UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) August 17, 2006
NORDSTROM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON 001-15059 91-0515058
(STATE OR OTHER JURISDICTION (COMMISSION FILE (I.R.S. EMPLOYER
OF INCORPORATION) NUMBER) IDENTIFICATION NO.)
1617 SIXTH AVENUE, SEATTLE, WASHINGTON 98101
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (206) 628-2111
INAPPLICABLE
(FORMER NAME OR FORMER ADDRESS IF CHANGED SINCE LAST REPORT)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2 below):
___ Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
___ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
___ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
___ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 Results of Operations and Financial Condition
On August 17, 2006, Nordstrom, Inc. issued an earnings release announcing
its results of operations for the quarter and six months ended July 29, 2006,
its financial position as of July 29, 2006, and its cash flows for the six
months ended July 29, 2006. A copy of this earnings release is attached as
Exhibit 99.1.
ITEM 7.01 Regulation FD Disclosure
On August 17, 2006, Nordstrom, Inc. issued an earnings release announcing
its results of operations for the quarter and six months ended July 29, 2006,
its financial position as of July 29, 2006, and its cash flows for the six
months ended July 29, 2006. A copy of this earnings release is attached as
Exhibit 99.1.
ITEM 9.01 Financial Statements and Exhibits
99.1 Nordstrom earnings release dated August 17, 2006 relating to
the Company's results of operations for the quarter and six months ended
July 29, 2006, its financial position as of July 29, 2006, and its cash
flows for the six months ended July 29, 2006.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
NORDSTROM, INC.
By: /s/Michael G. Koppel
-----------------------
Michael G. Koppel
Executive Vice President and
Chief Financial Officer
Dated: August 17, 2006
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
99.1 Nordstrom earnings release dated August 17, 2006 relating to
the Company's results of operations for the quarter and six
months ended July 29, 2006, its financial position as of July
29, 2006, and its cash flows for the six months ended July 29,
2006.
Exhibit 99.1
For Immediate Release
- ---------------------
August 17, 2006
NORDSTROM REPORTS SECOND QUARTER EARNINGS PER SHARE OF 67 CENTS
SEATTLE - August 17, 2006 - Nordstrom, Inc. (NYSE: JWN) today reported net
earnings of $178.8 million, or $0.67 per diluted share, for the second quarter
ended July 29, 2006. For the same period last year, net earnings were $148.9
million, or $0.53 per diluted share.
Total sales for the second quarter of 2006 increased 7.8 percent to $2.3
billion, compared to sales of $2.1 billion in the same period last year.
Second quarter same-store sales increased 5.7 percent.
SECOND QUARTER HIGHLIGHTS
Net earnings increased 20.0 percent in the second quarter compared to the
same quarter last year, reflecting steady improvement in merchandise
execution, inventory productivity, and expense leverage, as well as a one-time
Visa/Master card settlement gain. The company continues to focus on providing
a differentiated shopping experience and achieving long-term profitable
growth.
- Same-store sales increased 5.7 percent for the quarter, higher than the
company's one to three percent same-store sales plan. Regular price
selling was strong during the quarter and the initial response to fall
merchandise was favorable. The following full-line store merchandise
divisions performed above the company's average: intimate apparel,
accessories, designer apparel, and cosmetics. Also notable, same-store
sales in the Rack division increased 11.6 percent.
- Gross profit, as a percent of sales, increased 26 basis points. Overall
merchandise margin improved versus the prior year. Better than planned
sales results drove incremental leverage on buying and occupancy
expenses.
- The same-store sales increase combined with overall on-plan expenses
resulted in a 64 basis point reduction in selling, general and
administrative expenses on a percent to sales basis.
- As a result of our adoption of SFAS No. 123(R), "Share-Based Payment," we
recorded compensation expense of $2.6 million in buying and occupancy
costs and $4.2 million in selling, general and administrative expenses.
- The company received a one-time payment of $5.6 million related to the
Visa/MasterCard settlement gain, which was recorded in other income.
FULL YEAR RESULTS
Year-to-date net earnings increased 22.3 percent to $310.0 million for the
period ended July 29, 2006, compared to net earnings of $253.5 million for the
same period last year. Earnings per diluted share for the same periods were
$1.15 and $0.91, respectively.
Year-to-date total sales increased 7.9 percent to $4.1 billion compared to
prior year sales of $3.8 billion. Same-store sales increased 5.6 percent.
EXPANSION UPDATE
No new stores were opened during the second quarter. The company will
open a new relocated store at the Westfield Topanga mall in Woodland Hills,
Calif., on October 6th.
SHARE REPURCHASE
Nordstrom repurchased approximately 9.7 million shares of its common stock
during the second quarter for $350.0 million. This reduction in weighted-
average shares outstanding had a $0.01 impact on diluted earnings per share
for the quarter.
2006 OUTLOOK
For the fiscal year ending February 3, 2007, the company now anticipates
diluted earnings per share in the range of $2.31 to $2.39, which includes an
estimated expense of $0.06 per diluted share from the adoption of SFAS No.
123(R) regarding expensing of stock options. For the third quarter, the
company is planning low single digit same-store sales growth and earnings per
share in the range of $0.40 to $0.45.
CONFERENCE CALL INFORMATION:
Company management will be hosting a conference call and webcast to
discuss second quarter results at 4:15 p.m. (ET) today. Access to the
conference call is open to the press and general public in a listen only mode.
To participate, please dial 212-547-0138 ten minutes prior to the call
(passcode: NORD). A telephone replay will be available for 48 hours beginning
approximately one hour after the conclusion of the call by dialing 800-348-
3536. Interested parties may also access the call over the Internet by
visiting the Investor Relations section of the company's corporate website at
http://about.nordstrom.com/aboutus/investor/webcasts.asp. An archived version
of the webcast will be available at this location for 30 days.
Nordstrom, Inc. is one of the nation's leading fashion specialty
retailers, with 156 US stores located in 27 states. Founded in 1901 as a shoe
store in Seattle, today Nordstrom operates 99 full-line stores, 49 Nordstrom
Racks, five Faconnable boutiques, one free-standing shoe store, and two
clearance stores. Nordstrom also operates 34 international Faconnable
boutiques in Europe. Additionally, Nordstrom serves customers through its
online presence at http://www.nordstrom.com and through its catalogs.
Nordstrom, Inc. 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 involves risks and uncertainties, including anticipated results for
the fiscal year ending February 3, 2007 and the third quarter, store openings
and trends in company operations. Actual future results and trends may differ
materially from historical results or current expectations depending upon
factors including, but not limited to, the impact of economic and competitive
market forces, the impact of terrorist activity or the impact of a war on the
company, its customers and the retail industry, the company's ability to
predict fashion trends, consumer apparel buying patterns, trends in personal
bankruptcies and bad debt write-offs, changes in interest rates, employee
relations, the company's ability to continue its expansion plans, changes in
government or regulatory requirements, the company's ability to control costs,
weather conditions and hazards of nature. Our SEC reports, including our Form
10-K for the fiscal year ended January 28, 2006 and our Form 10-Q for the
quarter ended July 29, 2006 to be filed with the SEC, 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.
Investor Contact: Media Contact:
RJ Jones, 206-303-3007 Deniz Anders, 206-373-3038
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - 2nd Quarter
-----------------------------------------------------
(unaudited; amounts in thousands, except per share data and percentages)
Quarter % of sales (1) Quarter % of sales (1)
ended (except as ended (except as
7/29/06 indicated) 7/30/05 indicated)
-------- ---------- -------- ---------
Net sales $2,270,468 100.0% $2,106,438 100.0%
Cost of sales and related buying
& occupancy costs (1,446,633) (63.7%) (1,347,515) (64.0%)
-------- --------
Gross profit 823,835 36.3% 758,923 36.0%
Selling, general and
administrative expenses (579,552) (25.5%) (551,196) (26.2%)
-------- --------
Operating income 244,283 10.8% 207,727 9.9%
Interest expense, net (12,783) (0.6%) (10,904) (0.5%)
Other income including
finance charges, net 60,851 2.7% 44,970 2.1%
-------- --------
Earnings before income tax expense 292,351 12.9% 241,793 11.5%
Income tax expense (113,597) (38.9%) (2) (92,875) (38.4%) (2)
-------- --------
Net earnings $178,754 7.9% $148,918 7.1%
======== ========
Earnings per share
Basic $0.68 $0.54
Diluted $0.67 $0.53
ADDITIONAL DATA
- ---------------
Weighted average shares outstanding
Basic 261,512 273,379
Diluted 266,226 279,169
(1) Subtotals and totals may not foot due to rounding.
(2) Percent of earnings before income taxes.
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - Year to Date
-----------------------------------------------------
(unaudited; amounts in thousands, except per share data and percentages)
Six Months % of sales (1) Six Months % of sales (1)
ended (except as ended (except as
7/29/06 indicated) 7/30/05 indicated)
---------- ---------- ---------- ---------
Net sales $4,057,691 100.0% $3,760,912 100.0%
Cost of sales and related buying
& occupancy costs (2,569,636) (63.3%) (2,393,680) (63.6%)
---------- ----------
Gross profit 1,488,055 36.7% 1,367,232 36.4%
Selling, general and
administrative expenses (1,073,772) (26.5%) (1,016,618) (27.0%)
---------- ----------
Operating income 414,283 10.2% 350,614 9.3%
Interest expense, net (23,534) (0.6%) (23,543) (0.6%)
Other income including
finance charges, net 114,689 2.8% 87,702 2.3%
---------- ----------
Earnings before income tax expense 505,438 12.5% 414,773 11.0%
Income tax expense (195,453) (38.7%) (2) (161,317) (38.9%) (2)
---------- ----------
Net earnings $309,985 7.6% $253,456 6.7%
========== ==========
Earnings per share
Basic $1.17 $0.93
Diluted $1.15 $0.91
ADDITIONAL DATA
- ---------------
Weighted average shares outstanding
Basic 264,501 273,225
Diluted 269,556 278,832
(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 thousands)
7/29/06 1/28/06 7/30/05
---------- ---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 280,197 $ 462,656 $ 462,875
Short-term investments - 54,000 34,000
Accounts receivable, net 712,166 639,558 701,882
Investment in asset backed securities 354,348 561,136 515,596
Merchandise inventories 1,026,287 955,978 989,365
Current deferred tax assets 165,298 145,470 140,745
Prepaid expenses and other 67,452 55,359 50,101
Restricted cash 150,000 - -
---------- ---------- ----------
Total current assets 2,755,748 2,874,157 2,894,564
Land, buildings and equipment, net 1,750,304 1,773,871 1,771,492
Goodwill 51,714 51,714 51,714
Acquired tradename 84,000 84,000 84,000
Other assets 150,911 137,607 114,643
---------- ---------- ----------
Total assets $4,792,677 $4,921,349 $4,916,413
========== ========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 725,675 $ 540,019 $ 714,429
Accrued salaries, wages and related benefits 220,026 285,982 226,307
Other current liabilities 378,682 409,076 365,569
Income taxes payable 120,074 81,617 107,713
Current portion of long-term debt 307,463 306,618 4,840
---------- ---------- ----------
Total current liabilities 1,751,920 1,623,312 1,418,858
Long-term debt, net 624,861 627,776 923,952
Deferred property incentives, net 356,111 364,382 355,197
Other liabilities 215,425 213,198 199,724
Shareholders' equity:
Common stock, no par value: 1,000,000 shares
authorized; 256,500, 269,549 and 273,683
shares issued and outstanding 751,281 685,934 646,684
Unearned stock compensation - (327) (550)
Retained earnings 1,095,181 1,404,366 1,365,888
Accumulated other comprehensive
(loss) earnings (2,102) 2,708 6,660
---------- ---------- ----------
Total shareholders' equity 1,844,360 2,092,681 2,018,682
---------- ---------- ----------
Total liabilities and shareholders' equity $4,792,677 $4,921,349 $4,916,413
========== ========== ==========
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------------
(unaudited; amounts in thousands)
Six Months Six Months
ended ended
7/29/06 7/30/05
---------- ---------
Operating Activities
Net earnings $309,985 $253,456
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization of
buildings and equipment 138,632 137,436
Amortization of deferred property incentives
and other, net (16,280) (15,664)
Stock-based compensation expense 14,083 7,474
Deferred income taxes, net (31,632) 2,420
Tax benefit of stock-based payments 18,092 26,872
Excess tax benefit from stock-based payments (15,109) -
Provision for bad debt expense 6,448 10,064
Change in operating assets and liabilities:
Accounts receivable (78,971) (67,230)
Investment in asset backed securities 200,803 (94,112)
Merchandise inventories (79,747) (71,717)
Prepaid expenses (11,809) (71)
Other assets (1,262) (1,936)
Accounts payable 192,158 191,087
Accrued salaries, wages and related benefits (64,777) (67,260)
Other current liabilities (29,356) (938)
Income taxes payable 38,457 (7,842)
Property incentives 8,866 21,613
Other liabilities 974 15,959
---------- ---------
Net cash provided by operating activities 599,555 339,611
---------- ---------
Investing Activities
Capital expenditures (115,720) (131,384)
Proceeds from sale of assets 128 -
Purchases of short-term investments (109,550) (289,500)
Sales of short-term investments 163,550 297,325
Increase in restricted cash (150,000) -
Other, net (2,820) (139)
---------- ---------
Net cash used in investing activities (214,412) (123,698)
---------- ---------
Financing Activities
Principal payments on long-term debt (2,312) (98,650)
Increase in cash book overdrafts 5,604 35,633
Proceeds from exercise of stock options 24,700 55,413
Proceeds from employee stock purchase plan 8,370 8,640
Excess tax benefit from stock-based payments 15,109 -
Cash dividends paid (56,249) (40,994)
Repurchase of common stock (562,921) (73,913)
Other, net 97 210
---------- ---------
Net cash used in financing activities (567,602) (113,661)
---------- ---------
Net (decrease) increase in cash and cash equivalents (182,459) 102,252
Cash and cash equivalents at beginning of period 462,656 360,623
---------- ---------
Cash and cash equivalents at end of period $ 280,197 $462,875
========== =========
