Future Visions and Challenges in EBIT Margin Expansion

Successful strategic decisions in the company can sustainably increase the EBIT margin. In the near future, revenue growth will be seen as the most significant driver for margin improvement. Already this year, positive developments are emerging, offering hope. Investments in the supply chain and technological innovations play an important role in this. It will be particularly crucial to reduce losses in order to maximize the profit margin. Another focus is on customer growth and increasing revenue per customer at Rack. Fortunately, customer health metrics show a positive trend; both the number of customers and the frequency of purchases are increasing. New retail stores are the main source of customer acquisition. Notably, there is increasing migration of new customers from all areas and sales channels. With regard to the upcoming holiday season, the goal is to maintain revenue growth in tandem with inventory growth. Although the current inventory is slightly higher than desired, this is due to supporting growth at Rack and a wider selection at NordstromRack.com. The quality of the inventory is good, and every effort is being made to manage cleanly through the holidays. The fourth quarter will be marked by caution, even though the Q3 results were satisfactory. A slight decline towards the end of October is concerning. Inventory is heavier to support Rack and cold-weather categories disrupted by unusually warm weather. Intense efforts are being made to balance inventory and demand.