Nordstrom Third Quarter Earnings Increase 71 Percent
SEATTLE, Nov. 16 /PRNewswire-FirstCall/ -- Nordstrom, Inc. (NYSE: JWN) today reported net earnings of $77.8 million, or $0.54 per diluted share, for the third quarter ended October 30, 2004, which was ahead of expectations. For the same period last year, net earnings and earnings per diluted share were $45.5 million and $0.33, respectively.
(Logo: http://www.newscom.com/cgi-bin/prnh/20001011/NORDLOGO )
Total sales for the third quarter of 2004 increased 9.4 percent, to $1.5 billion, compared to sales of $1.4 billion in the same period last year. Third quarter same-store sales increased 8.1 percent.
Third Quarter Highlights
Earnings increased 71 percent in the third quarter compared to the same quarter last year, as the company continues to focus on merchandising improvements, inventory productivity and expense management. The better-than-expected performance reflects ongoing operating improvements consistent with the company's key strategic initiatives.
-- Same-store sales increased 8.1 percent, better than the company's plan of a low single digit increase. The company continues to see strong customer response to fashion, color and newness across all categories and price points.
-- As a percent to sales, gross profit improved 80 basis points primarily as a result of sales leverage on buying and occupancy expenses.
-- Selling, general and administrative expenses decreased 90 basis points compared to last year due to leverage on core operating expenses.
During the quarter, the company completed a review of its current and deferred tax liabilities, which resulted in a lower effective tax rate. This change increased net income per diluted share approximately $0.02 for the quarter.
Full Year Results
Through October 30, 2004, year-to-date net earnings increased 83 percent to $253.5 million compared to net earnings of $138.5 million for the same period last year. Earnings per share for these periods were $1.77 and $1.01, respectively.
Year-to-date total sales increased 11.1 percent to $5.0 billion compared to prior year sales of $4.5 billion. Same-store sales increased 9.1 percent.
Share Repurchase
As part of its recently announced share repurchase program, Nordstrom repurchased 2 million shares of common stock during the third quarter for a total of $75 million. This did not materially impact earnings per share for the quarter, as the impact on weighted average shares outstanding was insignificant.
Expansion Update
During the third quarter Nordstrom did not open any stores. The final new store planned for this year opened November 12th at Dadeland Mall in Miami, increasing gross square footage for the year approximately 2 percent to 19,439,000.
2004 Outlook
The company is providing the following fourth quarter forecast as well as
raising full-year expectations to $2.68 - $2.73 from the previously stated
forecast of $2.46 -$2.50:
4th Quarter 2004 Full-Year 2004
Comp-store Sales 1% - 3% increase 6% - 8% increase
Gross Profit (%) 25 - 35 basis point increase 140-150 basis point
increase
Selling, General
and Administrative
Expense (%) 120 - 130 basis point 90-100 basis point
decrease decrease
Service Charge
Income ($) $2 - $3 million increase $15 - $16 million
increase
Interest Expense $4 - $5 million decrease $13 - $14 million
decrease
Effective Tax Rate 38.4% 38.3%
Earnings per Share $0.90 - $0.95 $2.68 - $2.73
Diluted Shares
Outstanding 142.2 142.7
Prior Year
Diluted EPS $0.74 $1.76
Conference Call Information:
Company management will be hosting a conference call and webcast to discuss third quarter results at 4:30 p.m. (EST) today. Access to the conference call is open to the press and general public in a listen only mode. To participate, please dial, 1-212-547-0138 ten minutes prior to the call (passcode: NORD). A telephone replay will be available for 48 hours beginning approximately one hour after the conclusion of the call by dialing 866-415-2343. Interested parties may also access the call over the Internet by visiting the Investor Relations section of the company's corporate website at http://about.nordstrom.com/aboutus/investor/webcasts.asp . An archived version of the webcast will be available at this location for 30 days.
GAAP Sales Performance
The additional information provided in this section is to comply with the Securities and Exchange Commission's Regulation G. The company converted to a 4-5-4 Retail Calendar at the beginning of 2003. Year-to-date results for 2003 include one more day than the year-to-date for 2004. The company believes that adjusting for this difference provides a more comparable basis from which to evaluate sales performance. The following reconciliation bridges the year-to-date 2003 GAAP sales to the 4-5-4 comparable sales.
Sales
Reconciliation Dollar % Change % Change
($M) YTD 2003 YTD 2004 Increase Total Sales Comp Sales
Number of
Days GAAP 274 273
GAAP Sales $4,529.4 $5,031.0 $501.6 11.1% 8.6%
Less
Feb. 1, 2003
sales ($18.2) --
Reported
4-5-4
sales $4,511.2 $5,031.0 $519.8 11.5% 9.1%
4-5-4
Adjusted Days 273 273
Nordstrom, Inc. is one of the nation's leading fashion specialty retailers, with 150 US stores located in 27 states. Founded in 1901 as a shoe store in Seattle, Nordstrom today operates 94 full-line stores, 49 Nordstrom Racks, five U.S. Faconnable boutiques, one freestanding shoe store, and one clearance store. Nordstrom also operates 31 international Faconnable boutiques, primarily in Europe. Additionally, Nordstrom Direct serves customers through its online presence at http://www.nordstrom.com and through its direct mail catalogs.
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, 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 company's ability to predict fashion trends, consumer apparel buying patterns, the company's ability to control costs, weather conditions, hazards of nature, 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 and the impact of economic and competitive market forces, including the impact of terrorist activity or the impact of a war on the company, its customers and the retail industry. Our SEC reports may 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, Stephanie Allen, +1-206-303-3262, or media, Deniz Anders, +1-206-373-3038, both for Nordstrom, Inc.
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - 3rd Quarter
(unaudited; amounts in thousands, except per share data and percentages)
Quarter % of sales Quarter % of sales
ended (except as ended (except as
10/30/04 indicated) 11/1/03 indicated)
Net sales $1,542,075 100.0% $1,409,109 100.0
Cost of sales and
related buying
& occupancy costs (984,908) (63.9%) (911,429) (64.7%)
Gross profit 557,167 36.1% 497,680 35.3%
Selling, general and
administrative
expenses (465,769) (30.2%) (439,006) (31.1%)
Operating income 91,398 5.9% 58,674 4.2%
Interest expense, net (13,485) (0.9%) (26,681) (1.9%)
Service charge income
and other, net 45,000 3.0% 42,576 3.0%
Earnings before income
taxes 122,913 8.0% 74,569 5.3%
Income tax expense (45,085) (36.7%)(1) (29,100) (39.0%)(1)
Net earnings $77,828 5.0% $45,469 3.2%
Earnings per share
Basic $0.55 $0.33
Diluted $0.54 $0.33
ADDITIONAL DATA
Average number of shares
outstanding
Basic 140,698 136,304
Diluted 143,149 138,103
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - Year-to-Date
(unaudited; amounts in thousands, except per share data and percentages)
Year-to-Date % of sales Year-to-Date % of sales
ended (except as ended (except as
10/30/04 indicated) 11/1/03 indicated)
Net sales $5,031,045 100.0% $4,529,430 100.0%
Cost of sales and
related buying
& occupancy costs (3,228,732) (64.2%) (2,991,953) (66.1%)
Gross profit 1,802,313 35.8% 1,537,477 33.9%
Selling, general
and administrative
expenses (1,454,736) (28.9%) (1,351,628) (29.8%)
Operating income 347,577 6.9% 185,849 4.1%
Interest expense, net (64,260) (1.3%) (73,043) (1.6%)
Service charge income
and other, net 127,489 2.6% 114,289 2.5%
Earnings before income
taxes 410,806 8.2% 227,095 5.0%
Income tax expense (157,336) (38.3%)(1) (88,600) (39.0%)(1)
Net earnings $253,470 5.0% $138,495 3.1%
Earnings per share
Basic $1.81 $1.02
Diluted $1.77 $1.01
ADDITIONAL DATA
Average number of
shares outstanding
Basic 140,181 135,907
Diluted 142,868 136,659
(1) Percent of earnings before income taxes. For third quarter and
year-to-date 2004, the company's effective tax rate has been updated
based on a review of current and deferred tax liabilities.
SOURCE Nordstrom, Inc.
CONTACT:
investors, Stephanie Allen,
+1-206-303-3262, or
media,
Deniz Anders,
+1-206-373-3038,
both for Nordstrom, Inc.