Nordstrom Reports Fourth Quarter and Fiscal Year 2011 Earnings

Achieves Record Sales for Fiscal Year 2011

SEATTLE--(BUSINESS WIRE)--Feb. 16, 2012-- Nordstrom, Inc. (NYSE: JWN) today reported net earnings of $236 million, or $1.11 per diluted share, for the fourth quarter ended January 28, 2012. This represented an increase of 1.7 percent compared with net earnings of $232 million, or $1.04 per diluted share, for the same quarter last year.

Fourth quarter same-store sales increased 7.1 percent compared with the same period in fiscal 2010. Net sales in the fourth quarter were $3.17 billion, an increase of 12.5 percent compared with net sales of $2.82 billion during the same period in fiscal 2010. Additionally, total net sales of $10.50 billion for fiscal 2011 were the highest in the company’s history and represented two consecutive years of approximately 13 percent annual growth.

FOURTH QUARTER SUMMARY

Nordstrom’s fourth quarter performance was consistent with the strong trends the company experienced throughout 2011. The company achieved record sales for fiscal 2011, while continuing to make significant investments in the business to evolve with customers and to enhance its platform for sustainable, profitable growth.

• Nordstrom net sales, which include results from the full-line and Direct businesses, increased $232 million, or 9.8 percent, compared with the same period in fiscal 2010. Same-store sales increased 8.4 percent. Top-performing merchandise categories included Handbags, Designer and Cosmetics. The South and Midwest regions were the top-performing geographic areas for full-line stores relative to the fourth quarter of 2010. The Direct channel continued to show strong performance, with 35 percent quarter-over-quarter sales growth.
• Nordstrom Rack net sales increased $85 million, or 17.7 percent, compared with the same period in fiscal 2010, with same-store sales up 2.2 percent.
• Gross profit, as a percentage of net sales, increased 12 basis points compared with last year’s fourth quarter. The improvement was driven by the ability to leverage buying and occupancy expenses during the quarter.
• Retail selling, general and administrative expenses increased $121 million compared with last year’s fourth quarter. The increase was primarily attributable to various customer facing e-commerce initiatives, including HauteLook, and sales growth in both existing and new stores.
• In the Credit segment, customer payment rates improved, resulting in favorable trends in delinquency and write-off rates, and a corresponding decrease in finance charge revenue. Annualized net write-offs were 5.4 percent of average credit card receivables during the quarter, down from 7.2 percent in the fourth quarter of 2010. Delinquencies as a percentage of credit card receivables at the end of the fourth quarter were 2.6 percent, down from 3.0 percent at the end of the fourth quarter of 2010. As a result of these improvements, the overall performance of the credit portfolio and economic trends, the reserve for bad debt was reduced by $10 million.
• Earnings before interest and taxes increased $11 million to $417 million, or 12.8 percent of total revenues, from $406 million, or 13.9 percent of total revenues, in last year’s fourth quarter.

FULL YEAR RESULTS

For the fiscal year ended January 28, 2012, net earnings were up $70 million to $683 million, an increase of 11.4 percent compared with net earnings of $613 million for the fiscal year ended January 29, 2011. Earnings per diluted share for the same periods were $3.14 and $2.75, respectively.

Full year same-store sales increased 7.2 percent compared with fiscal 2010. Net sales for the year were a record $10.50 billion, an increase of 12.7 percent compared with prior year net sales of $9.31 billion.

CAPITAL INVESTMENT AND EXPANSION UPDATE

In fiscal 2012, the company’s capital expenditures, net of property incentives, are expected to total between $480 and $520 million, compared with approximately $430 million in fiscal 2011. The majority of the increase is attributable to investments in e-commerce.

Nordstrom has announced plans to open the following stores in fiscal year 2012:

FISCAL YEAR 2012 OUTLOOK

In 2012, Nordstrom plans to continue to invest and build upon the foundation for sustainable growth in top-line revenues, earnings and Return on Invested Capital (“ROIC”). For the 2012 fiscal year, Nordstrom expects same-store sales to increase 4 to 6 percent, and earnings per diluted share in the range of $3.30 to $3.45 for the full year. The expectations include the impact of the 53^rd week, which will add $160 to $170 million to total sales and approximately $0.03 to $0.05 to earnings per diluted share.

The company’s expectations for fiscal 2012 are as follows:

CONFERENCE CALL INFORMATION

The company’s senior management will host a conference call to discuss fourth quarter and fiscal year 2011 results and 2012 outlook at 4:45 p.m. Eastern Standard Time today. To listen to the live call online and view the speakers’ slides, visit the Investor Relations section of the company’s corporate website at http://investor.nordstrom.com. An archived webcast with the speakers’ slides will be available in the webcasts section for one year. Interested parties may also dial 415-228-4850 (passcode: NORD). A telephone replay will be available beginning approximately one hour after the conclusion of the call by dialing 203-369-1323 (passcode: 6673) until the close of business on February 23, 2012.

ABOUT NORDSTROM

Nordstrom, Inc. is one of the nation’s leading fashion specialty retailers. Founded in 1901 as a shoe store in Seattle, today Nordstrom operates 225 stores in 30 states, including 117 full-line stores, 104 Nordstrom Racks, two Jeffrey boutiques, one treasure&bond store and one clearance store. Nordstrom also serves customers through Nordstrom.com and through its catalogs. Additionally, the Company operates in the online private sale marketplace through its subsidiary HauteLook. Nordstrom, Inc.’s common stock is publicly traded on the NYSE under the symbol JWN.

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 outlook for the fiscal year ending February 2, 2013, anticipated annual same-store sales rate, anticipated store openings, anticipated capital expenditures for fiscal year 2012 and trends in our operations. Such statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. Actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to: the impact of economic and market conditions and the resultant impact on consumer spending patterns; our ability to maintain our relationships with vendors; our ability to respond to the business environment, fashion trends and consumer preferences, including changing expectations of service and experience in stores and online; effective inventory management; successful execution of our growth strategy, including possible expansion into new markets, technological investments and acquisitions, including our ability to realize the anticipated benefits from such acquisitions, and the timely completion of construction associated with newly planned stores, relocations and remodels, which may be impacted by the financial health of third parties; our ability to maintain relationships with our employees and to effectively attract, develop and retain our future leaders; successful execution of our multi-channel strategy; our compliance with applicable banking and related laws and regulations impacting our ability to extend credit to our customers; impact of the current regulatory environment and financial system and health care reforms; the impact of any systems failures and/or security breaches, including any security breaches that result in the theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident; our compliance with employment laws and regulations and other laws and regulations applicable to us; trends in personal bankruptcies and bad debt write-offs; changes in interest rates; efficient and proper allocation of our capital resources; availability and cost of credit; our ability to safeguard our brand and reputation; successful execution of our information technology strategy; weather conditions, natural disasters, health hazards or other market disruptions, or the prospects of these events and the impact on consumer spending patterns; disruptions in our supply chain; the geographic locations of our stores; the effectiveness of planned advertising, marketing and promotional campaigns; our ability to control costs; and the timing and amounts of share repurchases by the company, if any, or any share issuances by the company, including issuances associated with option exercises or other matters. Our SEC reports, including our Form 10-K for the fiscal year ended January 29, 2011, our Forms 10-Q for the fiscal quarters ended April 30, 2011, July 30, 2011 and October 29, 2011, and our Form 10-K for the fiscal year ended January 28, 2012, to be filed with the SEC on or about March 16, 2012, contain other information on these and other factors that could affect our financial results and cause actual results to differ materially from any forward-looking information we may provide. The company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.

¹Capitalized operating leases is our best estimate of the asset base we would record for our leases that are classified as operating if they had met the criteria for a capital lease, or we purchased the property. Asset base is calculated as described in footnote 5 below.

²Based upon our effective tax rate multiplied by the net operating profit for the 12 fiscal months ended January 28, 2012 and January 29, 2011.

³Based upon the trailing 12-month average.

⁴Based upon the trailing 12-month average for accounts payable, accrued salaries, wages and related benefits, and other current liabilities.

⁵Based upon the trailing 12-month average of the monthly asset base, which is calculated as the trailing 12-months rent expense multiplied by 8. The multiple of eight times rent expense is a commonly used method of estimating the asset base we would record for our capitalized operating leases described in footnote 1.

• Adjusted Debt is not exact, but rather our best estimate of the total company debt we would hold if we had purchased the property and issued debt associated with our operating leases;
• EBITDAR does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments, including leases, or the cash requirements necessary to service interest or principal payments on our debt; and
• Other companies in our industry may calculate Adjusted Debt to EBITDAR differently than we do, limiting its usefulness as a comparative measure.

¹The components of Adjusted Debt are as of January 28, 2012 and January 29, 2011, while the components of EBITDAR are for the 12 months ended January 28, 2012 and January 29, 2011.

²The multiple of eight times rent expense used to calculate Adjusted Debt is a commonly used method of estimating the debt we would record for our leases that are classified as operating if they had met the criteria for a capital lease, or we had purchased the property.

• Free Cash Flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs; and
• Other companies in our industry may calculate Free Cash Flow differently than we do, limiting its usefulness as a comparative measure.

Source: Nordstrom, Inc.

Nordstrom, Inc.
INVESTOR CONTACT: Rob Campbell, 206-233-6550
MEDIA CONTACT: Colin Johnson, 206-303-3036