Executive Summary

Net sales rose 3.4% year over year to $3.785B, driven by strength in both banners; gross margin expanded 155 bps to 36.6% on strong regular-price sales; GAAP diluted EPS was $0.72 (impacted by a $54M supply chain asset impairment), while adjusted EPS was $0.96, up vs $0.84 last year .
Digital sales increased 6.2% and represented 37% of total; Rack net sales grew 8.8% (comps +4.1%), Nordstrom banner net sales +0.9% (comps +0.9%); Anniversary Sale timing shift added ~100 bps to Q2 net sales versus 2023 .
Guidance updated: FY revenue -1% to +1%; comps flat to +2%; EBIT margin 3.0–3.4%; adjusted EBIT margin 3.6–4.0%; GAAP EPS $1.40–$1.70; adjusted EPS $1.75–$2.05; tax rate ~27%; management also flagged ~10 bps SG&A charges in Q3/Q4 from accelerated tech depreciation and highlighted a strategic data-platform change to enable faster deployment of generative AI .
Key catalysts: sustained gross margin expansion, Rack store growth (11 opened YTD, plan to open 12 more ahead of holiday), RFID rollout improving inventory accuracy, and Marketplace launch expanding choice; management struck a cautiously confident tone on the back half given external uncertainties .

What Went Well and What Went Wrong

What Went Well

“We delivered solid results…with net sales of $3.8 billion, and earnings per share of 96 cents. We grew net sales as well as comparable sales and expanded margins” (CEO) .
RFID rollout and better inventory flow improved speed, reduced shrink, and enhanced fulfillment accuracy; supply chain optimization supported steady flow of fresh merchandise across banners .
Marketplace launched in April, adding 15,000+ items and nearly 100 brands, expanding digital assortment (not yet material but on-track) .
Anniversary Sale engagement was high: 75% of Icon/Ambassador Nordy Club shopped; Active posted double-digit growth; private brands grew mid-single digits with Nordstrom and Zella as top two volume brands (President) .

What Went Wrong

SG&A rose 160 bps to 34.4% on a supply chain asset impairment and lapped a prior-year real estate gain; adjusted SG&A was 33.0% excluding the $54M impairment .
Ending inventory increased 8.3% YoY, exceeding sales growth, largely to support Rack/new stores and rack.com; management plans to realign sales-to-inventory spread .
Credit card revenues declined modestly as a percent of total due to higher losses (partly offset by higher balances/yield), consistent with consumer budget pressures (CFO) .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Net Sales ($USD Billions)	$4.3	$3.221	$3.785
Total Revenues ($USD Billions)	N/A	$3.335	$3.894
Diluted EPS (GAAP)	$0.96	($0.24)	$0.72
Adjusted EPS (Non-GAAP)	N/A	($0.24)	$0.96
Gross Profit Margin %	34.4%	31.6%	36.6%
SG&A as % of Net Sales	34.4%	35.8%	34.4%
EBIT Margin %	5.7%	(0.6%)	5.0%

Segment Net Sales ($USD Billions)	Q1 2025	Q2 2025
Nordstrom	$2.040	$2.514
Nordstrom Rack	$1.181	$1.271
Total Company	$3.221	$3.785
YoY Change – Nordstrom	+0.6%	+0.9%
YoY Change – Rack	+13.8%	+8.8%
YoY Change – Total	+5.1%	+3.4%

KPIs	Q4 2024	Q1 2025	Q2 2025
Digital Sales (% of Net Sales)	38%	34%	37%
Digital Sales YoY	(2%)	(0.2%)	+6.2%
Ending Inventory YoY	(3%)	(6.3%)	+8.3%
Available Liquidity ($B)	$1.4 incl. >$0.6 cash	$1.2 incl. $0.428 cash	$1.5 incl. $0.679 cash

Non-GAAP adjustments: Adjusted EPS and adjusted EBIT exclude supply chain asset impairment ($54M in Q2) and other items; adjusted EBIT margin was 6.4% vs GAAP EBIT margin 5.0% in Q2 .

Guidance Changes

Metric	Period	Previous Guidance (Q1 2025)	Current Guidance (Q2 2025)	Change
Revenue (YoY vs 53-week FY2023)	FY 2024	-2% to +1%	-1% to +1%	Raised lower bound
Comparable Sales (vs 52 weeks FY2023)	FY 2024	-1% to +2%	Flat to +2%	Raised lower bound
EBIT Margin (GAAP)	FY 2024	3.5% to 4.0%	3.0% to 3.4%	Lowered (reflects impairment/accelerated depreciation)
Adjusted EBIT Margin	FY 2024	N/A	3.6% to 4.0%	Established explicit adjusted range
GAAP EPS	FY 2024	$1.65–$2.05	$1.40–$1.70	Lowered
Adjusted EPS	FY 2024	N/A	$1.75–$2.05	Established adjusted range
Tax Rate	FY 2024	~27%	~27%	Maintained
SG&A (Tech Depreciation)	Q3 & Q4 2024	N/A	~10 bps charges each quarter	New headwind
Dividend	Quarterly	$0.19 declared (May)	$0.19 declared (Aug)	Maintained

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
Operational Optimization / Supply Chain	Continued 50+ bps variable supply chain savings; San Bernardino FC relocation to WCOC; inventory productivity improved	Faster click-to-delivery; consolidations; theft and inventory cleanup impacted margin; actions taken	Ceased build-out of leased omnichannel center; impairment booked; improved speed/reliability; RFID rollout advancing	Strengthening, broader scope
Digital Strategy & Marketplace	Marketplace planned for April; focus on personalized experience and choice count	Marketplace launched late April; scaling; balanced price points; search/discovery improvements	Marketplace added 15k+ items and ~100 brands; not yet material; continued scaling	Scaling, positive customer/brand feedback
RFID & Inventory Accuracy	Not highlighted	Inventory integrity initiatives underway	RFID enables real-time data, reduces shrink, improves fulfillment accuracy	Expanding deployment/benefits
Rack Growth & Store Openings	Opened 19 stores in 2023; strong ROI; Rack comps high-single digits; rack.com profitable	9 YTD openings; plan total 22 in 2024; strong new-store ROI/customer acquisition	11 YTD openings; plan 12 more; Rack digital strength; BOPIS and store fulfillment rolling out	Sustained expansion, omnichannel capabilities
Category Performance	Active, Beauty, Women’s Apparel led; fewer markdowns	Active, Kids, Women’s Apparel and Beauty strong; private brand relaunch	Active, Women’s Apparel, Beauty, Kids top performers; Anniversary Sale drove newness	Broad-based strength, private brands gaining traction
Credit Card Revenues	Expected ~3% of net sales in 2024; monitoring regulatory changes	Decline modestly vs prior year; higher losses	Decline modestly vs prior year; consistent with expectations	Mild headwind
Macro & Promotional Environment	Cautious consumer; promotional environment not elevated	Promotional environment normal; guidance prudently cautious	External environment uncertain; cautious guidance; July Anniversary timing shift noted	Cautious stance maintained

Management Commentary

“We delivered solid results in the second quarter, with net sales of $3.8 billion, and earnings per share of 96 cents…Our teams executed well throughout the quarter and delivered a successful Anniversary Sale.” – Erik Nordstrom, CEO .
“We have…made progress on implementing RFID technology across our locations…improve the accuracy of our inventory…reduce shrink…allowing us to fulfill the items our customers are looking for.” – Erik Nordstrom, CEO .
“We made the strategic decision to cease build-out…of a leased omnichannel center…we can serve West Coast customers more efficiently from our existing supply chain network…we have taken an asset impairment charge.” – Erik Nordstrom, CEO .
“75% of our Icon and Ambassador Nordy Club members [shopped Anniversary];…active…registered double-digit growth…private brands delivered mid-single digit growth with Nordstrom and Zella as top two.” – Pete Nordstrom, President .
“Gross profit…expanded 155 basis points to 36.6 percent on strong regular price sales…SG&A…increased 160 basis points…largely due to the supply chain asset impairment.” – Cathy Smith, CFO .

Q&A Highlights

Anniversary Sale: Management was “on plan” with sell-through; strong early read on fall categories (outerwear, sweaters); margins depend on forward sell-through (CFO/President) .
Inventory: Overgrowth concentrated at Rack/new stores/rack.com; aging healthy; view inventory quality as strong; aim to realign inventory to demand (President/CFO) .
Rack economics: New Rack stores deliver mid-to-high-teens IRR; runway to open 20–25 stores/year; strong customer acquisition from openings (CEO/CFO) .
Margin trajectory: Expect small gross margin expansion for full year; SG&A headwinds include tech depreciation charges in Q3/Q4; continued supply chain productivity (CFO) .
Designer category: Normalizing to ~2019 levels; inventory balanced, ready to chase; healthier margins expected (President) .

Estimates Context

S&P Global consensus estimates for Q2 2025 were unavailable due to a mapping issue in our SPGI CIQ feed; as a result, comparisons versus Wall Street consensus cannot be provided for this quarter [GetEstimates error].

Key Takeaways for Investors

Gross margin expansion and adjusted EPS strength underpin improving profitability; watch for continued regular-price mix and shrink improvement to sustain margins into H2 .
Rack remains the growth engine: strong new-store ROI, expanding omnichannel (BOPIS, store fulfillment), and differentiated access to premium brands should drive traffic and comps; inventory is intentionally positioned to support this growth .
Operational execution (RFID, supply chain optimization) is translating to speed, accuracy, and cost benefits—key to margin durability and improved customer experience .
Marketplace expands choice but is not yet material; expect more contribution in 2025 as seller count and discovery improvements scale .
Guidance cautious given external uncertainty and accounting/tech charges; focus on adjusted EBIT/adjusted EPS ranges to parse core performance vs one-time impacts .
Inventory elevated YoY in Q2 to fuel Rack/digital growth, but aging is healthy; monitor mix and seasonal categories (outerwear, sweaters) pacing into holiday .
Near-term trading: narrative likely responds to gross margin resilience, Rack momentum and tech/data initiatives; risk factors include consumer credit pressure and SG&A headwinds from accelerated depreciation .

NORDSTROM INC (JWN)·Q2 2025 Earnings Summary