Trina Schurman - Director, IR Blake Nordstrom - Co-President Anne Bramman - CFO Erik Nordstrom - Co-President Pete Nordstrom - Co-President James Nordstrom - President of Stores.

Oliver Chen - Cowen & Co Mark R. Altschwager - Robert W.

Baird Paul Trussell - Deutsche Bank Erinn Murphy - Piper Jaffray Matthew Boss - JPMorgan Chuck Grom - Gordon Haskett Simeon Siegel - Nomura Instinet Kimberly Greenberger - Morgan Stanley Brian Tunick - RBC Capital Markets Paul Lejuez - Citi Michael Binetti - Credit Suisse Lorraine Hutchinson - Bank of America Merrill Lynch.

Greetings, and welcome to the Nordstrom First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. We will begin with prepared remarks followed by a question-and-answer session. [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..

Good afternoon, and thank you for joining us. Today's earnings call will last 45 minutes and will include 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 nordstrom.com in the Investor Relations section.

Our discussion may include forward-looking statements so please refer to the slides showing our Safe Harbor language. During today's call the company does not plan to comment further on the going private process that of Nordstrom family.

Participating in today's call are Blake Nordstrom, Co-President; and Anne Bramman, Chief Financial Officer, who will discuss the company's first quarter performance and the outlook for 2018. Joining during the Q&A session will be Erik Nordstrom and Pete Nordstrom, Co-President; and Jamie Nordstrom, President of Stores.

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

providing a compelling product offering, delivering exceptional services and experiences, and leveraging the strength of our brand. Now I'd like to turn the call over to Anne to provide additional insights into our financial performance and outlook for the year..

We've made generational investments in Canada and Manhattan and through our acquisitions of HauteLook and Trunk Club. We anticipate operating improvements as these businesses scale. We're also benefiting from productivity gains as a result of foundational investments in our capabilities.

We expect ongoing opportunities for improved expense leverage, particularly in marketing and technology. In supply chain, we continue to invest in creating end-to-end value and improving the customer experience.

Our strategic brand partnerships represent another lever that enables us to provide a compelling product offering and strengthen our regular-price selling. Now I'd like to take a moment to remind you of our capital allocation principles. First and foremost, our priority is to reinvest in the business to create long-term shareholder value.

Over the next five years, our CapEx plan of $3.2 billion, or 4% of sales, supports investments in digital capabilities and new market opportunities in Manhattan and Canada. In addition, we seek to return capital directly to shareholders through dividends and share repurchases.

We recently announced a quarterly dividend of $0.37 per share and resumed share repurchase activity. And finally, we remain committed to maintaining a strong investment-grade rating. Turning now to our full year outlook, we've narrowed the EPS range to $3.35 to $3.55, raising the low end to incorporate our first quarter performance.

Our first year sales outlook remains unchanged, reflecting a comp sales increase of 0.5% to 1.5%. Our updated EBIT outlook assumes current revenue trends at a mid-teens growth rate. As a reminder, our outlook includes the following sales timing considerations.

While comp sales will be reported on a like-for-like basis, total sales will be impacted by an event shift from the Anniversary Sale. Additionally, revenue recognition is not expected to materially impact full-year sales, but there will be associated impacts related to the Anniversary event shift.

These two combined factors are estimated to create a timing impact to total sales growth by approximately 150 basis points in Q2 and Q3. Please refer to our appendix for further color. Finally, before we turn to Q&A, we'd like to announce our plans to host an investor event on July 10th.

This will give us an opportunity to provide further insights into our customer strategy, how we're positioned for the future, and drivers of long-term value creation. We plan to webcast the event and will follow up with more details. Now, I'll turn it over to Trina for Q&A..

Thank you, Anne. Before we get started with Q&A, we'd like to ask that you limit to one question. If you have additional questions, please return to the queue. We'll now move to the Q&A session..

[Operator Instructions] thank you. Our first question is from Oliver Chen from Cowen & Co. Please proceed with your question..

Hi, great job on the men's store really innovative with the structure and service and curator assortment. Our question is about digitally enabled sales. What's ahead of in terms of improving profitability and margin rates in that overtime? And related to that, is your comments around supply changes.

What would you say are the bigger opportunities just making sure that it's seamless as possible in terms of the next chapter of the supply chain? You've been really advance and a lot of the features that you offer such as geolocation and inventory accuracy, would love your thoughts? Thank you..

Sure. This is Erik. But first on the digitally enabled sales. Our profitability on those sales is really terrific, that's some of our highest profitable customer engagements we have. So our goal is not only are profitable more importantly they are some of our highest satisfaction services we provide.

And our focus is to add more customer participating, we have a challenge on awareness. We've a lot of services in our stores and it's not always as conspicuous to customers what those capabilities. It's one of the things we've learned that the local store opening at Los Angeles by having a store that's all about services.

It's been easier to communicate to customers what we can do and the engagement with all of those services been terrific. So we're seeing nice growth, [indiscernible] digitally enabled sales and we'll continue to do that. Supply chain in general, we're looking to leverage the inventory we have to serve customers better.

We think it's an advantage that we have a lot of inventory very, very close to our customers which is in stores. Our stores are obviously in the big markets and that happens to be where the vast majority of our online customers are to. So big step in that, will be opening a filled assortment center in Southern California.

We're just getting on our way plans on that. but we'll be able to - through that and some other initiatives we're working on, be able to offer our customers much bigger selection at much faster shipping rates and it also leads to pretty significant step in inventory efficiency for us too..

Thank you, best regards..

Our next question comes from the line of Mark Altschwager from Robert W. Baird. Please proceed with your question..

Could you provide a bit more color on some of the comp results in the off price business. What do you believe drove the softness in the quarter? And did weather play a role at all? And what did you see at the key drivers to the improvement over the remainder of the year that you talked about and especially on the store side? Thank you..

Mark, it's Blake and I mentioned in the off price comments that we had a 0.4% increase that was just slightly below our plans for our price, but within that we had really strong digital online sales build in Nordstromrack.com and HauteLook but our stores did see some softness in the first quarter and you mentioned whether we did see some seasonally related items and classifications impacted.

Predominantly women's apparel, women's is our largest merchandise division in the Rack. There's a number of initiatives that we're working on. I think the thing that we're most encouraged about is that the customer accounts are flat, so we still have a lot of great foot traffic and we have a real opportunity if we get the mix and the buyer right.

Our inventories are in line, so we're fluid, we're open to buy and we don't believe we have undue risk with mark downs. So we've been able to address that on a daily basis.

Those things that are underperforming and so we fully expect to see improvement throughout this year both in our plans and our expectations and we're working hard on number of initiatives to address those opportunities in Q1..

Thank you best of luck..

Our next question comes from the line of Paul Trussell from Deutsche Bank. Please proceed with your question..

I just want to make sure we walk away understanding the spread between comps and sales with the various shifts. So first I wanted to ask if you could discuss the rewards, loyalty event that shifted into 1Q. And while I understand that helped overall sales by 250 basis points.

Could you just clarify whether or not that is included in the comps and then also looking into 2Q? Net sales you mentioned it will be helped by the inclusion Anniversary Sale by 150 basis, but do we net that out against the 250 basis point shift I guess loss from the loyalty event. Help on those items, would be gratefully appreciated..

Our 53rd-week year are always challenging no matter what company you talk in the retail space and so let me try and walk you through that, so from a comp perspective we're looking this on a like days for like days. So the shift in calendar has no impact to comp sales.

The only delta that we laid out is in the appendix slide of the deck that we went through is on the triple point of that and is net of several things, it's the counter shift, as well as any impact there wasn't a quarter for revenue recognition. So we netted all that together and that part of the spread between comp and total sales growth.

When we go to Q2 and Q3 and rest of that schedule we met all of that together for you through - all you have to do is look at all together which we shift in calendar, shifts in events and revenue recognition and that's just the net impact..

Okay, thank you..

Next is Dana Tulsi [ph] from Tulsi [ph] Advisor Group. Please proceed with your question..

Can you talk a little bit about what you're seeing in terms of the merchandising side of the business in terms of new products that you put in, new brands that are resonating and how it's differing in Rack versus Fall-line? Thank you..

Dana, this is Pete. It's been part of our initiative for a while to be fully explicit and purposeful about trying to bring in new brands and that's gone really well.

The thing that's probably most encouraging is that we see a growth in strength across our portfolio that's not necessarily because it's new or because it's smaller or because it's exclusive or because it's a large savage [ph] brand. It's kind of how it all works together. So in terms of some of the new things that we've done that have been successful.

Like we Allbirds [ph] Sweaty Betty, Phase On, introduced Anthropologie Home, all that's been really great. But at the same time, we're also having really good designer business and established brands that you know. I mean, Gucci, Valentino and St. Laurent are all in top handful of growth brands that we have Chanel is also in there.

I mean I think you see a play out when you look at our men's store for example, the kind of unique breadth of offer that we have and we know that's a recipe where it takes a lot of finesse in working on it and the whole brand vendor part of it of all [indiscernible] time, but it's something we spend a lot of time working on and trying to establish collaborative relationship so we're solving for common problems and I think we're really encouraged by where we're with this and what's possible in the future..

And on the full line stores, is there any categories strength categories that you want to see improve more what we should be looking towards?.

Well I'd say the one that we want to improve more is probably shoes. We had a challenged Q1 in shoes a lot of that was related to some of the seasonal stuff that came up earlier. If you just look at purely like sandal sales as an example, now a lot of that's changed now. The weather is kind of swung across the country little bit back on track.

I'd say our women's shoes business if we can get that humming along that would make a big difference. We've had continued strength in the accessories handbag of beauty of our business which just continues to do really well. You heard me mention the designer part, that's the best growing part of our businesses, designer across.

The handbag, the women apparel, the men's apparel and shoe offerings and as good that is, I think it suggest it could be better, so we think we can do more that way as well. There's a lot to be encouraged about I think and again we talk about the established brands.

You get brands like Lotter [ph] or Nike and people like that, that have been around for long time and we have good strong business with them and good collaborative efforts..

Thank you..

Next is Erinn Murphy with Piper Jaffray..

I guess going back to the digital focus.

If you kind of think about furthering that could you just maybe speak to how that's impacting the number of stores you're thinking about on a long-term basis for both Rack and Full-price here in North America? And then at 29% being digitally enhanced where do you see this going overtime?.

Erinn, this is Erik. How we look at it both in Full-price and off-price and I'd say we're little further long in full price we've had stronger data. Is looking at by market and really looking within markets and how can we gain market share by leveraging both our digital assets and our physical assets.

And so we continue to get better information all the time of the synergy between the physical and digital. So with that, you've seen a close I don't know two to three stores a year on last couple of years. I think [indiscernible] best barometer going forward.

We certainly don't anticipate large scale store closing, all of our stores are profitable both in Rack and our full line stores. So it's more understanding a market where we get the best engagement with customers and how that adds up to be profitable relationship with customer. So our focus is market share by local market and how we can grow that..

And then just maybe on active customers, last quarter you talked about 33 million active customers.

I think it's the first time you've given that metric, any update to where that was at the end of the first quarter?.

Yes, so I don't think it's materially changed in our plans, we try to give some color commentary in the [indiscernible] as far as how [indiscernible] the customer. I think that's more of a metric that you'd want to look to on a rolling 12-month basis..

Great. Thank you..

Next is Matthew Boss with JPMorgan..

Question at your full-price doors, same store sales decelerated from a 2.4 comp in the fourth quarter to a 0.7 comp this quarter comparison with similar. I know you said sales hate [ph] your plan and you spoke to signs of stabilization.

But I guess what do you think accounts for the sequential flowing at full price, despite what a lot of companies are speaking towards a pretty strong consumer backdrop for your core customers. Just and maybe Blake any thoughts that you have for that sequential flow..

Yes, so I think a couple of things that before we talk about the overall. I just want to get anchored in some of the numbers. So the first thing is when we talk about full price that includes stores, our digital channels as well as Canada and Trunk Club in it.

So that is all in full price so that's not necessarily a same store sales as we mentioned last quarter. It's really gotten very muddy and it's really gotten it's not even how we look at it inside the business as well.

so it's we're really looking at this less on a less channel basis and more on a comp and total sales based on full price and soft price. So that's number one so when you look at the release that we get, it actually showed that on a comparable basis, we went in and revised to see if you could see the overall trends in that full price business.

so we actually thought in Q1 against Q1 of last year was actually was a positive comp versus last year the negative comp. so we feel like in Q1, our full price business has continued trend particularly what we thought in the second half of last year..

Great.

And so that your 7% comp that you did this quarter, what comp did you in the fourth quarter on apples-to-apples basis?.

2.4%..

Right, so what accounts for that sequential deceleration from the 2.4 to 0.7 that was really the basis of the question?.

This is Jamie. I think one of the things that we saw coming into in the Q1, was a little bit of - its slight deceleration early in the quarter on some of our online traffic mostly is results of some changes we made with marketing, with so much product or execution. Those trends started to shift towards the end of the quarter.

So while you're right, it does show a deceleration. I think there's puts and takes in Q4. We feel pretty good about how we came out of Q1, overall if you look at our business our full price business over the last year over the two years, it's been incredibly stable and in terms of traffic and ticket and average point all those metrics.

So it's really nothing to point to that would give you any color..

That's the one..

Next is Chuck Grom with Gordon Haskett..

Anne back in March you gave us some color on the margin cadence as 2018 progressed. I think you said it's not in the slide deck this afternoon, so just want to ask and see if you could clarify.

I think you said the first quarter would be below, second quarter be above and then the back half would be in line, operating margins were down about 45 basis points here in 1Q, just want to see if you still believe in the cadence throughout the rest of the year..

So directionally, we gave you that's the right cadence. Clearly there's going to be a little bit here and there, but when we look at the margins for Q1 it was pretty in line with our expectations. So we still - and so the guidance we gave for the ups and downs as well as the full year was [indiscernible] it's pretty correct..

Okay and then just looking ahead on Slide 11, you talked about the planned improvement.

It's the second time you've shown that slide just curious where you think and you look out over the next couple of years operating margins could get to and I guess embedded in that, what would be the comp that you will need to get there and what would be the leverage hurdle?.

I'm sorry so you're talking about the generational investments?.

Yes, on Slide 11 we talked about the planned improvement over the next four to five years..

So as we've been talking about, we've been making investments along the way. And we've had - we're opening the stores in Canada with Rack which we're seeing is really enhancing our penetration strategy and customer awareness in the Canadian market and to that, it's a big piece of it.

And the other big piece that's coming online is the New York Tower in fall of next year. So as that comes online that's really going to help the margin improvement.

And then we're continuing to see as our digital growth and we talked about this both in the off price and full price business and so we highlighted the fact that Trunk Club's improved and we've also highlighted the fact that we had outsized digital growth and our online business for the off price..

Okay, thank you..

Next is Simeon Siegel with Nomura Instinet..

To follow-up on earlier question. Just recognizing the puts and takes of the new comp methodology and I guess that the 53-week of sort of have [indiscernible], so any help you could give us with extracations [ph] for you 2Q comps. And why figure is not for compare and I'm sorry if I missed it.

The tax rate what's the right way to think about when does that start to come down, thanks..

Yes, so we don't normally give guidance on first comps on a quarterly basis and so we'll be looked at, we delivered comps points 6 for Q1 and we still have reaffirmed our guidance for the total year and so again we're looking at comps as a light [indiscernible] like day versus and so we gave you guidance on the shift in account for total sales versus comp.

the way I would think about the tax rate it is, we still are also are disappointed, the rate that we gave at the beginning of the year for guidance but there's just some timing shift between recognizing profitability within Canada and the US, so it's going to be little choppy throughout the year but for the full year it should wind to what we gave you..

All right thanks. Best of the luck for the year..

Next is Kimberly Greenberger with Morgan Stanley..

I wanted to just follow-up on Erinn's question about the optimal store count. Knowing that you're looking at your store count on a market-by-market basis.

After you've gone through that analysis and sort of aggregated it out, what numbers are you coming up with in terms of an ideal US store fleet both for Rack and for Full-price? And then I just wanted to ask, it sounded like the slight miss to plan in the off-price business came from the women's apparel business, do you attribute that just to weather? Do you think there were any execution issues and was that the only business that missed the plan? Thanks so much..

Kimberly, this is Jamie. I'll take the first part and hand it over to Blake. In terms of store count we're really not looking at tops down number. I'd reiterate what Erik mentioned earlier, we're looking at market-by-market and we've had more matured markets we happen to gone from Los Angeles right now where we've been doing business for 40 years.

Some of these stores we opened in centers that were once better than they're now and we've got some stores that in centers that are doing better than ever. And so there's a lot that goes into how we look at it. It's by investing in existing stores.

We have number of stores that we've made big investments end of last few years and have plans to continue to invest in our best stores. In addition to that, we have a store that might be the fifth or sixth store in a market that we opened when that made all more sense. I think 10, 15, 20, 30 years ago and you've seen us closed some of those stores.

So it's a combination of investing in our best stores, calling those stores that are involved that are not as relevant anymore, but overall looking at it market-by-market and seeing how we can be as effective as possible in serving our customers there..

So Kimberly this is Blake. In terms of the Rack or Off-price we have roughly 240 stores. These are very productive stores and we're very pleased to have a very robust online business as well. It was just shy of $1 billion last year.

So we're in earlier days of trying to understand as Erik talked about earlier in and Jamie about looking it from a customers' point of view and how we can best serve them both in physical bricks and mortar and also digitally. So we're strategic and opportunistic in terms of new store growth, we don't have a set number.

Again we're about 240, we're opening six in Canada this year. We have six stores in the US in relocation. We've four slated for 2019. So it's not a set number. It has to meet our criteria, these are all strong stores so we're not looking to close stores in that.

But we do think in general, that we have a very strong base, with that strong digital base to best serve the customer. Your second question was regarding women's and you asked about the weather or the seasonal part, that I mentioned and were there any other execution issue, yes there was.

But I think the most material was some bets that we made in some areas that were more seasonally related that in Q1 at least didn't play out as well, the customer voted. Your other question was, were there any other businesses or merchandise area within the Rack that misplanned [ph].

No I would say predominantly the other merchandise areas met or slightly exceeded their plans again since women's is such large part of the business. It had an impact on it, but across the board we see lots of opportunities and that what we're getting after. We have a number of tests that we're working on right now.

This is a business that's pretty nimble and agile and so we can take those learnings in the feedback we get from our people and the customer, apply it and literally within 30 days get some feedback and made some adjustments. And the fact that our inventories are in line is a real strength for us..

Super helpful. Thanks so much..

Nest is Brian Tunick with RBC Capital Markets..

Question on the outside growth you're seeing in digital, is that fulfilment and shipping etc., is that still having a negative impact on margins or have you reach scale? I just haven't heard you guys talk about that being a determent right now and then secondly off the $3.2 billion in your CapEx plans you're talking about, what is being assumed for DC's and supply chain versus other investments? Thank you very much..

Brian, this is Erik. I'll take the first part. Our growth in digital [indiscernible].

Really what's the question?.

Fulfilment..

Sorry about that. As you've heard us talk about we look at our business as full price and off price, the customer journey is very much digital and physical combined and the impact of additional goes way beyond what's captured in e-commerce sales.

That being said, when we do break it out as best we can and it's hard to get precise because there's so much overlap. We break it out for full price, our e-commerce profit margin about the exactly same as our store profit margins. So we don't experience any movement in our operating margins when there's a shift from physical to digital.

Anne [indiscernible]?.

CapEx and [indiscernible] I think it's provided in the Q4 or the last quarter earnings, that was just a highlight. Between fulfilment was roughly about 20% of our CapEx spend and if you look at technology and fulfilment combined, it was almost half..

That's very helpful. See you on July 10. Thank you..

Next is Paul Lejuez with Citi..

Just curious if there was a gross margin impact of the shift on the loyalty event this quarter and what might the impact in 2Q? And just curious higher level, how you might characterize the promotional environment out there today relative to recent quarters. Thanks..

So I'll take the gross margin question. There we really aren't seeing a shift in the margin component to it and so Pete, do you want to take the promotional environment..

Yes, there's really kind of no news in the promotional environment it's pretty stable, in some ways the things that we've done has mitigated that, given the kind of preferred brands, strategic approach that we're taking in lot of brands, lot of that's in response to trying to offset some of the promotional activity, but by in large if you look at it, it's pretty flat.

Consistent..

Okay and was there any sort of pressure for the size of below plans sales at Rack. Did you have to promote more heavily there to move through the - to quantify in 1Q on the gross margin line..

I don't know if there is anything that would call out, there are classifications whether we've got a glut in the inventory, the customer is not responding because it's kind of isolated case would be like dresses. So we've got a lot of dresses and they're backing up and so we might take additional mark downs at selected times to move a classification.

But it doesn't move the needle for the total gross margins and it's not apples and oranges what we've done in previous years. So we think we're able to address those slow sellers and maintain our margins..

And I would just say, that calls out in the comments that our gross margin is pretty consistent with what we were expecting in year over year as well..

Okay and do you expect any pressure in the second quarter as a result of that, the dresses glut, in face to be called out..

No I think we're pleased about it, we're trying in more real time address any slow sellers we have and we feel very good about how current our inventories and the risk or exposure to it. And I think that's why Anne and the team felt confident with our full year guidance..

Got you. Thank you. Good luck guys..

Next is Michael Binetti with Credit Suisse..

I just want to be crystal clear and I know you won't help us with the second quarter comp, you gave us the year.

But is your view that to build our comps from here we start with the momentum in first quarter which in your mind is the underlying momentum if you ignore these shifts at the 0.6 and that's not effected by loyalty and that doesn't come out of 2Q, so you roll that momentum forward and then incorporate some sort of acceleration that Jamie spoke to earlier with some of the digital headwinds early in the quarter blowing off by the end of the quarter, is that the way that we should be rolling forward as we think about the near term underlying momentum of the business?.

Yes, I think that's pretty fair. I guess I'll say when we gave the comp guidance 0.5 to 1.5 it was based on what we were seeing a pretty consistent trend. We would expect on the high end of our guidance on the comps that we're going to see continued in our off price business as well as continue to accelerated growth in digital.

You have to contemplate that on the high end, on the low end of the comp pricing. Which you would assume is the change in off price in particular in the Rack stores really doesn't change that much for the year. So on this comp, the bellwether [ph I would use when you look at the rest of the year..

Okay and then, just a couple on the margin, really quickly here. I think you gave some commentary last quarter that first quarter EBITDA will be down and that came through. Second quarter EBITDA was to be up.

Third and fourth quarter to be flat and then can you help us, anchor ourselves on the gross margin impact of the Anniversary sale moving in the second quarter.

Can we use the historical analogies of 2016 shift for how much of the gross margin moves because of the sale?.

Wow! That's pretty granular..

There's lot going on here..

Yes, there's a lot going on there. So I think again I would encourage you take a look at comps and build from there on some of the accounts that are shipped then you get the totals of, I think once you guys do that and you look at our historical patterns around things like Anniversary sale.

I think you can massage it with the margin structure would look like in the EBIT pieces to it..

A minutia, if there's a margin issue related to the sale that for the sale because we not sold through well and then that result in mark downs count down the road. So it really doesn't happen in the moment so much..

Okay, great. Thanks..

Next is Lorraine Hutchinson with Bank of America..

Just wanted to follow-up on the comment, that Trunk Club made significant improvements in the quarter.

Can you just talk a little bit about why and what your expectations are for that business this year?.

Sure, it's Erik. It's pretty time last year, we really spent - the team spent all of last year doing a pretty deep dive and change the typical business model, mainly around the Trunk business. We do have the Clubhouses, the majority of the business is through the Trunk's.

So we pulled back on marking last year to get the business model to point where we think we can scale it, we think we're to that point right now, over the last several months. In particular, I think everything we do, it's about serving customers better and our customer's response has been significant more positive.

In particular it shows up and the keep rates we have from the Trunk's we have sent out and the number of repeat Trunk's that customers are signing up for both of those metrics are significantly improved from what we've had since we bought the business.

so I would describe it as still early days, but we're certainly encouraged that the core of the business, the Trunk business has a model that is something we're excited about, we're confident that success can continue and something we can get behind and start to leverage more..

We'll now take one more question..

Our last question comes from Brian Cowen [ph] with Bank of America..

Anne, on an ongoing basis you continue to run at the high end of your 1.5 to 2.5 times long-term leverage range and I appreciate the comments on IG ratings.

I guess I'm wondering has the targeted changed and then can you discuss your willingness to sort of flex the balance sheet for additional investment if you find it share repurchase, M&A or sort of where you'll be comfortable operating from a credit rating perspective, if you find a unique opportunity. Thank you..

Yes so on the flex side we're at the top end right now, we've had as you know from the pre-opening expenses and some of the investments in Manhattan and Canada and this comp [ph] tripping up to the higher end of the leverage range. We still don't feel very comfortable with that leverage range, I mentioned in the comment.

We're committed to being a strong investment grade debt company and so you know as we start bringing some of the generational investments more in line, some more growth we expect to see that leverage to get back into the norm.

As far as the flex on the balance sheet, I think we'll have a lot more opportunities to provide some color in the Analyst Day on that as well.

but in general, we have a fairly conservative balance sheet, we do want to be investment grade and we do take a look at where is the best return on our investment, to first investing in the company and driving shareholder value that way and then looking at the best way to return cash to shareholders with dividends or share buyback.

We do take a look at share buyback as a return metric and we're little opportunistic as we see the price in mitigating our balance, where we think intrinsic value is that the company be opportunistic in that manner. From an M&A perspective, again we've got a very flexible balance sheet.

So again we're looking at what's the best right investments and long-term return for the shareholders..

Thank you for all that detail. Appreciated..

Again, thank you for joining today's call. A replay along with the slide presentation and prepared remarks will be available for one-year on our website. Thank you for your interest in Nordstrom..

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation..