Nordstrom Reports Third Quarter Earnings Per Share Increase 33 Percent
SEATTLE, Nov. 20 /PRNewswire-FirstCall/ -- 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.
(Logo: http://www.newscom.com/cgi-bin/prnh/20001011/NORDLOGO )
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)
% of % of
Quarter sales(1) Quarter 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
ADDITIONAL DATA
Weighted average shares
outstanding
Basic 256,757 271,599
Diluted 261,616 277,293
(1) Subtotals and totals may not foot due to rounding.
(2) Percent of earnings before income tax expense.
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - Year to Date
(unaudited; amounts in thousands, except per share data and percentages)
% of % of
Nine Months sales(1) Nine Months 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
ADDITIONAL DATA
Weighted average shares
outstanding
Basic 261,920 272,683
Diluted 266,893 278,399
(1) Subtotals and totals may not foot due to rounding.
(2) Percent of earnings before income tax expense.
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
Operating Activities 10/28/06 10/29/05
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
SOURCE Nordstrom, Inc.
11/20/2006
CONTACT: investors, RJ Jones, +1-206-303-3007, or media, Deniz Anders,
+1-206-373-3038, both of Nordstrom, Inc.
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