Nordstrom Reports Fourth Quarter and Fiscal Year 2008 Earnings
Total sales in the fourth quarter were
Fourth Quarter Summary
Although the retail operating environment was difficult, Nordstrom
continued to align the key drivers of its business to the current economic
realities. The company made good progress adjusting inventory levels to
current sales trends, reducing expenses without compromising its commitment to
the customer and lowering capital expenditures. Fourth quarter sales were
slightly better than original expectations and earnings per share were in-line
with consensus expectations of
-- Results in full-line stores continued to be challenging, as same-store
sales decreased 15.8 percent.
-- Nordstrom Rack was one of the top performers amongst its off-price
competitors with a same-store sales decrease of 1.5 percent.
-- Sales for Nordstrom Direct continued to be strong, increasing 9.7
percent.
-- Gross profit, as a percentage of sales, decreased 561 basis points
compared with last year's fourth quarter, due to significantly higher
levels of markdowns. Nordstrom's merchant and store teams responded
well to the intense competitive environment, preserving the company's
market share. Year-end inventory per square foot was down 12 percent
from the prior year, which is in-line with the fourth quarter
same-store sales decrease of 12.5 percent.
-- Selling, general and administrative expenses decreased
Full year results
For the fiscal year ended
Total sales for the year decreased 6.3 percent to
Expansion Update
In 2009, Nordstrom plans to open three new full-line stores and relocate
one full-line store:
-- On
-- On
-- On
-- On
In spring 2009, Nordstrom plans to open five new Nordstrom Rack stores:
--
-- Bergen Town Center in Paramus,
-- The Commons at Southtowne in Sandy,
-- Orland Park Place in Orland Park,
-- Ravenswood 101 in
In fall 2009, Nordstrom plans to open five new Nordstrom Rack stores:
-- Beverly Connection in
-- Shops of Southlake in Southlake,
-- Millenia Crossing in
-- Hastings Village in
-- Rookwood Pavilion in
Fiscal Year 2009 Outlook
Nordstrom is planning for 2009 based on the trends the company experienced
in the second-half of 2008. The company will continue to align the key
drivers of its business (inventory, expenses, working capital and capital
expenditures) to mitigate operating margin pressure, enhance free cash flow
and maintain a healthy balance sheet. For the 2009 fiscal year, Nordstrom
expects same-store sales to decrease 10 to 15 percent, which yields earnings
per share in the range of
Outlined in the table below are the company's expectations for fiscal year
2009:
Same-store Sales 10% to 15% decrease
Gross Profit (%) 150 to 250 basis point decrease
Selling, General and Admin.
Expense ($) $100 to $175 million decrease
Selling, General and Admin.
Expense (%) 40 to 70 basis point increase
Finance Charges and Other, net $55 to $60 million increase
Interest Expense, net $20 to $25 million increase
Effective Tax Rate 39.4% to 39.7%
Earnings per Diluted Share $1.10 to $1.40
Diluted Shares Outstanding 219 million
It has always been Nordstrom's practice to clearly and openly communicate with its shareholders and other constituencies. In this spirit, the company will continue to provide its expectations for annual results, which it will update with each quarterly earnings release. As the economy has weakened and become more unpredictable, it has become difficult to accurately predict near-term results. Given the uncertainty surrounding the economic environment, Nordstrom does not feel it is appropriate to continue providing quarterly EPS estimates. Nordstrom believes that providing its annual expectations in line-item detail, combined with the continued release of monthly sales, will allow interested parties to effectively monitor and assess the company's performance. The company expects same-store sales in the first half of 2009 to be 300 to 400 basis points below the outlook for the fiscal year.
Conference Call Information
The company's senior management will host a conference call to discuss
fourth quarter results at
About Nordstrom
Certain statements in this news release contain "forward-looking"
information (as defined in the Private Securities Litigation Reform Act of
1995) that involve risks and uncertainties, including, but not limited to,
anticipated financial results for the fiscal year ending
INVESTOR CONTACT: Chris Holloway
Nordstrom, Inc.
(206) 303-3290
MEDIA CONTACT: Brooke White
Nordstrom, Inc.
(206) 373-3030
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - 4th Quarter
-------------------------------------------------
(unaudited; amounts in millions, except per share data and percentages)
% of % of
Quarter sales(1) Quarter sales(1)
ended (except as ended (except as
1/31/09 indicated) 2/2/08 indicated)
------- --------- ------ ---------
Net sales $2,301 100.0% $2,514 100.0%
Cost of sales and related
buying & occupancy costs (1,565) (68.0%) (1,569) (62.4%)
------ ------
Gross profit 736 32.0% 945 37.6%
Selling, general and
administrative expenses (670) (29.1%) (637) (25.4%)
Finance charges and other, net 90 3.9% 76 3.0%
--- ---
Earnings before interest and
income taxes 156 6.8% 384 15.3%
Interest expense, net (33) (1.5%) (30) (1.2%)
--- ---
Earnings before income taxes 123 5.3% 354 14.1%
Income tax expense (55) (44.5%)(2) (142) (40.2%)(2)
--- ----
Net earnings $68 3.0% $212 8.4%
=== ====
Earnings per share
Basic $0.32 $0.93
Diluted $0.31 $0.92
ADDITIONAL DATA
Weighted average shares
outstanding
Basic 215.6 228.5
Diluted 216.8 231.6
(1) Subtotals and totals may not foot due to rounding.
(2) Percent of earnings before income taxes.
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - Fiscal Year
-------------------------------------------------
(unaudited; amounts in millions, except per share data and percentages)
% of % of
Year sales(1) Year sales(1)
ended (except as ended (except as
1/31/09 indicated) 2/2/08 indicated)
------- --------- ------- ---------
Net sales $8,272 100.0% $8,828 100.0%
Cost of sales and related
buying & occupancy costs (5,417) (65.5%) (5,526) (62.6%)
------ ------
Gross profit 2,855 34.5% 3,302 37.4%
Selling, general and
administrative expenses (2,386) (28.8%) (2,360) (26.7%)
Finance charges and other, net 310 3.8% 271 3.1%
Gain on sale of Faconnable - - 34 0.4%
--- ---
Earnings before interest and
income taxes 779 9.4% 1,247 14.1%
Interest expense, net (131) (1.6%) (74) (0.8%)
---- ---
Earnings before income taxes 648 7.8% 1,173 13.3%
Income tax expense (247) (38.1%)(2) (458) (39.0%)(2)
---- ----
Net earnings $401 4.8% $715 8.1%
==== ====
Earnings per share
Basic $1.85 $2.92
Diluted $1.83 $2.88
ADDITIONAL DATA
Weighted average shares
outstanding
Basic 216.6 244.8
Diluted 219.2 248.8
(1) Subtotals and totals may not foot due to rounding.
(2) Percent of earnings before income taxes.
NORDSTROM, INC.
CONSOLIDATED BALANCE SHEETS
---------------------------
(unaudited; amounts in millions)
1/31/09 2/2/08
------- ------
Assets
Current assets:
Cash and cash equivalents $72 $358
Accounts receivable, net 1,942 1,788
Merchandise inventories 900 956
Current deferred tax assets, net 210 181
Prepaid expenses and other 93 78
--- ---
Total current assets 3,217 3,361
Land, buildings and equipment, net 2,221 1,983
Goodwill 53 53
Other assets 170 203
--- ---
Total assets $5,661 $5,600
====== ======
Liabilities and Shareholders' Equity
Current liabilities:
Commercial Paper $275 $-
Accounts payable 563 556
Accrued salaries, wages and related
benefits 214 268
Other current liabilities 525 550
Current portion of long-term debt 24 261
--- ---
Total current liabilities 1,601 1,635
Long-term debt, net 2,214 2,236
Deferred property incentives, net 435 369
Other liabilities 201 245
Commitments and contingent liabilities
Shareholders' equity:
Common stock, no par value: 1,000 shares
authorized; 215.4 and 220.9 shares
issued and outstanding 997 936
Retained earnings 223 201
Accumulated other comprehensive loss (10) (22)
--- ---
Total shareholders' equity 1,210 1,115
----- -----
Total liabilities and shareholders' equity $5,661 $5,600
====== ======
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited; amounts in millions)
Year Year
ended ended
Operating Activities 1/31/09 2/2/08
------- ------
Net earnings $401 $715
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of buildings and
equipment 302 269
Gain on sale of Faconnable - (34)
Amortization of deferred property incentives
and other, net (21) (36)
Stock-based compensation expense 28 26
Deferred income taxes, net (36) (42)
Tax benefit from stock-based payments 3 28
Excess tax benefit from stock-based payments (4) (26)
Provision for bad debt expense 173 107
Change in operating assets and liabilities:
Accounts receivable (93) (1,083)
Investment in asset backed securities - 420
Merchandise inventories 53 -
Prepaid expenses 9 (9)
Other assets 29 (27)
Accounts payable 16 (19)
Accrued salaries, wages and related benefits (54) (64)
Other current liabilities 28 36
Income taxes (76) (6)
Deferred property incentives 119 58
Other liabilities (29) (1)
--- ---
Net cash provided by operating activities 848 312
--- ---
Investing Activities
Capital expenditures (563) (501)
Change in accounts receivable originated at
third parties (232) (151)
Proceeds from sale of Faconnable - 216
Proceeds from sale of assets 2 12
Other, net 1 3
--- ---
Net cash used in investing activities (792) (421)
---- ----
Financing Activities
Proceeds from commercial paper 275 -
Proceeds from long-term borrowings, net 150 2,510
Principal payments on long-term borrowings (410) (680)
Increase in cash book overdrafts 20 5
Proceeds from exercise of stock options 13 34
Proceeds from employee stock purchase plan 17 17
Excess tax benefit from stock-based payments 4 26
Cash dividends paid (138) (134)
Repurchase of common stock (264) (1,702)
Other, net (9) (12)
--- ---
Net cash (used in) provided by financing
activities (342) 64
---- ---
Net decrease in cash and cash equivalents (286) (45)
Cash and cash equivalents at beginning of year 358 403
--- ---
Cash and cash equivalents at end of year $72 $358
=== ====
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