: Nature of Operations and Summary of Significant Accounting Policies			50
Note 2: Canada Wind-down			57
Note 3: Revenue			59
Note 4: Land, Property and Equipment			60
Note 5: Leases			60
Note 6: Debt and Credit Facilities			61
Note 7: Fair Value Measurements			63
Note 8: Self-Insurance			63
Note 9: Supplemental Executive Retirement Plan			64
Note 10: Stock-based Compensation			65
Note 11: Shareholders’ Equity			68
Note 12: Income Taxes			69
Note 13: Commitments and Contingencies			71
Note 14: Earnings Per Share			71
Note 15: Segment Reporting			71

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Nordstrom, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Nordstrom, Inc. and subsidiaries (the “Company”) as of February 1, 2025 and February 3, 2024 and the related consolidated statements of earnings, comprehensive earnings, shareholders’ equity, and cash flows, for each of the three years in the period ended February 1, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 1, 2025, and February 3, 2024, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 21, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, effective February 4, 2024, the Company changed its method of accounting for merchandise inventories from the retail inventory method to the weighted average cost method.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Audit and Finance Committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Merchandise Inventories—Refer to Note 1 to the financial statements

Critical Audit Matter Description

The Company values its inventory at the lower of cost or net realizable value using the weighted average cost method. The Company records reserves for excess and obsolete inventory based on the specific identification of units with a current retail value below cost, plus an estimate of future markdowns below cost, which considers the age of inventory and historical trends.

Evaluation of the estimates required a high degree of auditor judgment and an increased extent of effort when (1) performing audit procedures to evaluate the reasonableness of the markdown rates used to estimate future markdowns below cost, and (2) performing audit testing of historical markdown rates utilized within the reserve calculation, to evaluate whether the reserve for merchandise inventory was appropriately recorded as of February 1, 2025.

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How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the reserves for excess and obsolete inventory, included the following, among others:

•We tested the effectiveness of controls over the review of excess and obsolete inventory and the required reserves to value inventory at the lower of cost or net realizable value.

•We evaluated the appropriateness of the markdown rates utilized in management’s analysis, which included analytical procedures over the aging of inventory balances and historical trends of markdowns recorded below cost.

•We compared actual inventory sold below cost in the current fiscal year to the inventory valuation reserve estimated by the Company in the prior year to evaluate management’s ability to accurately estimate the valuation reserve for inventory.

•We evaluated management’s calculation of the valuation reserve by testing the mathematical accuracy of the reserve calculation.

/s/ Deloitte & Touche LLP

Seattle, Washington

March 21, 2025

We have served as the Company’s auditor since 1970.

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Nordstrom, Inc.

Consolidated Statements of Earnings

(Amounts in millions except per share amounts)


Fiscal year	2024	2023	2022
Net sales	$14,557	$14,219	$15,092
Credit card revenues, net	459	474	438
Total revenues	15,016	14,693	15,530
Cost of sales and related buying and occupancy costs	(9,396)	(9,303)	(10,019)
Selling, general and administrative expenses	(5,125)	(4,855)	(5,046)
Canada wind-down costs	—	(284)	—
Earnings before interest and income taxes	495	251	465
Interest expense, net	(102)	(104)	(128)
Earnings before income taxes	393	147	337
Income tax expense	(99)	(13)	(92)
Net earnings	$294	$134	$245

Earnings per share:
Basic	$1.79	$0.83	$1.53
Diluted	$1.74	$0.82	$1.51

Weighted-average shares outstanding:
Basic	164.3	161.8	160.1
Diluted	168.9	163.4	162.1

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

Nordstrom, Inc.

Consolidated Statements of Comprehensive Earnings

(Amounts in millions)


Fiscal year	2024	2023	2022
Net earnings	$294	$134	$245
Postretirement plan adjustments, net of tax of ($2), ($2) and ($12)	5	5	32
Foreign currency translation adjustment	—	(4)	(8)
Comprehensive net earnings	$299	$135	$269

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

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Nordstrom, Inc.

Consolidated Balance Sheets

(Amounts in millions)


	February 1, 2025	February 3, 2024
Assets
Current assets:
Cash and cash equivalents	$1,035	$628
Accounts receivable, net	245	334
Merchandise inventories	2,104	1,888
Prepaid expenses and other current assets	305	286
Total current assets	3,689	3,136

Land, property and equipment, net	3,039	3,177
Operating lease right-of-use assets	1,419	1,359
Goodwill	249	249
Other assets	570	523
Total assets	$8,966	$8,444

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$1,288	$1,236
Accrued salaries, wages and related benefits	424	244
Current portion of operating lease liabilities	244	240
Other current liabilities	1,132	1,102
Current portion of long-term debt	—	250
Total current liabilities	3,088	3,072

Long-term debt, net	2,618	2,612

Noncurrent operating lease liabilities	1,421	1,377
Other liabilities	699	535

Commitments and contingencies (Note 13)

Shareholders’ equity:
Common stock, no par value: 1,000 shares authorized; 165.2 and 162.4 shares issued and outstanding	3,496	3,418
Accumulated deficit	(2,369)	(2,578)
Accumulated other comprehensive gain	13	8
Total shareholders’ equity	1,140	848
Total liabilities and shareholders’ equity	$8,966	$8,444

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

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Consolidated Statements of Shareholders’ Equity

(Amounts in millions except per share amounts)


Fiscal year ended	February 1, 2025	February 3, 2024	January 28, 2023
Common stock
Balance, beginning of year	$3,418	$3,353	$3,283
Issuance of common stock under stock compensation plans	20	20	29
Stock-based compensation	58	45	41
Balance, end of year	$3,496	$3,418	$3,353

Accumulated deficit
Balance, beginning of year	($2,578)	($2,588)	($2,652)
Cumulative effect of change in accounting principle, net of tax	39	—	—
Net earnings	294	134	245
Dividends	(124)	(123)	(119)
Repurchase of common stock	—	(1)	(62)
Balance, end of year	($2,369)	($2,578)	($2,588)

Accumulated other comprehensive gain (loss)
Balance, beginning of year	$8	($26)	($50)
Accumulated translation loss reclassified to earnings	—	33	—
Other comprehensive earnings	5	1	24
Balance, end of year	$13	$8	($26)

Total	$1,140	$848	$739

Dividends per share	$0.76	$0.76	$0.76

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

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Consolidated Statements of Cash Flows

(Amounts in millions)


Fiscal year	2024	2023	2022
Operating Activities
Net earnings	$294	$134	$245
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization expenses	603	586	604
Canada wind-down costs	—	207	—
Asset impairment	51	30	80
Right-of-use asset amortization	187	184	185
Deferred income taxes, net	(100)	(60)	(83)
Stock-based compensation expense	72	52	59
Other, net	(25)	(71)	(46)
Change in operating assets and liabilities:
Accounts receivables, net	78	(53)	23
Merchandise inventories	(115)	(61)	265
Prepaid expenses and other assets	19	14	(24)
Accounts payable	(16)	40	(190)
Accrued salaries, wages and related benefits	180	(42)	(94)
Other current liabilities	73	(73)	44
Lease liabilities	(266)	(272)	(269)
Other liabilities	232	6	147
Net cash provided by operating activities	1,267	621	946

Investing Activities
Capital expenditures	(516)	(569)	(473)

Decrease in cash and cash equivalents resulting from Canada deconsolidation	—	(33)	—
Proceeds from the sale of assets and other, net	28	31	80
Net cash used in investing activities	(488)	(571)	(393)

Financing Activities
Proceeds from revolving line of credit	—	—	100
Payments on revolving line of credit	—	—	(100)

Principal payments on long-term debt	(250)	—	—
Change in cash book overdrafts	(4)	2	(14)
Cash dividends paid	(124)	(123)	(119)
Payments for repurchase of common stock	—	(1)	(62)
Proceeds from issuances under stock compensation plans	20	20	29
Other, net	(14)	(7)	(20)
Net cash used in financing activities	(372)	(109)	(186)

Effect of exchange rate changes on cash and cash equivalents	—	—	(2)
Net increase (decrease) in cash and cash equivalents	407	(59)	365
Cash and cash equivalents at beginning of year	628	687	322
Cash and cash equivalents at end of year	$1,035	$628	$687

Supplemental Cash Flow Information
Income taxes paid, net of refunds received	$149	$53	$211
Interest paid, net of capitalized interest	126	143	136

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Founded in 1901 as a retail shoe business in Seattle, Washington, our Company is a leading fashion retailer that offers 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. This breadth of merchandise allows us to serve a wide range of customers who appreciate quality fashion and a superior shopping experience, across our digital and physical assets and in both our Nordstrom and Nordstrom Rack banners. Our facilities and stores are located in 41 states in the U.S.

As of February 1, 2025, Nordstrom includes:

•92 Nordstrom stores

•Nordstrom.com website and mobile application

•six Nordstrom Locals

As of February 1, 2025, Nordstrom Rack includes:

•277 Nordstrom Rack stores

•NordstromRack.com website and mobile application

•two Last Chance clearance stores

Fiscal Year

Principles of Consolidation

The Consolidated Financial Statements include the balances of Nordstrom, Inc. and its subsidiaries and are presented in U.S. dollars. All intercompany transactions and balances are eliminated in consolidation 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.

On March 2, 2023, Nordstrom Canada commenced a wind-down of its business operations (see Note 2: Canada Wind-down) and as of this date, Nordstrom Canada was deconsolidated from Nordstrom, Inc.’s financial statements. Nordstrom Canada results prior to March 2, 2023 are included in the Company’s Consolidated Financial Statements for the periods ended February 3, 2024 and prior.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires that we make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities during the reporting period. Uncertainties regarding such estimates and assumptions are inherent in the preparation of financial statements. Actual results may differ from these estimates and assumptions. Our most significant accounting judgments and estimates include revenue recognition, inventory valuation, long-lived asset recoverability, income taxes and contingent liabilities.

Revenue

Net Sales

We recognize sales revenue net of estimated returns and excluding sales taxes. Revenue from sales shipped to customers from our Supply Chain Network facilities, stores and directly from our vendors, 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, commissions from sales at our Nordstrom stores are expensed at the point of sale and both are recorded in SG&A expenses. Sales revenue from Marketplace is recorded on a net basis, representing the commission fee earned.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

We reduce sales and cost of sales by an estimate of future customer merchandise returns, which is calculated based on historical and expected 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 Consolidated Balance Sheets. As of February 1, 2025 and February 3, 2024, our sales return reserve was $379 and $377, and our estimated returns asset was $190 and $164. Due to the seasonality of our business, these balances typically increase when higher sales occur in the last month of a period, such as during the Anniversary Sale, which usually occurs at the end of the second quarter, and decrease in the following period. We record the impact of the sales return reserve separately in both our Nordstrom and Nordstrom Rack banners. The majority of our returns from both digital and physical sales come through our stores.

Loyalty Program

As our customers earn points and Nordstrom Notes in The Nordy Club, a portion of underlying sales revenue is deferred based on an estimated standalone selling price of points, Nordstrom Notes and other loyalty benefits, such as alterations. As Nordstrom Notes expire one year from issuance, we recognize the revenue and related cost of sale when the Nordstrom Notes are ultimately redeemed and reduce our contract liability. We include the deferred revenue in other current liabilities on the Consolidated Balance Sheets. We record breakage revenue of unused points and unredeemed Nordstrom Notes based on expected customer redemption. We estimate, based on historical and expected usage, that approximately 7% of Nordstrom Notes and points will be unredeemed. Estimating future breakage rates requires judgment based on current and historical trends, and actual breakage rates may vary from our estimates. Other benefits of the loyalty program, including shopping and fashion events, are recorded in SG&A as these are not a material right of the program.

As of February 1, 2025 and February 3, 2024, our outstanding performance obligation for The Nordy Club, which consists primarily of unredeemed points and Nordstrom Notes at retail value, was $109 and $115. Almost all Nordstrom Notes redemptions occur within eleven months of issuance.

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. Although our gift cards do not have an expiration date, we include this deferred revenue in other current liabilities on the Consolidated Balance Sheets as customers can redeem gift cards at any time. We record breakage revenue on unused gift cards based on expected customer redemption. We estimate, based on historical usage, that 4% of gift cards will be unredeemed and recognized as revenue. Estimating future breakage rates requires judgment based on current and historical trends, and actual breakage rates may vary from our estimates. Breakage income was $54, $52 and $40 in 2024, 2023 and 2022.

As of February 1, 2025 and February 3, 2024, our outstanding performance obligation for unredeemed gift cards was $327 and $343. Almost all gift card redemptions occur within two years of issuance.

Credit Card Revenues, net

Although the primary purpose of offering our credit cards is to foster greater customer loyalty and drive more sales, we also receive credit card revenue through our program agreement with TD. Under that agreement, which was amended in October 2024 and now runs through March 2032, TD is the exclusive issuer of Nordstrom-branded consumer credit cards. Credit card revenues, net include our portion of the ongoing credit card revenue, net of credit losses, pursuant to our program agreement with TD. In connection with the amendment, we recorded deferred revenue, which will be combined with the remaining deferred revenue recorded as part of our 2022 amendment and recognized in full over the term of the agreement. Our outstanding performance obligation for the TD agreement is included in other current liabilities and other liabilities on our Consolidated Balance Sheets and the amortization is included in other operating, net on the Consolidated Statements of Cash Flows.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Cost of Sales

Cost of sales primarily includes the purchase and manufacturing costs of inventory sold, net of vendor allowances, and in-bound freight and duty expense.

Buying and Occupancy Costs

Buying costs consist primarily of compensation and other costs incurred by our merchandising and product development groups. Occupancy costs include rent, depreciation, property taxes and facility operating costs of our stores, office facilities and Supply Chain Network facilities.

Selling, General and Administrative Expenses

SG&A consists primarily of compensation and benefits, marketing, outbound supply chain and technology costs.

Shipping and Fulfillment Costs

Our shipping and fulfillment costs include payments to third-party shippers and costs to hold, move and prepare merchandise for shipment. These costs do not include in-bound freight to our Supply Chain Network facilities, which we include in the cost of our inventory. Shipping and fulfillment costs of $758, $712 and $885 in 2024, 2023 and 2022 were included in SG&A.

Advertising

Advertising production costs for internet and print advertising, store events and other media are expensed the first time the advertisement is run. Online marketing costs are expensed when incurred. Total advertising expenses, net of vendor allowances, of $318, $313 and $309 in 2024, 2023 and 2022 were included in SG&A.

Vendor Allowances

We receive allowances from merchandise vendors for beauty expenses, purchase price adjustments, advertising programs and various other expenses. Allowances for beauty expenses, advertising programs and other expenses are recorded in SG&A as a reduction of the related costs when incurred. Purchase price adjustments are recorded as a reduction of cost of sales at the point they have been earned and the related merchandise has been marked down or sold. Advertising includes NMN, where vendors pay a fee for certain benefits, such as the use of our first-party data. Funds received from vendors are recorded as a reduction of the campaign cost in SG&A to the extent of the advertising costs incurred, with the excess treated as a reduction of cost of sales.

Vendor allowances earned are as follows:


Fiscal year	2024	2023	2022
Beauty expenses	$114	$114	$111
Purchase price adjustments	105	94	120
Advertising1	97	87	112
Other	8	6	2
Total vendor allowances	$324	$301	$345

1 Excludes advertising allowances in excess of costs incurred of $60, $40 and $24 in 2024, 2023 and 2022, which are recorded as a reduction of cost of sales.

401(k) Plan

We provide a 401(k) plan for our employees that allows for employee elective contributions and our matching contributions. Employee elective contributions are funded through voluntary payroll deductions. Total expenses related to Company contributions were $76 in 2024 and $71 in 2023 and 2022, and were included in both buying and occupancy costs and SG&A on our Consolidated Statements of Earnings.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Stock-Based Compensation

The EIP authorizes the grant of stock options, PSUs, RSUs, stock appreciation rights and both restricted and unrestricted shares of common stock to employees and nonemployee directors. We grant stock-based awards under our EIP and employees may purchase our stock at a discount under our ESPP. We predominantly recognize stock-based compensation expense related to stock-based awards at their estimated grant date fair value, recorded on a straight-line basis over the requisite service period. Compensation expense for certain award holders is accelerated based upon age and years of service. Compensation expense for PSUs is adjusted based on the payout percentage of the PSU grant subject to achieving specific performance measures. The total compensation expense is reduced by actual forfeitures as they occur.

We primarily estimate the grant date fair value of stock options using the Binomial Lattice-based valuation model, but for our price-hurdle grants in 2021, we estimate the grant date fair value using the Monte Carlo simulation valuation model. The grant date fair value of RSUs and PSUs is determined based on the number of RSUs or PSUs granted and the quoted price of our common stock on the date of grant, less the estimated present value of dividends over the vesting period. PSUs granted are classified as equity.

Amounts included on the following line items of our Consolidated Statements of Shareholders’ Equity and our Consolidated Statements of Cash Flows are as follows:

•Issuance of common stock under stock compensation plans — includes common stock option exercises and purchases of shares under the ESPP

•Stock-based compensation — primarily includes stock-based compensation expense for our common stock options, RSUs and PSUs, partially offset by shares withheld for taxes on RSUs and PSUs

New Store Opening Costs

Certain expenses associated with opening new stores, including marketing expenses, relocation expenses and occupancy costs, are not capitalized and are charged to expense as incurred. These costs are included in both buying and occupancy costs and SG&A, according to their nature as disclosed above.

Income Taxes

We use the asset and liability method of accounting for income taxes. Using this method, deferred tax assets and liabilities are recorded based on differences between the financial reporting and tax basis of assets and liabilities and for operating loss and tax credit carryforwards. The deferred tax assets and liabilities are calculated using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if, based on all available evidence, it is determined that some portion of the tax benefit will not be realized.

We regularly evaluate the likelihood of realizing the benefit for income tax positions we have taken in various federal, state and foreign filings by considering all relevant facts, circumstances and information available. If we believe it is more likely than not that our position will be sustained, we recognize a benefit at the largest amount we believe is cumulatively greater than 50% likely to be realized. Interest and penalties related to income tax matters are classified as a component of income tax expense.

Income taxes require significant management judgment regarding applicable statutes and their related interpretation, the status of various income tax audits and our particular facts and circumstances. Also, as audits are completed or statutes of limitations lapse, it may be necessary to record adjustments to our taxes payable, deferred taxes, tax reserves or income tax expense.

Earnings Per Share

Earnings per basic share is computed using the weighted-average number of common shares outstanding during the year. Earnings per diluted share uses the weighted-average number of common shares outstanding during the year plus dilutive common stock equivalents, primarily RSUs and stock options. Dilutive common stock is calculated using the treasury stock method and includes outstanding RSUs and options that would reduce the amount of earnings for which each share is entitled. Anti-dilutive shares (including stock options and other shares) are excluded from the calculation of diluted shares and earnings per diluted share because their impact could increase earnings per diluted share.

Comprehensive Net Earnings

Comprehensive net earnings consist of net earnings and other gains and losses affecting equity that are excluded from net earnings. These consist of postretirement plan adjustments, net of related income tax effects, and foreign currency translation adjustments.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Cash Equivalents

Cash equivalents are short-term investments with an original maturity of three months or less from the date of purchase and are carried at cost, which approximates fair value. At the end of 2024 and 2023, checks not yet presented for payment drawn in excess of our bank deposit balances were $58 and $62. Amounts are included in accounts payable on our Consolidated Balance Sheets and in change in cash book overdrafts as a financing activity in our Consolidated Statements of Cash Flows.

Accounts Receivable

Accounts receivable, net primarily includes receivables from TD related to our program agreement, non-Nordstrom-branded credit and debit cards and developer reimbursements. As of February 1, 2025 and February 3, 2024, accounts receivable, net also includes the amount we believe probable of receipt as part of the claims process related to the wind-down of Canada (see Note 2: Canada Wind-down).

Merchandise Inventories and Change in Accounting Principle

We believe using the weighted average cost method is preferable to the retail inventory method and consistent with our overall strategy because it provides more precise data and enhances visibility into item-level profitability, which drives faster decisions and better outcomes. We determined that retrospective application for periods prior to fiscal year 2024 was impracticable due to lack of available information. We recorded the cumulative effect of this change in accounting principle as of February 4, 2024, resulting in a decrease to accumulated deficit of $39, net of tax of $14.

Leases

We lease the land, buildings, or land and buildings for many of our stores, office facilities and Supply Chain Network facilities and record leases, which consist primarily of operating leases, on the Consolidated Balance Sheets as operating lease ROU assets and operating lease liabilities, both of which include current and noncurrent portions. Operating lease liabilities are initially recognized based on the net present value of the fixed portion of our lease and common area maintenance payments from lease commencement through the lease term. To calculate the net present value, we apply an incremental borrowing rate. The incremental borrowing rate is determined using a portfolio approach based on the rate of interest we would pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. We use quoted interest rates obtained from financial institutions as an input to derive our incremental borrowing rate as the discount rate for the lease. We recognize ROU assets based on operating lease liabilities reduced by property incentives received from landlords. We test ROU assets for impairment in the same manner as long-lived assets and exclude the related operating lease liability and operating lease payments in our analysis.

Land, Property and Equipment

Land is recorded at historical cost, while property and equipment are recorded at cost less accumulated depreciation and amortization. Capitalized software includes the costs of developing or obtaining internal-use software, including external direct costs of materials and services and internal payroll costs related to the software project.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

We capitalize interest on construction in progress and software projects during the period in which expenditures have been made, activities are in progress to prepare the asset for its intended use and actual interest costs are being incurred. Depreciation and amortization are computed using the straight-line method over the asset’s estimated useful life, which is determined by asset category as follows:


Asset			Life (in years)
Buildings and improvements			5 – 40
Store fixtures and equipment			3 – 15
Leasehold improvements			5 – 40
Capitalized software			2 – 7

Leasehold improvements and leased property and equipment that are purchased at the inception of the lease, or during the lease term, are amortized over the shorter of the lease term or the asset life. Lease terms include the fixed, non-cancelable term of a lease, plus any renewal periods determined to be reasonably assured.

Long-Lived Assets

When facts and circumstances indicate the carrying values of buildings, equipment and ROU assets may be impaired, we compare the carrying value to the related projected future cash flows, among other quantitative and qualitative analyses. Cash flow analysis requires judgment regarding many factors, such as revenues, growth rates, expenses, capital expenditures and sublease income. These projections are inherently subject to uncertainties. While we believe the inputs and assumptions utilized in our future cash flows are reasonable, our estimates may change in the near term based on our current and future performance. Land, property and equipment are grouped at the lowest level at which there are identifiable cash flows when assessing impairment, while cash flows for our retail store assets are identified at the individual store level.

The following table provides details related to asset impairment charges for each fiscal year:


	2024	2023	20222
Long-lived asset impairment1	$27	$9	$68
Operating lease ROU asset impairment1	24	21	12
Asset impairment	$51	$30	$80

1 After impairment, the carrying values of the remaining long-lived tangible and ROU assets were not material.

2 Amounts include impairment charges of $70 related to supply chain and $10 related to the wind-down of Trunk Club.

Supply Chain Impairments

During the second quarter of 2024, fourth quarter of 2023 and the third quarter of 2022, as part of our various supply chain optimization initiatives, we incurred non-cash impairment charges to adjust the carrying values to their estimated fair values for certain supply chain assets. These charges are included in SG&A on the Consolidated Statement of Earnings, unallocated Corporate/Other expenses in Note 15: Segment Reporting and in asset impairment on the Consolidated Statement of Cash Flows. We evaluated the assets for impairment by comparing the carrying values to the related projected future cash flows, among other quantitative and qualitative analyses.

Trunk Club Wind-down

During the first quarter of 2022, in conjunction with the decision to sunset the Trunk Club brand, we incurred a non-cash impairment charge of $10 related to a Trunk Club property to adjust the carrying values to their estimated fair value. These charges are included in our Retail segment SG&A on the Consolidated Statement of Earnings and in asset impairment on the Consolidated Statement of Cash Flows.

During the second quarter of 2022, we also incurred additional costs of $8 associated with the wind-down of Trunk Club. These expenses are primarily included in our Retail segment cost of sales and related buying and occupancy costs on the Consolidated Statement of Earnings. All charges are classified as operating on the Consolidated Statement of Cash Flows.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Goodwill

Goodwill represents the excess of acquisition cost over the fair value of the related net assets acquired and is not subject to amortization. We review our goodwill annually for impairment, as of the first day of the fourth quarter, or when circumstances indicate that the carrying value may exceed the fair value. We perform this evaluation at the reporting unit level, all in our Retail segment. Our goodwill is allocated to two reporting units, Nordstrom and NordstromRack.com. When evaluating these assets for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If we determine that it is more likely than not that the carrying value exceeds the fair value of the reporting unit, we perform a quantitative fair value test. We may also choose to bypass this qualitative assessment and perform the quantitative assessment.

As of February 1, 2025 and February 3, 2024, we had goodwill of $249. To determine fair value, we compare the carrying value of the reporting unit to its estimated fair value, which is based on the expected present value of future cash flows (income approach), comparable public companies (market approach) or a combination of both. Determining fair value using these approaches requires management assumptions, estimations and judgments regarding factors like overall economic conditions, prospective financial information, growth rates, terminal value, discount rates and market multiples. If fair value is lower than the carrying value, an impairment charge is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Based on the results of our evaluations, we had no goodwill impairment in 2024, 2023 or 2022.

Investments

From time to time, we invest in financial interests of certain private companies and venture capital funds that align with our business and omni-channel strategies, which are recorded in other assets in the Consolidated Balance Sheets and proceeds from the sale of assets and other, net on the Consolidated Statements of Cash Flows.

As of February 1, 2025 and February 3, 2024, we held $40 and $41 of equity interests in certain venture capital funds, which are recorded at fair value using the practical expedient estimate of NAV or its equivalent.

During the first quarter of 2022, in connection with the sale of a limited partnership interest in a corporate office building, we recognized a gain of $51 included in SG&A in the Consolidated Statement of Earnings and unallocated Corporate/Other expenses in Note 15: Segment Reporting, and recognized $73 in proceeds from the sale of assets and other, net on the Consolidated Statement of Cash Flows.

Self-Insurance

We retain a portion of the risk for certain losses related to employee health and welfare, workers’ compensation and other liability claims. Liabilities associated with these losses include undiscounted estimates of both losses reported and losses incurred but not yet reported. We estimate our ultimate cost using an actuarially-based analysis of claims experience, regulatory changes and other relevant factors.

Foreign Currency

On March 2, 2023, Nordstrom Canada commenced a wind-down of its business operations. The functional currency of our Canadian operations was the Canadian Dollar. Prior to deconsolidation, we translated assets and liabilities into U.S. Dollars using the exchange rate in effect at the balance sheet date, while we translated revenues and expenses using an average exchange rate for the period. We recorded these translation adjustments as a component of accumulated other comprehensive loss on the Consolidated Balance Sheets. In the first quarter of 2023, we recognized a charge of $33 related to the derecognition of the accumulated comprehensive loss on foreign currency translation (see Note 2: Canada Wind-down).

Proposed Merger

On December 22, 2024, Nordstrom, Inc. entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Norse Holdings, Inc., a Delaware corporation (“Parent”), and Navy Acquisition Co. Inc., a Washington corporation and a direct, wholly owned subsidiary of Parent (“Acquisition Sub”). The Merger Agreement provides that, on the terms and subject to the conditions of the Merger Agreement, Acquisition Sub will merge with and into Nordstrom, Inc., with Nordstrom, Inc. continuing as the surviving corporation and becoming a wholly-owned subsidiary of Parent.

Under the terms of the Merger Agreement, upon the closing of the Merger, our shareholders will receive $24.25 per share in cash, without interest and less any required tax withholdings, for each share of common stock they hold on the transaction closing date, without interest and less any required tax withholdings. In addition, prior to and contingent upon closing, Nordstrom, Inc. may declare a special dividend of up to $0.25 per share (based on the amount of available cash on hand of Nordstrom, Inc. and its subsidiaries). Upon completion of the Merger, our shares of common stock will be delisted on the NYSE, and Nordstrom, Inc. will become a private company.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

The consummation of the Merger is subject to certain closing conditions, including: (i) the approval of the Merger Agreement by two-thirds of the outstanding shares of our Company common stock and a majority of the outstanding shares of our Company common stock other than shares owned by Parent, Acquisition Sub, Liverpool, the Family Group, or their respective affiliates or by any director or Section 16 officer of the Company (together, the “Requisite Shareholder Approvals”); (ii) the expiration or termination of the applicable waiting period under the HSR Act or the grant of early termination thereof; (iii) the absence of any then effective order issued by any court of competent jurisdiction in the United States that prohibits, enjoins, or makes illegal the Merger; and (iv) the absence of a Below Investment Grade Rating Event (as defined in the Merger Agreement) that has occurred and is continuing. On February 13, 2025, the HSR waiting period expired.

The Merger Agreement contains certain termination rights for the Company and Parent. Under the terms of the Merger Agreement, Nordstrom, Inc. may be required to pay Parent a termination fee of $85 if the Merger Agreement is terminated due to a change or withdrawal of the Company Board of Director’s recommendation in favor of the Merger or a termination fee of $42.5 under certain other specified circumstances. The Merger Agreement additionally provides that Parent may be required to pay to the Company a termination fee equal to $170 if the Merger Agreement is validly terminated by the Company due to Parent materially breaching its representations, warranties or covenants or $100 if the Merger Agreement is validly terminated by either the Company or Parent due to a Below Investment Grade Rating Event (as defined in the Merger Agreement).

In the fourth quarter of 2024, we recognized privatization fees of $18 in connection with the Merger Agreement, which are included in SG&A on the Consolidated Statement of Earnings and unallocated Corporate/Other expenses in Note 15: Segment Reporting.

Reclassification

We reclassified amounts in our fiscal 2023 and 2022 Consolidated Statements of Cash Flows to conform with current period presentation. As a result, we disaggregated:

•Accounts receivable, net and prepaid expenses and other assets

•Other current liabilities and other liabilities

These reclassifications had no impact on cash flows from operations, cash flows from investing or cash flows from financing.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of additional income tax information, primarily related to the rate reconciliation and income taxes paid. Annual disclosure requirements will be effective for us for the fourth quarter of 2025, with early adoption permitted. We are currently evaluating the impact of this ASU on our disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosure about specific expense categories included in the income statement. Annual disclosure requirements will be effective for us for the fourth quarter of 2027, and quarterly disclosure requirements will be effective for us in the first quarter of 2028, with early adoption permitted. We are currently evaluating the impact of this ASU on our disclosures.

NOTE 2: CANADA WIND-DOWN

Background

On March 2, 2023, as part of our initiatives to drive long-term profitable growth and enhance shareholder value, and after careful consideration of all reasonably available options, we announced the decision to discontinue support for Nordstrom Canada’s operations. Accordingly, Nordstrom Canada commenced a wind-down of its business operations, obtaining an Initial Order from the Ontario Superior Court of Justice under the CCAA on March 2, 2023 to facilitate the wind-down in an orderly fashion. Nordstrom Canada’s e-commerce platform ceased operations on March 2, 2023 and the closure of six Nordstrom and seven Nordstrom Rack stores was completed in June 2023.

The Ontario Superior Court of Justice appointed a monitor to oversee the wind-down process. Subsequent to the CCAA filing, Nordstrom has been providing limited support to Nordstrom Canada for the purpose of supporting an orderly wind-down, including providing shared services and temporary use of intellectual property.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Wind-down Charges and Deconsolidation of Nordstrom Canada

The following table details the pre-tax charges recorded in 2023 associated with the wind-down of operations in Canada:


Fiscal year			2023
Loss on Canada write-off1			$176
Accumulated translation loss reclassified to earnings1			33
Contingent liabilities			70
Other exit costs2			5
Total pre-tax charges			$284

1 Non-cash charges are included in Canada wind-down costs on the Consolidated Statement of Cash Flows.

2 Other exit costs include funding an employee trust, net of expected recoveries, and professional fees.

These charges recorded in 2023 are primarily included within unallocated Corporate/Other expenses in Note 15: Segment Reporting. The decrease in cash due to the deconsolidation of Nordstrom Canada is included in investing activities on the Consolidated Statement of Cash Flows and all other impacts are included in operating cash flows.

Loss on Canada Write-off and Accumulated Translation Loss

While Nordstrom continues to own 100% of the shares of Nordstrom Canada, as of March 2, 2023, the date of the CCAA filing, we no longer have a controlling interest under GAAP and have deconsolidated Nordstrom Canada. We hold a variable interest in the Nordstrom Canada entities, which are considered variable interest entities, but are not consolidated, as we are no longer the primary beneficiary.

For the year ended February 3, 2024, we recorded a pre-tax loss on Canada write-off of $176 that included the derecognition of Nordstrom Canada’s assets and liabilities and the write-down of both our Nordstrom Canada investment and related-party receivables to estimated fair value. In addition, we recognized a charge of $33 in 2023 related to the derecognition of the accumulated comprehensive loss on foreign currency translation.

To assess the estimated fair value of our Nordstrom Canada investment and our related-party receivables, we estimated the assets available for distribution in relation to expected claims. At the time of filing for CCAA protection on March 2, 2023, the estimated amount of Nordstrom Canada’s liabilities exceeded the estimated fair value of assets available for distribution to creditors, and we believed we would not recover a significant portion of our receivables. As a result, our fair value was recorded as zero in our Condensed Consolidated Balance Sheets as of April 29, 2023. As of February 3, 2024, we adjusted our receivables by an immaterial amount based on currently available information.

Prior to deconsolidation, Nordstrom made loans to the Canadian subsidiaries and incurred liabilities related to certain intercompany charges. These were considered intercompany transactions and were eliminated in consolidation of Nordstrom. Subsequent to deconsolidation, these liabilities and receivables were no longer eliminated through consolidation, are considered related-party transactions and are recorded in our Consolidated Balance Sheets at estimated fair value. As of February 3, 2024, Nordstrom had a net outstanding liability to Nordstrom Canada of $52 related to certain intercompany charges incurred prior to deconsolidation. As of February 1, 2025, Nordstrom had no outstanding liability to Nordstrom Canada.

Contingent Liabilities and Guarantees

In the third quarter of 2023, Nordstrom, Inc. reached a settlement with former landlords related to guarantees of certain lease obligations of Nordstrom Canada. As part of the agreements, we made cash payments to the former landlords in exchange for a release of substantially all our guarantee obligations, as well as the right to these landlords’ distributions from Nordstrom Canada as part of the CCAA proceedings.

Receivables

As of February 1, 2025 and February 3, 2024, we recorded $11 and $71 in accounts receivable, net on the Consolidated Balance Sheets to reflect the estimated amounts we expect to receive in the claims process. This includes receipts related to the rights to the former landlords’ distributions, reimbursement of employee trust contributions and other receivables existing at the time of deconsolidation. On March 1, 2024, creditors approved a plan of arrangement, which was sanctioned by the Ontario Superior Court of Justice on March 20, 2024 and implemented by Nordstrom Canada on April 25, 2024. Initial distributions pursuant to the plan of arrangement occurred in May 2024.

Employee Trust

In connection with the filing, Nordstrom contributed $11 in 2023 to establish an employee trust to fund termination and severance payments to employees of Nordstrom Canada. As of February 3, 2024, the trust was terminated.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Debtor-in-Possession Financing

If needed, Nordstrom agreed to provide Nordstrom Canada debtor-in-possession financing up to $11. However, Nordstrom Canada had sufficient liquidity to sustain operations through the wind-down period and did not borrow any amounts from Nordstrom.

Income Taxes

For the year ended February 3, 2024, we recognized net tax benefits of $95 primarily related to the write-off of our investment in Canada, net of tax expense related to an increase in valuation allowance for Canada deferred tax assets.

NOTE 3: REVENUE

Contract Liabilities

Contract liabilities represent our obligation to transfer goods or services to customers and include deferred revenue for The Nordy Club (including unused points and unredeemed Nordstrom Notes), gift cards and our TD program agreement. Our contract liabilities are classified on the Consolidated Balance Sheets as follows:


	Other current liabilities	Other liabilities
Balance as of January 28, 2023	$536	$136
Balance as of February 3, 2024	508	85
Balance as of February 1, 2025	502	295

Revenues recognized from our beginning contract liability balance were $309 and $316 for the years ended February 1, 2025 and February 3, 2024.

In 2024, we amended our program agreement with TD, which will be combined with the deferred revenue from the prior amendment and recognized in full over the term of the agreement as services are rendered. This recognition over time aligns with the satisfaction of the performance obligations in the contract and our determination that the likelihood of a significant revenue reversal is not probable. The transaction price is allocated to our performance obligations, which include the issuance rights and services associated with the transition of servicing functions to TD, on a relative standalone selling price basis. The balance of deferred revenue of $361 as of February 1, 2025 is included in other current liabilities and other liabilities on our Consolidated Balance Sheet. Agreement amortization is included in other operating, net on the Consolidated Statements of Cash Flows.

Disaggregation of Revenue

The following table summarizes our disaggregated net sales:


Fiscal year	2024	2023	2022
Nordstrom	$9,390	$9,436	$10,279
Nordstrom Rack	5,167	4,783	4,813
Total net sales	$14,557	$14,219	$15,092

Digital sales as a % of total net sales	36%	36%	38%

The following table summarizes the percent of net sales by merchandise category:


Fiscal year	2024		2023		2022
Women’s Apparel	29%		27%		28%
Shoes	26%		26%		26%
Men’s Apparel	15%		15%		15%
Beauty	12%		13%		12%
Accessories	11%		12%		13%
Kids’ Apparel	4%		4%		3%
Other	3%		3%		3%
Total net sales	100	%	100	%	100	%

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

NOTE 4: LAND, PROPERTY AND EQUIPMENT

Land, property and equipment consist of the following:


	February 1, 2025	February 3, 2024
Land and land improvements	$286	$283
Buildings and building improvements	1,383	1,365
Leasehold improvements	3,173	3,103
Store fixtures and equipment	4,076	3,873
Capitalized software	2,579	2,439
Construction in progress	289	365
Land, property and equipment	11,786	11,428
Accumulated depreciation and amortization	(8,747)	(8,251)
Land, property and equipment, net	$3,039	$3,177

NOTE 5: LEASES

We lease the land, buildings, or land and buildings for many of our stores, office facilities and Supply Chain Network facilities, as well as equipment. The following table summarizes the majority of our fixed, non-cancelable lease terms:


Property Type			Lease Term (in years)
Nordstrom stores			15 – 30
Nordstrom Rack stores			Approximately 10
Office and Supply Chain Network facilities			5 – 20

Many of our leases include options that allow us to extend the lease term beyond the initial commitment period. At the commencement of a lease, we generally include only the initial lease term as we have determined that options to extend are not reasonably certain to occur. The exercise of lease renewal options is generally at our sole discretion. At the renewal of an expiring lease, we reassess our options in the agreement and include all reasonably certain extensions in the measurement of our lease term.

Most of our leases also require us to pay certain expenses, such as common area maintenance charges, real estate taxes and other executory costs, the fixed portion of which is included in Operating Lease Cost, as we combine lease and non-lease components. We recognize Operating Lease Cost, which is primarily included in occupancy costs, on a straight-line basis over the lease term. Variable lease cost includes payments for variable common area maintenance charges and additional payments based on a percentage of sales, which are recognized when probable. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table summarizes the components of lease cost:


Fiscal year	2024	2023	2022
Operating Lease Cost	$291	$278	$280
Variable lease cost1	97	93	97
Sublease income	(16)	(25)	(19)
Total lease cost, net	$372	$346	$358

1 Variable lease cost includes short-term lease cost, which was immaterial in 2024, 2023 and 2022.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

The following table summarizes future lease payments as of February 1, 2025:


Fiscal year									Operating Leases
2025									$332
2026									336
2027									286
2028									241
2029									205
Thereafter									691
Total lease payments1									2,091

Amount representing interest									(426)
Present value of net lease payments2									$1,665

1 Total lease payments do not include payments for variable lease costs that are required by most of our lease agreements.

2 Net lease payments exclude $123 of lease payments for operating leases that were signed but not yet commenced as of February 1, 2025.

The following table includes supplemental information:


Fiscal year	2024	2023		2022
Cash paid related to operating lease liabilities	$364	$358		$354
Operating lease interest	92	86		85
Operating lease liabilities arising from lease agreements	317	242		260

		February 1, 2025		February 3, 2024
Weighted-average remaining lease term		8 years		8 years
Weighted-average discount rate		5.8	%	5.5	%

NOTE 6: DEBT AND CREDIT FACILITIES

Debt

A summary of our long-term debt is as follows:


	February 1, 2025	February 3, 2024






Long-term debt, net of unamortized discount:

Senior notes, 2.30%, due April 2024	$—	$250
Senior notes, 4.00%, due March 2027	350	349
Senior debentures, 6.95%, due March 2028	300	300
Senior notes, 4.375%, due April 2030	500	500
Senior notes, 4.25%, due August 2031	425	425
Senior notes, 7.00%, due January 2038	147	147
Senior notes, 5.00%, due January 20441	912	909
Deferred bond issuance costs	(16)	(18)
Total long-term debt	$2,618	$2,862

Current portion of debt	—	(250)
Total due beyond one year	$2,618	$2,612

1 The unamortized discount on these notes was $54 and $57 as of February 1, 2025 and February 3, 2024.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Required principal payments on long-term debt are as follows:


Fiscal year1
2025			$—
2026			—
2027			350
2028			300
2029			—
Thereafter			2,039

1 Required principal payments exclude estimated future interest payments of $1,381 as of February 1, 2025, with $135 payable within one year.

During the first quarter of 2024, we retired our 2.30% senior notes due in April 2024 using cash on hand.

Interest Expense

The components of interest expense, net are as follows:


Fiscal year	2024	2023	2022
Interest on long-term debt and short-term borrowings	$143	$150	$150

Interest income	(33)	(33)	(10)
Capitalized interest	(8)	(13)	(12)
Interest expense, net	$102	$104	$128

Credit Facilities

As of February 1, 2025 and February 3, 2024, we had no outstanding borrowings under the Revolver that expires in May 2027. As of February 1, 2025, we have an outstanding standby letter of credit of $29 resulting in available short-term borrowing capacity of $771. This letter of credit is not reflected in our Consolidated Balance Sheets. Provided that we obtain written consent from the lenders, we have the option to increase the Revolver by up to $200, to a total of $1,000, and two options to extend the Revolver for additional one-year terms.

Any outstanding borrowings under the Revolver are secured by substantially all our personal and intellectual property assets and are guaranteed by certain of our subsidiaries. Under the Revolver, our obligation to secure any outstanding borrowings will be eliminated if no default exists and we either have an unsecured investment-grade debt rating from two of three specified ratings agencies, or we have one investment-grade rating and achieve two consecutive fiscal quarters with a Leverage Ratio of less than 2.5 times.

Under the Revolver, we have two financial covenant tests that need to be met on a quarterly basis: a Leverage Ratio that is less than or equal to 4 times and a fixed charge coverage ratio that is greater than or equal to 1.25 times. As of February 1, 2025, we were in compliance with all covenants.

The Revolver contains customary representations, warranties, covenants and terms, including paying a variable rate of interest and a facility fee based on our debt rating, and is available for working capital, capital expenditures and general corporate purposes. The Revolver allows us to issue dividends and repurchase shares provided we are not in default and no default would arise as a result of such payments. If the pro-forma Leverage Ratio after such payments is less than 3 times, then such payments are unlimited. If the pro-forma Leverage Ratio is greater than or equal to 3 times but less than 3.5 times, then we are limited to $100 per fiscal quarter and if the pro-forma Leverage Ratio is greater than or equal to 3.5 times, then the limit is $60 per fiscal quarter.

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 of reducing available liquidity under the Revolver by an amount equal to the principal amount of commercial paper outstanding. Conversely, borrowings under our Revolver have the effect of reducing the available capacity of our commercial paper program by an amount equal to the amount outstanding. As of February 1, 2025 and February 3, 2024, we had no issuances outstanding under our commercial paper program.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

NOTE 7: FAIR VALUE MEASUREMENTS

We disclose our financial assets and liabilities that are measured at fair value in our 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 measured at carrying value on a recurring basis include cash and cash equivalents, accounts receivable, accounts payable and our Revolver, which approximate fair value due to their short-term nature.

Long-term debt is recorded at carrying value. If long-term debt was measured at fair value, we would use quoted market prices of the same or similar issues, which 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:


	February 1, 2025	February 3, 2024
Carrying value of long-term debt	$2,618	$2,862
Fair value of long-term debt	2,324	2,441

We measure certain items at fair value on a nonrecurring basis, primarily goodwill and long-lived tangible and ROU assets, in connection with periodic evaluations for potential impairment. For more information regarding long-lived tangible asset impairment charges, see Note 1: Nature of Operations and Summary of Significant Accounting Policies. We estimate the fair value of these assets using primarily unobservable inputs and, as such, these are considered Level 3 fair value measurements. In the first quarter of 2023, we measured our investment in Nordstrom Canada, our related-party receivables and related lease guarantees at fair value (see Note 2: Canada Wind-down).

Investments Measured at NAV

We have certain investments that are measured at fair value using the NAV per share, or its equivalent, as a practical expedient. This class of investments consists of partnership interests that mainly invest in venture capital strategies with a focus on privately held consumer and technology companies. The NAV is based on the fair value of the underlying net assets owned by the fund and the relative interest of each participating investor in the fair value of the underlying assets. Our interest in these partnerships is generally not redeemable and is subject to significant restrictions regarding transfers. Distributions from each fund will be received as the underlying assets of the funds are liquidated. Liquidation is triggered by clauses within the partnership agreements or at the funds’ stated end date. The contractual terms of the partnership interests range from six to ten years. For more information regarding investments measured at NAV, see Note 1: Nature of Operations and Summary of Significant Accounting Policies.

NOTE 8: SELF-INSURANCE

Our self-insurance reserves are summarized as follows:


	February 1, 2025	February 3, 2024
Workers’ compensation	$70	$73
Employee health and welfare	27	28
Other liability	21	18
Total self-insurance reserves	$118	$119

We are self-insured for the majority of our workers’ compensation programs, employee health and welfare coverage and other liability.

Our workers’ compensation policies have a retention per claim of $1 or less and no policy limits. Approximately 30% of our workers’ compensation obligations are payable within one year. In connection with our workers’ compensation programs, we have a standby letter of credit issued on our behalf with $13 available and $2 outstanding as of February 1, 2025. This letter of credit is not reflected in our Consolidated Balance Sheets.

Our employee health and welfare programs do not use stop-loss coverage and participants contribute to the cost of their coverage through premiums and out-of-pocket expenses for deductibles, copays and coinsurance.

Other liability primarily includes commercial general liability obligations. Our commercial general liability policy, with a limit up to $111, has a retention per claim of $1 or less. Approximately 60% of our other liability reserve obligations are payable within one year.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

NOTE 9: SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

We have a SERP, which provides retirement benefits to certain officers and select employees. The SERP has different benefit levels depending on the participant’s role. At the end of 2024, we had 57 participants in the plan, including five officers and select employees eligible for SERP benefits, 44 retirees and eight beneficiaries. This plan is nonqualified and does not have a minimum funding requirement. We selected the measurement date of January 31, the calendar month end closest to our fiscal year end, to value our SERP.

Benefit Obligation and Funded Status

Our benefit obligation and funded status is as follows:


	February 1, 2025	February 3, 2024
Change in benefit obligation:
Benefit obligation at beginning of year	$168	$176
Participant service cost	1	1
Interest cost	8	9
Benefits paid	(11)	(11)
Actuarial gain	(8)	(7)

Benefit obligation at end of year	158	168
Change in plan assets:
Fair value of plan assets at beginning of year	—	—
Employer contribution	11	11
Benefits paid	(11)	(11)
Fair value of plan assets at end of year	—	—
Underfunded status at end of year	($158)	($168)

The accumulated benefit obligation, which is the present value of benefits, assuming no future compensation changes, was $158 and $168 at the end of 2024 and 2023. Amounts recognized as liabilities in the Consolidated Balance Sheets consist of the following:


	February 1, 2025	February 3, 2024
Accrued salaries, wages and related benefits	$12	$12
Other liabilities (noncurrent)	146	156
Net amount recognized	$158	$168

Components of SERP Expense

The components of SERP expense recognized in SG&A on the Consolidated Statements of Earnings are as follows:


Fiscal year	2024	2023	2022
Participant service cost	$1	$1	$2
Interest cost	8	9	6
Amortization of net loss and other	—	—	4
Total SERP expense	$9	$10	$12

Accumulated Other Comprehensive Gain (Loss)

Amounts recognized in accumulated other comprehensive gain (loss) (pre-tax) consist of the following:


Fiscal year	2024	2023	2022
Actuarial gain	$8	$7	$34
Amortization of net loss and other	—	—	4
Amounts recognized in accumulated other comprehensive gain (loss)	$8	$7	$38

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Assumptions

Weighted-average assumptions used to determine our benefit obligation and SERP expense are as follows:


Fiscal year	2024		2023		2022
Assumptions used to determine benefit obligation:
Discount rate	5.66	%	5.27	%	4.95	%
Rate of compensation increase	2.50	%	2.50	%	2.50	%
Assumptions used to determine SERP expense:
Discount rate	5.27	%	4.95	%	3.19	%
Rate of compensation increase	2.50	%	2.50	%	2.50	%

Future Benefit Payments and Contributions

As of February 1, 2025, the expected future benefit payments based upon the assumptions described above and including benefits attributable to estimated future employee service are as follows:


Fiscal year
2025			$12
2026			12
2027			13
2028			13
2029			12
2030 – 2034			61
Thereafter			35

NOTE 10: STOCK-BASED COMPENSATION

Under our stock-based compensation and deferred compensation plan arrangements, we issued 2.8, 2.4 and 3.4 shares of common stock in 2024, 2023 and 2022. Under the EIP, the aggregate number of shares authorized to be issued may not exceed 39.5 plus any shares currently outstanding under the 2010 Equity Incentive Plan that are forfeited or expire during the term of the EIP. As of February 1, 2025, we had 15.4 shares issued and outstanding and 16.5 shares remaining available for future grants under the EIP. Upon completion of the Merger, unvested RSUs, stock options and PSUs would be converted to cash-based awards and vest on the same schedule. Unvested and vested options would be canceled if their exercise price is equal to or greater than the merger consideration plus the amount of the special dividend, and vested options would be paid in cash if their exercise price is less than the merger consideration plus the amount of the special dividend. The amount of the cash payment would be based on the number of shares subject to the vested option and the difference of the merger consideration, plus the amount of the special dividend, and the exercise price.

Under the ESPP, employees may make payroll deductions of up to 15% of their base compensation for the purchase of Nordstrom common stock. At the end of each six-month offering period, participants apply their accumulated payroll deductions toward the purchase of shares of our common stock at 90% of the fair market value on the last day of the offer period. As part of the Merger Agreement, the ESPP will continue to operate with certain changes, including (i) the current offering period that began on November 1, 2024 will be the final offering period, (ii) current participants will not be permitted to increase their payroll deduction election or contribution rate and (iii) no new participants will be allowed to participate in the ESPP. As of February 1, 2025, we had 19.6 shares authorized and 4.1 shares remaining available for issuance under the ESPP. We issued 0.7, 1.0 and 0.9 shares under the ESPP during 2024, 2023 and 2022. As of February 1, 2025 and February 3, 2024, we had current liabilities of $5 for future purchases of shares under the ESPP.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

The following table summarizes our stock-based compensation expense:


Fiscal year	2024	2023	2022
RSUs	$59	$40	$41
Stock options	2	6	11
Other1	11	6	7
Total stock-based compensation expense, before income tax benefit	72	52	59
Income tax benefit	(18)	(13)	(15)
Total stock-based compensation expense, net of income tax benefit	$54	$39	$44

1 Other stock-based compensation expense includes PSUs, nonemployee director stock awards and ESPP.

The stock-based compensation expense before income tax benefit was recorded in our Consolidated Statements of Earnings as follows:


Fiscal year	2024	2023	2022
Cost of sales and related buying and occupancy costs	$12	$10	$9
SG&A	60	42	50
Total stock-based compensation expense, before income tax benefit	$72	$52	$59

Restricted Stock Units

Our CPCC approves grants of restricted stock units to employees. The number of units granted to an individual are determined based upon award amounts and the fair value of the restricted stock units at the time of grant. Restricted stock units typically vest and convert to shares over either three or four years.

A summary of restricted stock unit activity for 2024 is presented below:


Fiscal year	2024
	Shares	Weighted-average grant date fair value per unit
Outstanding, beginning of year	6.2	$19
Granted	4.7	16
Vested	(2.3)	21
Forfeited or canceled	(1.0)	17
Outstanding, end of year	7.6	$17

The aggregate fair value of restricted stock units vested during 2024, 2023 and 2022 was $47, $33 and $62. As of February 1, 2025, the total unrecognized stock-based compensation expense related to nonvested restricted stock units was $66, which is expected to be recognized over a weighted-average period of 17 months.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

Stock Options

Our CPCC approves grants of nonqualified stock options to employees. The number of awards granted to an individual are determined based upon award amounts and the fair value of stock options at the time of grant. Our options primarily vest equally over a four-year period or at the end of two years, and expire ten years after the date of grant. We did not grant options in 2024. We used the following assumptions to estimate the fair value for stock options at each grant date:


Fiscal year		2023		2022
Assumptions
	Risk-free interest rate1	3.98% – 5.05%		1.18% – 1.95%
	Weighted-average volatility2	52.3	%	52.4	%
	Weighted-average expected dividend yield3	3.8	%	3.4	%
	Expected life in years4	8.2		8.3

Grant Date Information
	Date of grant	March 6, 2023		March 3, 2022
	Weighted-average fair value per option	$8		$10
	Exercise price per option	$20		$26

1 Represents the yield on U.S. Treasury securities that mature over the 10-year life of the stock options.

2 Based on a combination of the historical volatility of our common stock and the implied volatility of exchange-traded options for our common stock.

3 Our forecasted dividend yield for the next 10 years.

4 Derived from the output of the Binomial Lattice-based valuation model and represents the estimated period of time until option exercise. The expected term of options granted is based on our historical exercise behavior, taking into consideration the contractual term of the option and our employees’ expected exercise and post-vesting employment termination behavior.

A summary of stock option activity for 2024 is presented below:


Fiscal year	2024
	Shares	Weighted- average exercise price per option	Weighted-average remaining contractual life (years)	Aggregate intrinsic value1
Outstanding, beginning of year	7.6	$35
Granted	—	—
Exercised	(0.3)	17
Forfeited or canceled	(0.9)	54
Outstanding, end of year	6.4	$33	4	$17
Exercisable, end of year	4.0	$37	4	$13

Fiscal year		2024	2023	2022
Aggregate intrinsic value of options exercised1		$2	$1	$4
Fair value of stock options vested		$4	$4	$27

1 The aggregate intrinsic value represents the amount realized if all in-the-money options were exercised on the final business day before February 1, 2025.

As of February 1, 2025, the total unrecognized stock-based compensation expense related to nonvested stock options was $3, which is expected to be recognized over a weighted-average period of 5 months.

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Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

NOTE 11: SHAREHOLDERS’ EQUITY

We have certain limitations with respect to the payment of dividends and share repurchases under our Revolver agreement (see Note 6: Debt and Credit Facilities). While the Merger Agreement is in effect, we are prohibited from repurchasing shares of our common stock, including under the stock repurchase program.

Changes in the number of issued and outstanding shares of our common stock in 2024, 2023 and 2022 are the result of compensation plan issuances (see Note 10: Stock-based Compensation) and share repurchases.

Share Repurchases

In May 2022, our Board of Directors authorized a new program to repurchase up to $500 of our outstanding common stock, with no expiration date, which replaced the August 2018 program. While the Merger Agreement is in effect, we are prohibited from repurchasing shares of our common stock, including under the stock repurchase program, without the prior written consent of Parent. The following is a summary of the activity related to our share repurchase programs:


	Shares	Average price per share	Amount
Capacity at January 29, 2022			$707
August 2018 program termination			(707)
May 2022 program authorization (no expiration)			500
Shares repurchased	2.8	$22	(62)
Capacity at January 28, 2023			438


Shares repurchased1	0.03	$19	(1)
Capacity at February 3, 20241			438
Shares repurchased	—	$—	—
Capacity at February 1, 2025			$438

1 Subtotal of ending share repurchase capacity may not foot due to rounding.

Dividends

We paid dividends of $0.76 per share in 2024, 2023 and 2022. In February 2025, subsequent to year end, we declared a quarterly dividend of $0.19 per share, which will be paid on March 26, 2025 to shareholders of record as of March 11, 2025. While the Merger Agreement is in effect, we are prohibited from, without the prior written consent of Parent, declaring dividends on our common stock other than regular quarterly dividends not to exceed $0.19 per share, a stub period dividend contingent upon the closing of the Merger, and a special dividend prior to and contingent upon the closing of the Merger.

Rights Plan

In September 2022, our Board of Directors approved the Shareholder Rights Agreement and declared a dividend of one right for each outstanding share of Nordstrom common stock to shareholders of record on September 30, 2022. In June 2023, shareholders approved an advisory vote on the extension of our Rights Plan at our 2023 Annual Meeting of Shareholders, and in August 2023, the Board of Directors extended the expiration date to September 19, 2025, unless redeemed, exchanged or terminated earlier by our Board of Directors. Each right entitles holders to purchase one newly issued share of Nordstrom common stock at an exercise price of $94 per right, subject to adjustment. Initially, the rights are not exercisable and trade with our shares of common stock.

In general, the rights become exercisable following a public announcement that a person acquires 10% or more of the outstanding shares of Nordstrom common stock. If the rights are exercised, each holder (except the acquiring person) will have the right to receive common stock equal to two times the exercise price of the right. The Company may redeem the rights for $0.001 per right anytime prior to the rights becoming exercisable. The agreement also provides for exceptions and additional terms for other certain situations and circumstances. There is currently no impact to our Consolidated Financial Statements.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

In September 2024, we entered into a Second Amendment to the Shareholder Rights Agreement, which provides that the Family Group and Liverpool shall be an exempt person under the Shareholder Rights Agreement until the earlier of (i) April 17, 2025 and (ii) the date that such group increases their aggregate beneficial ownership of shares of the Company’s common stock to an amount greater than its beneficial ownership on the date of the Amendment plus 0.1% of the then-outstanding shares of common stock (subject to specified exclusions). In December 2024, we entered into a Third Amendment to the Shareholder Rights Agreement, which superseded the exemption of the Second Amendment, provides that (i) the Parent Parties shall be an exempt person under the Shareholder Rights Agreement until five business days following the valid termination of the Merger Agreement and (ii) a group composed of certain members of the Family Group who are guaranteeing the performance and payment of certain of Parent’s obligations under the Merger Agreement shall be an exempt person under the Shareholder Rights Agreement until five business days following the valid termination of the related limited guaranty.

NOTE 12: INCOME TAXES

U.S. and foreign components of earnings before income taxes were as follows:


Fiscal year	2024	2023	2022
U.S.	$393	$143	$316
Foreign	—	4	21
Earnings before income taxes	$393	$147	$337

Income tax expense consists of the following:


Fiscal year	2024	2023	2022
Current income taxes:
Federal	$170	$55	$149
State and local	29	18	27
Foreign	—	—	(1)
Total current income tax expense	199	73	175
Deferred income taxes:
Federal	(90)	(59)	(86)
State and local	(10)	(10)	(2)
Foreign	—	9	5
Total deferred income tax benefit	(100)	(60)	(83)
Total income tax expense	$99	$13	$92

A reconciliation of the statutory federal income tax rate to the effective tax rate on earnings before income taxes is as follows:


Fiscal year	2024		2023		2022
Statutory rate	21.0	%	21.0	%	21.0	%

State and local income taxes, net of federal income taxes	3.9	%	4.0	%	5.9	%
Federal credits	(1.8	%)	(4.7	%)	(3.8	%)
Non-deductible expenses	1.4	%	2.9	%	1.2	%
Stock-based compensation	1.1	%	5.1	%	1.8	%
Valuation allowance	—		6.6	%	0.4	%
Taxes on foreign operations	1.2	%	1.5	%	1.6	%
Excess tax over book loss on Canada wind-down	(2.0	%)	(18.2	%)	—
Resolution of prior period tax matters	—		(11.2	%)	—
Other, net	0.5	%	1.6	%	(0.9	%)
Effective tax rate	25.3	%	8.6	%	27.2	%

Nordstrom, Inc. and subsidiaries 69

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

The components of deferred tax assets and liabilities are as follows:


	February 1, 2025	February 3, 2024
Deferred tax assets:
Lease liabilities	$440	$425
Compensation and benefits accruals	101	104
Sales return reserve	49	56
Accrued expenses	35	31
Merchandise inventories	33	36
Gift cards	36	39
The Nordy Club loyalty program	7	2
Net operating losses	38	38
Other	35	36
Total deferred tax assets	774	767
Valuation allowance	(1)	(1)
Total deferred tax assets, net of valuation allowance	773	766
Deferred tax liabilities:
ROU assets	(336)	(310)
Land, property and equipment	(61)	(164)
Debt exchange premium	(11)	(11)
Total deferred tax liabilities	(408)	(485)
Net deferred tax assets	$365	$281

As of February 1, 2025 and February 3, 2024, state net operating loss carryforwards for income tax purposes was approximately $583 and $621. The net operating loss carryforwards are subject to certain statutory limitations of applicable state laws. If not utilized, a portion of our state net operating loss carryforwards will begin to expire in 2026.

As of February 1, 2025 and February 3, 2024, the valuation allowance for deferred tax assets was $1 for state net operating loss carryforwards that will not be realized in the foreseeable future. As a result of the wind-down of our Canada operations in 2023, the valuation allowance for foreign deferred tax assets increased $9 and upon deconsolidation was written off to zero. The write-off of the deferred tax assets and corresponding valuation allowance for Canada was included in the Canada wind-down costs.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


Fiscal year	2024	2023	2022
Unrecognized tax benefit at beginning of year	$24	$48	$47
Gross increase to tax positions in prior periods	2	1	1
Gross decrease to tax positions in prior periods	(1)	(4)	(6)
Gross increase to tax positions in current period	5	6	7

Settlements	—	(27)	(1)
Unrecognized tax benefit at end of year	$30	$24	$48

At the end of 2024 and 2023, $27 and $22 of the ending gross unrecognized tax benefit related to items which, if recognized, would affect the effective tax rate.

There was no material expense for interest and penalties in 2024, 2023 and 2022. At the end of 2024 and 2023, our liability for interest and penalties was $5 and $3.

We file income tax returns in the U.S. With few exceptions, we are no longer subject to federal or state and local income tax examinations for years before 2016. As of February 1, 2025, we believe it is reasonably possible unrecognized tax benefits related to federal, state and local tax positions may decrease $11 by January 31, 2026, due to the completion of examinations and the expiration of various statutes of limitations.

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

NOTE 13: COMMITMENTS AND CONTINGENCIES

Our estimated total purchase obligations, which primarily consist of inventory purchase orders, were $1,954 as of February 1, 2025. These purchase obligations are primarily payable within one year.

NOTE 14: EARNINGS PER SHARE

The computation of EPS is as follows:


Fiscal year	2024	2023	2022
Net earnings	$294	$134	$245

Basic weighted-average shares outstanding	164.3	161.8	160.1
Dilutive shares	4.6	1.6	2.0
Diluted weighted-average shares outstanding	168.9	163.4	162.1

Basic EPS	$1.79	$0.83	$1.53
Diluted EPS	$1.74	$0.82	$1.51

Anti-dilutive shares	6.1	8.4	8.7

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.

Nordstrom, Inc. and subsidiaries 71

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Nordstrom, Inc.

Notes to Consolidated Financial Statements

(Dollar and share amounts in millions except per share, per option and per unit amounts)

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

NORDSTROM INC 10-K