Nordstrom Reports Second Quarter Earnings Per Share of 67 Cents
SEATTLE, Aug. 17 /PRNewswire-FirstCall/ -- 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.
(Logo: http://www.newscom.com/cgi-bin/prnh/20001011/NORDLOGO )
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.
Contact: Investors, RJ Jones, +1-206-303-3007, or Media, Deniz Anders, +1-206-373-3038.
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
Operating Activities 7/29/06 7/30/05
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
SOURCE
Nordstrom, Inc.
08/17/2006
CONTACT:
Investors,
RJ Jones,
1-206-303-3007,
or
Media,
Deniz Anders,
1-206-373-3038