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) November 20, 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 November 20, 2006, Nordstrom, Inc. issued an earnings release announcing its results of operations for the quarter and nine months ended October 28, 2006, its financial position as of October 28, 2006, and its cash flows for the nine months ended October 28, 2006. A copy of this earnings release is attached as Exhibit 99.1. ITEM 7.01 Regulation FD Disclosure On November 20, 2006, Nordstrom, Inc. issued an earnings release announcing its results of operations for the quarter and nine months ended October 28, 2006, its financial position as of October 28, 2006, and its cash flows for the nine months ended October 28, 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 November 20, 2006 relating to the Company's results of operations for the quarter and nine months ended October 28, 2006, its financial position as of October 28, 2006, and its cash flows for the nine months ended October 28, 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: November 20, 2006 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION 99.1 Nordstrom earnings release dated November 20, 2006 relating to the Company's results of operations for the quarter and nine months ended October 28, 2006, its financial position as of October 28, 2006, and its cash flows for the nine months ended October 28, 2006.
Exhibit 99.1 For Immediate Release - --------------------- November 20, 2006 NORDSTROM REPORTS THIRD QUARTER EARNINGS PER SHARE INCREASE 33 PERCENT SEATTLE - November 20, 2006 - Nordstrom, Inc. (NYSE: JWN) today reported net earnings of $135.7 million, or $0.52 per diluted share, for the third quarter ended October 28, 2006. For the same period last year, net earnings were $107.5 million, or $0.39 per diluted share. Total sales for the third quarter of 2006 increased 12.4 percent to $1.9 billion, compared to sales of $1.7 billion in the same period last year. Third quarter same-store sales increased 10.7 percent. THIRD QUARTER HIGHLIGHTS Net earnings increased 26.3 percent in the third quarter compared to the same quarter last year, primarily due to the company's improved execution of its merchandising strategy. The company continues to focus on providing customers with compelling merchandise and superior service. - Same-store sales increased 10.7 percent for the quarter. All major merchandise categories performed above the company's low single digit growth plan. Results in intimate apparel, accessories, women's better and designer apparel exceeded the company's overall percentage increase. The company's Direct and Rack channels achieved double digit same-store sales increases. - Gross profit as a percent of sales increased 156 basis points versus the prior year. Merchandise margin improved versus the prior year driven primarily by lower markdowns, particularly in women's apparel. Above plan sales results created incremental leverage on buying and occupancy expenses. - Selling, general and administrative expenses as a percent to sales decreased 17 basis points versus the prior year. Total sales growth outpaced an increase in general and administrative expenses. Further rate improvement was held back by a rise in compensation costs linked to the price of the company's stock, which appreciated 38.4 percent in the quarter. This cost increase impacted the total SG&A expense rate by 64 basis points, and diluted earnings per share by $0.03 for the quarter. - As a result of the adoption of SFAS No. 123(R), "Share-Based Payment," the company recorded $6.5 million in compensation expense, which resulted in a $0.01 impact on diluted earnings per share for the quarter. Of the total expense, $2.9 million was recorded in buying and occupancy and $3.6 million was recorded in selling, general and administrative expenses. YEAR-TO-DATE RESULTS Year-to-date net earnings increased 23.5 percent to $445.7 million for the three quarters ended October 28, 2006, compared to net earnings of $360.9 million for the same period last year. Earnings per diluted share for the same periods were $1.67 and $1.30, respectively. Year-to-date total sales increased 9.3 percent to $5.9 billion compared to prior year sales of $5.4 billion. Same-store sales increased 7.2 percent. EXPANSION AND CAPITAL INVESTMENT UPDATE Nordstrom opened its newly relocated store at Westfield Topanga Mall in Canoga Park, Calif., on October 6, 2006. The 213,000 square foot, three-level store features the company's most comprehensive designer offering in the country along with new design concepts, amenities and services. The company opened a new 35,000 square foot Nordstrom Rack store at Grand Plaza in San Marcos, Calif., on November 16, 2006. Nordstrom announced plans today to open three new stores and for one store relocation. - In the spring of 2009, Nordstrom will open a newly relocated 140,000 square foot store at the Fashion Place, in Murray, Utah. - In the fall of 2009, Nordstrom will open a new 140,000 square foot store at the Kenwood Towne Centre in Cincinnati, Ohio. - In the spring of 2010, Nordstrom will open a new 140,000 square foot store at the St. Louis Galleria in St. Louis, Missouri. - In the spring of 2011, Nordstrom will open a new 140,000 square foot store at the Christiana Mall in Wilmington, Delaware. Nordstrom's board of directors recently approved the company's budget for capital expenditures for the 2007 through 2011 fiscal years. The total amount planned is for $2.8 billion over the five years, with approximately 80% of the capital allocated to new stores, store relocations and store remodels. SHARE REPURCHASE Nordstrom repurchased approximately 896,000 shares of its common stock during the third quarter for $32.6 million. This reduction in weighted- average shares outstanding had no material impact on diluted earnings per share for the quarter. 2006 OUTLOOK For the 53 week fiscal year ending February 3, 2007, the company now anticipates diluted earnings per share in the range of $2.46 to $2.51, including an estimated expense of $0.06 per diluted share for stock option compensation following the adoption of SFAS No. 123(R) at the beginning of this fiscal year. For the 14 week fourth quarter, the company is planning low single digit same-store sales growth and earnings per share in the range of $0.79 to $0.84. Under the 4-5-4 retail calendar, the 2006 fourth quarter and fiscal year include an additional week. CONFERENCE CALL INFORMATION: Company management will be hosting a conference call and webcast to discuss third quarter results at 4:30 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 866-444- 9038. 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 157 US stores located in 27 states. Founded in 1901 as a shoe store in Seattle, today Nordstrom operates 99 full-line stores, 50 Nordstrom Racks, five Faconnable boutiques, one free-standing shoe store, and two clearance stores. Nordstrom also operates 35 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 fourth 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 October 28, 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 - 3rd Quarter ----------------------------------------------------- (unaudited; amounts in thousands, except per share data and percentages) ADDITIONAL DATA - ---------------
Quarter % of sales (1) Quarter % of sales (1) ended (except as ended (except as 10/28/06 indicated) 10/29/05 indicated) -------- ---------- -------- --------- Net sales $1,872,103 100.0% $1,666,130 100.0% Cost of sales and related buying & occupancy costs (1,160,123) (62.0%) (1,058,452) (63.5%) ---------- ---------- Gross profit 711,980 38.0% 607,678 36.5% Selling, general and administrative expenses (538,210) (28.7%) (481,768) (28.9%) ---------- ---------- Operating income 173,770 9.3% 125,910 7.6% Interest expense, net (11,419) (0.6%) (10,248) (0.6%) Other income including finance charges, net 58,819 3.1% 47,350 2.8% ---------- ---------- Earnings before income tax expense 221,170 11.8% 163,012 9.8% Income tax expense (85,497) (38.7%) (2) (55,559) (34.1%) (2) ---------- ---------- Net earnings $135,673 7.2% $107,453 6.4% ========== ========== Earnings per share Basic $0.53 $0.40 Diluted $0.52 $0.39 1Subtotals and totals may not foot due to rounding. 2Percent of earnings before income tax expense.
Weighted average shares outstanding Basic 256,757 271,599 Diluted 261,616 277,293 NORDSTROM, INC. CONSOLIDATED STATEMENTS OF EARNINGS - Year to Date ----------------------------------------------------- (unaudited; amounts in thousands, except per share data and percentages) ADDITIONAL DATA - ---------------
Nine Months % of sales (1) Nine Months % of sales (1) ended (except as ended (except as 10/28/06 indicated) 10/29/05 indicated) ---------- ---------- ---------- --------- Net sales $5,929,794 100.0% $5,427,042 100.0% Cost of sales and related buying & occupancy costs (3,729,759) (62.9%) (3,452,132) (63.6%) ---------- ---------- Gross profit 2,200,035 37.1% 1,974,910 36.4% Selling, general and Administrative expenses (1,611,982) (27.2%) (1,498,386) (27.6%) ---------- ---------- Operating income 588,053 9.9% 476,524 8.8% Interest expense, net (34,953) (0.6%) (33,791) (0.6%) Other income including finance charges, net 173,508 2.9% 135,052 2.5% ---------- ---------- Earnings before income tax expense 726,608 12.3% 577,785 10.6% Income tax expense (280,950) (38.7%) (2) (216,876) (37.5%) (2) ---------- ---------- Net earnings $445,658 7.5% $360,909 6.7% ========== ========== Earnings per share Basic $1.70 $1.32 Diluted $1.67 $1.30 1Subtotals and totals may not foot due to rounding. 2Percent of earnings before income tax expense.
Weighted average shares outstanding Basic 261,920 272,683 Diluted 266,893 278,399 NORDSTROM, INC. NORDSTROM, INC. CONSOLIDATED BALANCE SHEETS ----------------------------------------------------- (unaudited; amounts in thousands)
10/28/06 1/28/06 10/29/05 ---------- ---------- ---------- Assets Current assets: Cash and cash equivalents $ 208,715 $ 462,656 $ 205,943 Short-term investments - 54,000 34,000 Accounts receivable, net 667,748 639,558 626,864 Investment in asset backed securities 313,656 561,136 509,759 Merchandise inventories 1,228,230 955,978 1,166,471 Current deferred tax assets, net 169,858 145,470 149,622 Prepaid expenses and other 65,711 55,359 53,451 ----------- ----------- ----------- Total current assets 2,653,918 2,874,157 2,746,110 Land, buildings and equipment, net 1,748,395 1,773,871 1,778,579 Goodwill 51,714 51,714 51,714 Acquired tradename 84,000 84,000 84,000 Other assets 170,355 137,607 129,130 ----------- ----------- ----------- Total assets $4,708,382 $4,921,349 $4,789,533 =========== =========== =========== Liabilities and Shareholders' Equity Current liabilities: Accounts payable 758,402 540,019 683,137 Accrued salaries, wages and related benefits 253,440 285,982 235,137 Other current liabilities 385,767 409,076 365,872 Income taxes payable 42,970 81,617 47,850 Current portion of long-term debt 106,572 306,618 306,967 ----------- ----------- ----------- Total current liabilities 1,547,151 1,623,312 1,638,963 Long-term debt, net 624,631 627,776 626,978 Deferred property incentives, net 351,733 364,382 367,511 Other liabilities 223,262 213,198 206,980 Shareholders' equity: Common stock, no par value: 1,000,000 shares authorized; 256,904, 269,549 and 269,690 shares issued and outstanding 791,678 685,934 663,810 Unearned stock compensation - (327) (438) Retained earnings 1,171,364 1,404,366 1,277,674 Accumulated other comprehensive (loss) earnings (1,437) 2,708 8,055 ----------- ----------- ----------- Total shareholders' equity 1,961,605 2,092,681 1,949,101 ----------- ----------- ----------- Total liabilities and shareholders' equity $4,708,382 $4,921,349 $4,789,533 =========== =========== =========== NORDSTROM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------------- (unaudited; amounts in thousands)
Nine Months Nine Months ended ended 10/28/06 10/29/05 ----------- ----------- Operating Activities Net earnings $445,658 $360,909 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization of buildings and equipment 205,816 204,496 Amortization of deferred property incentives and other, net (25,255) (24,331) Stock-based compensation expense 25,075 7,672 Deferred income taxes, net (49,755) 1,173 Tax benefit of stock-based payments 29,691 31,281 Excess tax benefit from stock-based payments (25,384) - Provision for bad debt expense 10,715 18,327 Change in operating assets and liabilities: Accounts receivable (38,652) (769) Investment in asset backed securities 242,204 (86,786) Merchandise inventories (235,623) (250,441) Prepaid expenses (10,092) 855 Other assets (4,203) (6,079) Accounts payable 213,294 190,601 Accrued salaries, wages and related benefits (34,861) (56,758) Other current liabilities (22,559) (2,099) Income taxes payable (38,647) (67,705) Deferred property incentives 13,779 41,891 Other liabilities 11,328 14,209 ----------- ----------- Net cash provided by operating activities 712,529 376,446 ----------- ----------- Investing Activities Capital expenditures (187,748) (205,015) Purchases of short-term investments (109,550) (397,500) Sales of short-term investments 163,550 405,325 Other, net (6,380) (6,404) ----------- ----------- Net cash used in investing activities (140,128) (203,594) ----------- ----------- Financing Activities Proceeds from long-term borrowing 100,000 - Principal payments on long-term debt (306,465) (99,769) (Decrease) increase in cash book overdrafts (21,511) 4,720 Proceeds from exercise of stock options 38,917 61,057 Proceeds from employee stock purchase plan 16,300 15,600 Excess tax benefit from stock-based payments 25,384 - Cash dividends paid (83,139) (64,236) Repurchase of common stock (595,521) (246,302) Other, net (307) 1,398 ----------- ----------- Net cash used in financing activities (826,342) (327,532) ----------- ----------- Net decrease in cash and cash equivalents (253,941) (154,680) Cash and cash equivalents at beginning of period 462,656 360,623 ----------- ----------- Cash and cash equivalents at end of period $ 208,715 $205,943 =========== ===========