Nordstrom is an American luxury department store chain that was founded in 1901 by John W. Nordstrom and Carl F. Wallin. The company operates more than 350 stores in the United States, Canada, and Puerto Rico, as well as an e-commerce platform. Nordstrom is known for its high-quality products and excellent customer service, and it has a strong reputation in the retail industry.
In this essay, we will perform a financial statement analysis of Nordstrom to better understand the company's financial health and performance. We will begin by reviewing the company's income statement, balance sheet, and cash flow statement, and then we will use various financial ratios to evaluate Nordstrom's financial strength and efficiency.
Income Statement
The income statement is a financial statement that shows a company's revenues, expenses, and profits over a period of time. The income statement for Nordstrom for the fiscal year ending January 30, 2021 (FY2021) shows that the company had total revenues of $15.5 billion, which represents a decline of 15.5% compared to the previous year. This decline was primarily due to the impact of the COVID-19 pandemic on the company's sales.
Nordstrom's expenses for FY2021 included $14.2 billion in cost of goods sold (COGS), $2.6 billion in selling, general, and administrative expenses (SG&A), and $36 million in other expenses. The company's net income for the year was $184 million, which represents a decline of 77.3% compared to the previous year. This decline in net income was due to the decline in sales and the increase in expenses.
Balance Sheet
The balance sheet is a financial statement that shows a company's assets, liabilities, and equity at a specific point in time. Nordstrom's balance sheet as of January 30, 2021 shows that the company had total assets of $8.5 billion, which includes $5.5 billion in current assets and $3.0 billion in non-current assets. The company's current assets include cash and cash equivalents, accounts receivable, and inventory. Nordstrom's non-current assets include property, plant, and equipment, intangible assets, and long-term investments.
Nordstrom's total liabilities as of January 30, 2021 were $6.7 billion, which includes $2.7 billion in current liabilities and $4.0 billion in non-current liabilities. The company's current liabilities include accounts payable, taxes payable, and short-term debt. Nordstrom's non-current liabilities include long-term debt and other long-term obligations.
The company's equity as of January 30, 2021 was $1.8 billion, which represents the residual interest in the assets of the company after liabilities are paid. Nordstrom's equity is made up of common stock, retained earnings, and other comprehensive income.
Cash Flow Statement
The cash flow statement is a financial statement that shows a company's inflows and outflows of cash over a period of time. Nordstrom's cash flow statement for FY2021 shows that the company had net cash provided by operating activities of $660 million, which represents an increase of 8.3% compared to the previous year. This increase in cash flow from operating activities was due to the company's efforts to reduce expenses and improve its working capital.
Nordstrom's net cash used in investing activities for FY2021 was $158 million, which represents a decline of 50.0% compared to the previous year. This decline was due to the company's decision to reduce its capital expenditures in response to the COVID-19 pandemic.
The company's net cash used
Nordstrom is a leading fashion retailer that operates a chain of department stores, as well as an e-commerce platform. The company's financial statements provide valuable information about its financial performance, position, and cash flows. By analyzing Nordstrom's financial statements, we can gain a better understanding of the company's financial health and make informed decisions about its stock or other investments.
First, let's start by looking at Nordstrom's income statement. This statement shows the company's revenue, costs, and profits over a specific period of time, such as a fiscal quarter or year. By comparing Nordstrom's income statement to that of its competitors or to industry averages, we can assess the company's overall financial performance.
One key metric to consider is Nordstrom's gross profit margin, which is calculated by dividing gross profit by revenue. This metric shows the percentage of revenue that remains after subtracting the cost of goods sold. A higher gross profit margin indicates that the company is generating more profit per dollar of sales and may be more efficient at managing its costs.
Next, we can turn to Nordstrom's balance sheet. This statement shows the company's assets, liabilities, and equity as of a specific point in time. By analyzing the balance sheet, we can assess the company's financial position, including its liquidity and solvency.
For example, we can look at Nordstrom's current ratio, which is calculated by dividing current assets by current liabilities. This ratio measures the company's ability to pay its short-term debts using its current assets. A higher current ratio indicates that the company has more liquidity and may be better able to meet its short-term obligations.
Finally, we can analyze Nordstrom's cash flow statement. This statement shows the company's cash inflows and outflows over a specific period of time. By analyzing the cash flow statement, we can assess the company's ability to generate cash and fund its operations.
For example, we can look at Nordstrom's free cash flow, which is calculated by subtracting capital expenditures from net cash provided by operating activities. This metric shows the company's ability to generate cash after paying for its investments in property, plant, and equipment. A positive free cash flow indicates that the company is generating more cash than it is using to fund its growth, which can be a good sign for investors.
Overall, analyzing Nordstrom's financial statements is an important step in understanding the company's financial health and performance. By examining key metrics such as gross profit margin, current ratio, and free cash flow, investors and analysts can make informed decisions about the company's stock or other investments.
