Nordstrom Inc (NYSE:JWN) Q1 2020 Earnings Conference Call - Final Transcript

May 28, 2020 • 04:45 pm ET

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Nordstrom Inc (NYSE:JWN) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings, and welcome to the Nordstrom First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

At this time, I'll turn the call over to Trina Schurman, Director of Investor Relations for Nordstrom. You may begin.

Executive
Trina Schurman

Good afternoon, and thank you for joining us. Today's earnings call will last 45 minutes and will include approximately 30 minutes for your questions. Before we begin, I want to mention that we'll be referring to slides, which can be viewed by going to the Investor Relations section on nordstrom.com. Our discussion may include forward-looking statements, so please refer to the slide showing our safe harbor language.

Participating in today's call are Erik Nordstrom, Chief Executive Officer; and Anne Bramman, Chief Financial Officer, who will provide a business update and discuss the company's first quarter performance for 2020. Joining during the Q&A session will be Pete Nordstrom, President of Nordstrom Inc, and Chief Brand Officer.

With that, I'll turn the call over to Erik.

Executive
Erik B. Nordstrom

Good afternoon, and thank you for joining us today. On behalf of everyone at Nordstrom, our hearts continue to go out to all those impacted by COVID-19. The past several months have been unlike anything we've ever experienced, and we've been working hard to continue to show up in a meaningful way for our customers, employees, shareholders and communities.

With health and safety as our top priority, we temporarily closed our stores on March 17th to do our part to help limit the spread of the virus. Prior to the closures, we saw strong momentum from the second half of 2019 continue into February with positive sales growth. These closures had a meaningful impact on our financial results as stores made up two-thirds of sales in 2019. In our e-commerce business, sales grew 5% and reached more than $1 billion for the first quarter. Online demand trends were consistent with the second half of 2019. While our stores were temporarily closed, our e-commerce business had more than 50% growth in customers who are new to Nordstrom.

We successfully strengthened our financial flexibility through early actions to increase liquidity and reduce our cash burn, which Anne will discuss further. With inventory as our biggest lever of flexibility, we reduced receipts by 30% during the first quarter, generated customer demand through increased marketing and promotions, and utilized our fulfillment capabilities to clear inventory held in our stores. These actions decreased inventory levels by more than 25% from last year, putting us in a favorable position to bring in newness starting in June. As we expect a heavy promotional retail environment through July, we shifted our one-of-a-kind Anniversary event to August 19th to give customers the best experience. Early access for Nordstrom cardmembers will begin August 4th through August 13th, depending on their Nordy Club status. This unique event will feature new arrivals at reduced prices for a limited time.

In Off-Price, we cancelled receipts beginning in March through the second quarter, allowing us to take advantage of closeouts