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) May 9, 2012

 

 

NORDSTROM, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

 

 

WASHINGTON		001-15059		91-0515058
(STATE OR OTHER JURISDICTION OF INCORPORATION)		(COMMISSION FILE NUMBER)		(I.R.S. EMPLOYER 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:

 

¨	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))

 

 

 

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ITEM 2.02 Results of Operations and Financial Condition

On May 10, 2012, Nordstrom, Inc. issued an earnings release announcing its results of operations for the quarter ended April 28, 2012, its financial position as of April 28, 2012, and its cash flows for the quarter ended April 28, 2012. A copy of this earnings release is attached as Exhibit 99.1.

ITEM 5.07 Submission of Matters to a Vote of Security Holders.

At the Annual Meeting of Shareholders of Nordstrom, Inc. (the “Company”) held on May 9, 2012, the shareholders voted on the election of each of the Company’s eleven nominees for directors for the term of one year, the approval of the Amended and Restated Nordstrom, Inc. Executive Management Bonus Plan, the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm, and an advisory vote to approve executive compensation.

The results of the voting were as follows:

 

		For				Against				Abstentions				Broker Non- Votes
Election of Directors
Phyllis J. Campbell			169,052,120				143,736				287,565				17,101,381
Michelle M. Ebanks			168,816,448				377,665				289,308				17,101,381
Enrique Hernandez, Jr.			165,327,315				3,904,192				251,914				17,101,381
Robert G. Miller			169,021,776				170,197				291,448				17,101,381
Blake W. Nordstrom			167,543,828				1,870,043				69,550				17,101,381
Erik B. Nordstrom			167,503,849				1,910,953				68,619				17,101,381
Peter E. Nordstrom			167,500,358				1,914,970				68,093				17,101,381
Philip G. Satre			168,585,476				605,639				292,306				17,101,381
B. Kevin Turner			168,918,881				403,996				160,544				17,101,381
Robert D. Walter			168,661,513				531,474				290,434				17,101,381
Alison A. Winter			167,189,966				2,184,453				109,002				17,101,381
Approval of the Amended and Restated Nordstrom, Inc. Executive Management Bonus Plan			164,258,133				4,821,156				404,132				17,101,381
Ratification of the Appointment of Independent Registered Public Accounting Firm			183,700,929				2,676,379				207,494				n/a
Advisory Vote to Approve Executive Compensation			167,286,171				1,694,333				502,917				17,101,381

ITEM 7.01 Regulation FD Disclosure

On May 10, 2012, Nordstrom, Inc. issued an earnings release announcing its results of operations for the quarter ended April 28, 2012, its financial position as of April 28, 2012, and its cash flows for the quarter ended April 28, 2012. A copy of this earnings release is attached as Exhibit 99.1.

ITEM 8.01 Other Events

On May 10, 2012, Nordstrom, Inc. issued a press release announcing that its Board of Directors has approved a quarterly dividend. A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

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ITEM 9.01 Financial Statements and Exhibits

 

99.1		Nordstrom earnings release dated May 10, 2012 relating to the Company’s results of operations for the quarter ended April 28, 2012, its financial position as of April 28, 2012, and its cash flows for the quarter ended April 28, 2012.
99.2		Press release of Nordstrom, Inc., dated May 10, 2012.

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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.

 

Dated: May 10, 2012

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EXHIBIT INDEX

 

EXHIBIT NUMBER		DESCRIPTION
99.1		Nordstrom earnings release dated May 10, 2012 relating to the Company’s results of operations for the quarter ended April 28, 2012, its financial position as of April 28, 2012, and its cash flows for the quarter ended April 28, 2012.
99.2		Press release of Nordstrom, Inc., dated May 10, 2012.

Exhibit 99.1

 

FOR RELEASE:					INVESTOR CONTACT:			Rob Campbell
May 10, 2012 at 1:05 p.m. PT								Nordstrom, Inc.
								(206) 233-6550
					MEDIA CONTACT:			Colin Johnson
								Nordstrom, Inc.
								(206) 303-3036

Nordstrom First Quarter 2012 Earnings In Line with Company Expectations;

Affirms Full-Year EPS Guidance

SEATTLE, Wash. (May 10, 2012) – Nordstrom, Inc. (NYSE: JWN) today reported net earnings of $149 million, or $0.70 per diluted share, for the first quarter ended April 28, 2012. This represented an increase of 2.9 percent compared with net earnings of $145 million, or $0.65 per diluted share, for the same quarter last year.

First quarter same-store sales increased 8.5 percent compared with the same period in fiscal 2011. Net sales in the first quarter were $2.53 billion, an increase of 13.7 percent compared with net sales of $2.23 billion during the same period in fiscal 2011.

The Company affirms its outlook on full year earnings per share. Additional guidance on several key line items, including anticipated directional trends in the three remaining quarters, is provided below.

FIRST QUARTER SUMMARY

Nordstrom’s first quarter performance was consistent with the Company’s expectations, reflecting continued strength in same-store sales across multiple channels combined with planned significant investments in the business to improve the customer shopping experience and to enhance its platform for sustainable, profitable growth.

 

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Nordstrom net sales, which include results from the full-line and Direct businesses, increased $191 million, or 10.8 percent, compared with the same period in fiscal 2011. Same-store sales increased 9.3 percent. Top-performing merchandise categories included Handbags, Women’s Shoes and Men’s Shoes.

 

•

Full-line same-store sales increased 5.6 percent compared with the same period in fiscal 2011. The South and Midwest regions were the top-performing geographic areas relative to the first quarter of 2011.

 

•

The Direct channel continued to show strong sales growth with an increase of 44.2 percent, significantly outpacing the overall Company performance and reflective of the Company’s multiple initiatives under way in e-commerce.

 

•

Nordstrom Rack net sales increased $91 million, or 19.6 percent, compared with the same period in fiscal 2011, with same-store sales up 6.8 percent.

 

•

Gross profit, as a percentage of net sales, decreased 31 basis points compared with last year’s first quarter. The decline was mostly attributable to enhancements made to the Fashion Rewards program and a reduction in shipping revenue as a result of launching free shipping and free returns for online purchases in the third quarter of 2011.

 

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Retail selling, general and administrative expenses increased $110 million, or 18.0 percent, compared with last year’s first quarter. The increase was primarily due to various initiatives to improve the customer experience across all channels and specifically to grow our e-commerce business. The increase also reflected higher volume from existing and new stores.

 

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In the Credit segment, customer payment rates continued to improve, resulting in favorable trends in delinquency and write-off rates. Annualized net write-offs were 4.7 percent of average credit card receivables during the quarter, down from 7.0 percent in the first quarter of 2011. Delinquencies as a percentage of credit card receivables at the end of the first quarter were 2.3 percent, down from 3.3 percent at the end of the first quarter of 2011. As a result of these improvements and our expectations for the credit portfolio performance, the reserve for bad debt was reduced by $10 million.

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Earnings before interest and taxes increased $8 million to $280 million from $272 million in last year’s first quarter due to increased sales, partially offset by costs related to our initiatives to drive continued growth in e-commerce.

 

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Return on invested capital (ROIC) for the 12 months ended April 28, 2012, was 13.1 percent, compared with 13.6 percent achieved in the prior 12-month period. The decline was largely a function of higher average cash balances relative to the prior period. The Company anticipates that ROIC for fiscal 2012 will exceed ROIC for fiscal 2011. A reconciliation of this non-GAAP financial measure to the closest GAAP measure is included below.

EXPANSION UPDATE

Nordstrom opened the following stores in the first quarter of 2012:

 

Location		Store Name		Square Footage (000’s)		Timing
Nordstrom Full-line Stores
Salt Lake City, Utah		City Creek Center		133		March 22
Nordstrom Rack
Orange, California		Outlets at Orange		35		March 1
Seattle, Washington1		Westlake Center		41		March 15
Boise, Idaho		Boise Towne Plaza		37		April 12
Alpharetta, Georgia		North Point MarketCenter		35		April 19
Farmington, Connecticut		West Farm Shopping Center		36		April 26

¹Nordstrom relocated its Downtown Seattle Nordstrom Rack store to the nearby Westlake Center.

FISCAL YEAR 2012 OUTLOOK

Nordstrom affirms its earnings per share outlook for fiscal year 2012. In addition, the Company is providing its view of directional quarterly trends of several key line items:

 

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The Company affirms its fiscal 2012 expectations for same-store sales to increase 4 to 6 percent. Due to Nordstrom’s Anniversary event starting one week later in July, an additional week of the event shifts into August, which is in our fiscal third quarter. As a result, the Company expects a low-single-digit increase in same-store sales in the second quarter and a high-single-digit increase in same-store sales in the third quarter.

 

•

The Company affirms its expectations for gross profit, as a percentage of net sales, to decrease 5 to 35 basis points for the fiscal year. In the second quarter, gross profit, as a percentage of net sales, is expected to decrease between 70 and 90 basis points compared with last year, and in the second half of the fiscal year, to range between a decrease of 10 basis points to an increase of 10 basis points compared with last year.

 

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The Company expects retail selling, general and administrative expenses to increase $275 million to $340 million for the fiscal year. This is an increase of $10 million from initial fiscal 2012 guidance and reflects additional e-commerce initiatives under way. Largely as a result of the timing of our investments in e-commerce, second quarter retail selling, general and administrative expenses, as a percentage of net sales, are expected to increase between 80 and 100 basis points compared with last year, and in the second half of the fiscal year, to decrease between 70 and 90 basis points compared with last year.

 

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Credit selling, general and administrative expenses in fiscal 2012 are expected to be within a range of flat to an increase of $10 million. This is a decrease of $10 million from initial fiscal 2012 guidance and is attributable to the reduction in the reserve for bad debt that occurred in the first quarter of 2012.

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The Company’s expectations for fiscal 2012 are as follows:

 

Same-store sales		4 to 6 percent increase
Credit card revenues		$0 to $10 million increase
Gross profit (%)		5 to 35 basis point decrease
Retail selling, general and administrative expenses ($)		$275 to $340 million increase
Credit selling, general and administrative expenses ($)		$0 to $10 million increase
Interest expense, net		$25 to $30 million increase
Effective tax rate		39.0 percent
Earnings per diluted share		$3.30 to $3.45
Diluted shares outstanding		212.6 million

CONFERENCE CALL INFORMATION

The Company’s senior management will host a conference call to discuss first quarter 2012 results at 4:45 p.m. Eastern Daylight Time today. To listen to the live call online, visit the Investor Relations section of the Company’s corporate website at http://investor.nordstrom.com. An archived webcast will be available in the webcasts section for one year. Interested parties may also dial 415-228-4850 (passcode: NORD). A telephone replay will be available beginning approximately one hour after the conclusion of the call by dialing 203-369-0788 (passcode: 6673) until the close of business on May 17, 2012.

ABOUT NORDSTROM

Nordstrom, Inc. is one of the nation’s leading fashion specialty retailers. Founded in 1901 as a shoe store in Seattle, today Nordstrom operates 231 stores in 31 states, including 117 full-line stores, 110 Nordstrom Racks, two Jeffrey boutiques, one treasure&bond store and one clearance store. Nordstrom also serves customers through Nordstrom.com and through its catalogs. Additionally, the Company operates in the online private sale marketplace through its subsidiary HauteLook. Nordstrom, Inc.’s common stock 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 involve risks and uncertainties, including, but not limited to, anticipated financial outlook for the fiscal year ending February 2, 2013 and its second quarter and second half, anticipated annual same-store sales rate, anticipated Return on Invested Capital and trends in our operations. Such statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to: the impact of economic and market conditions and the resultant impact on consumer spending patterns; our ability to respond to the business environment, fashion trends and consumer preferences, including changing expectations of service and experience in stores and online; effective inventory management; successful execution of our growth strategy, including possible expansion into new markets, technological investments and acquisitions, including our ability to realize the anticipated benefits from such acquisitions, and the timely completion of construction associated with newly planned stores, relocations and remodels, which may be impacted by the financial health of third parties; our ability to maintain relationships with our employees and to effectively attract, develop and retain our future leaders; successful execution of our multi-channel strategy; our compliance with applicable banking and related laws and regulations impacting our ability to extend credit to our customers; impact of the current regulatory environment and financial system and health care reforms; the impact of any systems failures, cybersecurity and/or security breaches, including any security breaches that result in the theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident; our compliance with employment laws and regulations and other laws and regulations applicable to us; availability and cost of credit; our ability to safeguard our brand and reputation; successful execution of our information technology strategy; our ability to maintain our relationships with vendors; trends in personal bankruptcies and bad debt write-offs; changes in interest rates; efficient and proper allocation of our capital resources; weather conditions, natural disasters, health hazards or other market disruptions, or the prospects of these events and the impact on consumer spending patterns; disruptions in our supply chain; the geographic locations of our stores; the effectiveness of planned advertising, marketing and promotional campaigns; our ability to control costs; and the timing and amounts of share repurchases by the Company, if any, or any share issuances by the Company, including issuances associated with option exercises or other matters. Our SEC reports, including our Form 10-K for the fiscal year ended January 28, 2012, 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.

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NORDSTROM, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(unaudited; amounts in millions, except per share data)

 

		Quarter Ended
		4/28/12				4/30/11
Net sales		$	2,535			$	2,229
Credit card revenues			94				94
Total revenues			2,629				2,323
Cost of sales and related buying and occupancy costs			(1,584	)			(1,385	)
Selling, general and administrative expenses:
Retail			(721	)			(611	)
Credit			(44	)			(55	)
Earnings before interest and income taxes			280				272
Interest expense, net			(40	)			(31	)
Earnings before income taxes			240				241
Income tax expense			(91	)			(96	)
Net earnings		$	149			$	145
Earnings per share:
Basic		$	0.72			$	0.66
Diluted		$	0.70			$	0.65
Weighted average shares outstanding:
Basic			207.3				219.0
Diluted			211.4				223.3

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NORDSTROM, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited; amounts in millions)

 

		4/28/12				1/28/12				4/30/11
Assets
Current assets:
Cash and cash equivalents		$	1,647			$	1,877			$	1,433
Accounts receivable, net			2,008				2,033				1,969
Merchandise inventories			1,372				1,148				1,149
Current deferred tax assets, net			215				220				222
Prepaid expenses and other			79				282				80
Total current assets			5,321				5,560				4,853
Land, buildings and equipment (net of accumulated depreciation of $3,865, $3,791 and $3,600)			2,472				2,469				2,361
Goodwill			175				175				200
Other assets			290				287				333
Total assets		$	8,258			$	8,491			$	7,747
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	1,176			$	917			$	1,035
Accrued salaries, wages and related benefits			232				388				232
Other current liabilities			793				764				715
Current portion of long-term debt			6				506				506
Total current liabilities			2,207				2,575				2,488
Long-term debt, net			3,137				3,141				2,276
Deferred property incentives, net			503				500				506
Other liabilities			328				319				343
Commitments and contingencies
Shareholders’ equity:
Common stock, no par value: 1,000 shares authorized; 208.6, 207.6 and 219.8 shares issued and outstanding			1,557				1,484				1,362
Retained earnings			570				517				800
Accumulated other comprehensive loss			(44	)			(45	)			(28	)
Total shareholders’ equity			2,083				1,956				2,134
Total liabilities and shareholders’ equity		$	8,258			$	8,491			$	7,747

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NORDSTROM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; amounts in millions)

 

		Quarter Ended
		4/28/12				4/30/11
Operating Activities
Net earnings		$	149			$	145
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization expenses			101				86
Amortization of deferred property incentives and other, net			(18	)			(14	)
Deferred income taxes, net			-				1
Stock-based compensation expense			13				11
Tax benefit from stock-based compensation			13				7
Excess tax benefit from stock-based compensation			(14	)			(8	)
Provision for bad debt expense			13				25
Change in operating assets and liabilities:
Accounts receivable			(6	)			4
Merchandise inventories			(204	)			(143	)
Prepaid expenses and other assets			2				(2	)
Accounts payable			203				154
Accrued salaries, wages and related benefits			(156	)			(147	)
Other current liabilities			33				52
Deferred property incentives			21				29
Other liabilities			9				9
Net cash provided by operating activities			159				209
Investing Activities
Capital expenditures			(98	)			(116	)
Change in restricted cash			200				-
Change in credit card receivables originated at third parties			17				30
Other, net			-				(2	)
Net cash provided by (used in) investing activities			119				(88	)
Financing Activities
Principal payments on long-term borrowings			(502	)			(1	)
Increase (decrease) in cash book overdrafts			48				(9	)
Cash dividends paid			(56	)			(50	)
Payments for repurchase of common stock			(57	)			(171	)
Proceeds from issuances under stock compensation plans			47				29
Excess tax benefit from stock-based compensation			14				8
Other, net			(2	)			-
Net cash used in financing activities			(508	)			(194	)
Net decrease in cash and cash equivalents			(230	)			(73	)
Cash and cash equivalents at beginning of period			1,877				1,506
Cash and cash equivalents at end of period		$	1,647			$	1,433

 

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NORDSTROM, INC.

STATEMENTS OF EARNINGS BY SEGMENT

(unaudited; amounts in millions, except percentages)

Retail

Our Retail business includes our Nordstrom branded full-line stores and website, our Nordstrom Rack stores, and our other retail channels including HauteLook, our Jeffrey stores and our treasure&bond store. It also includes unallocated corporate center expenses. The following table summarizes the results of our Retail business for the quarter ended April 28, 2012 compared with the quarter ended April 30, 2011:

 

		Quarter Ended 4/28/12				% of sales1				Quarter Ended 4/30/11				% of sales1
Net sales		$	2,535				100.0%			$	2,229				100.0%
Cost of sales and related buying and occupancy costs			(1,561	)			(61.6%	)			(1,371	)			(61.5%	)
Gross profit			974				38.4%				858				38.5%
Selling, general and administrative expenses			(721	)			(28.4%	)			(611	)			(27.4%	)
Earnings before interest and income taxes			253				10.0%				247				11.1%
Interest expense, net			(34	)			(1.3%	)			(27	)			(1.2%	)
Earnings before income taxes		$	219				8.7%			$	220				9.9%

¹Subtotals and totals may not foot due to rounding.

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NORDSTROM, INC.

STATEMENTS OF EARNINGS BY SEGMENT

(unaudited; amounts in millions, except percentages)

Credit

Our Credit business earns finance charges, interchange fees, late fees and other revenue through operation of the Nordstrom private label and Nordstrom VISA credit cards. The following tables summarize the results of our Credit business for the quarter ended April 28, 2012 compared with the quarter ended April 30, 2011:

 

		Quarter Ended
		4/28/12				4/30/11
Credit card revenues		$	94			$	94
Interest expense			(6	)			(4	)
Net credit card income			88				90
Cost of sales and related buying and occupancy costs – loyalty program			(23	)			(14	)
Selling, general and administrative expenses:
Operational and marketing expenses			(31	)			(30	)
Bad debt provision			(13	)			(25	)
Earnings before income taxes		$	21			$	21

The following table illustrates the activity in our allowance for credit losses for the quarters ended April 28, 2012 and April 30, 2011:

 

		Quarter Ended
		4/28/12				4/30/11
Allowance at beginning of period		$	115			$	145
Bad debt provision			13				25
Write-offs			(30	)			(40	)
Recoveries			7				5
Allowance at end of period		$	105			$	135
Annualized net write-offs as a percentage of average credit card receivables			4.7%				7.0%
		4/28/12				4/30/11
30+ days delinquent as a percentage of ending credit card receivables			2.3%				3.3%
Allowance as a percentage of ending credit card receivables			5.2%				6.7%

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NORDSTROM, INC.

RETURN ON INVESTED CAPITAL (NON-GAAP FINANCIAL MEASURE)

(unaudited; amounts in millions)

We use various financial measures in our conference calls, investor meetings and other forums which may be considered non-GAAP financial measures within the meaning of Regulation G of the Securities and Exchange Commission. The following disclosure provides additional information regarding our Return on Invested Capital (ROIC) for the 12 fiscal months ended April 28, 2012 and April 30, 2011:

We believe that ROIC is a useful financial measure for investors in evaluating our operating performance. When analyzed in conjunction with our net earnings and total assets and compared with return on assets (net earnings divided by average total assets), it provides investors with a useful tool to evaluate our ongoing operations and our management of assets from period to period. ROIC is one of our key financial metrics, and we also incorporate it into our executive incentive measures. We believe that overall performance as measured by ROIC correlates directly to shareholders’ return over the long term. For the 12 fiscal months ended April 28, 2012, our ROIC decreased to 13.1% compared with 13.6% for the 12 fiscal months ended April 30, 2011. ROIC is not a measure of financial performance under GAAP, should not be considered a substitute for return on assets, net earnings or total assets as determined in accordance with GAAP, and may not be comparable with similarly titled measures reported by other companies. The closest measure calculated using GAAP amounts is return on assets, which decreased to 8.5% from 8.8% for the 12 fiscal months ended April 28, 2012, compared with the 12 fiscal months ended April 30, 2011. The following is a comparison of return on assets to ROIC:

 

		12 fiscal months ended
		4/28/12				4/30/11
Net earnings		$	687			$	641
Add: income tax expense			431				403
Add: interest expense			141				129
Earnings before interest and income tax expense			1,259				1,173
Add: rent expense			83				66
Less: estimated depreciation on capitalized operating leases1			(44	)			(35	)
Net operating profit			1,298				1,204
Estimated income tax expense2			(500	)			(465	)
Net operating profit after tax		$	798			$	739
Average total assets3		$	8,119			$	7,322
Less: average non-interest-bearing current liabilities4			(2,104	)			(1,845	)
Less: average deferred property incentives3			(506	)			(494	)
Add: average estimated asset base of capitalized operating leases5			589				463
Average invested capital		$	6,098			$	5,446
Return on assets			8.5%				8.8%
ROIC			13.1%				13.6%

¹Capitalized operating leases is our best estimate of the asset base we would record for our leases that are classified as operating if they had met the criteria for a capital lease, or we purchased the property. Asset base is calculated as described in footnote 5 below.

²Based upon our effective tax rate multiplied by the net operating profit for the 12 fiscal months ended April 28, 2012 and April 30, 2011.

³Based upon the trailing 12-month average, including cash and cash equivalents.

⁴Based upon the trailing 12-month average for accounts payable, accrued salaries, wages and related benefits, and other current liabilities.

⁵Based upon the trailing 12-month average of the monthly asset base, which is calculated as the trailing 12-months rent expense multiplied by eight. The multiple of eight times rent expense is a commonly used method of estimating the asset base we would record for our capitalized operating leases described in footnote 1.

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NORDSTROM, INC.

ADJUSTED DEBT TO EBITDAR (NON-GAAP FINANCIAL MEASURE)

(unaudited; amounts in millions)

We use various financial measures in our conference calls, investor meetings and other forums which may be considered non-GAAP financial measures within the meaning of Regulation G of the Securities and Exchange Commission. The following disclosure provides additional information regarding our Adjusted Debt to EBITDAR as of April 28, 2012 and April 30, 2011:

Adjusted Debt to EBITDAR is one of our key financial metrics, and we believe that our debt levels are best analyzed using this measure. Our current goal is to manage debt levels to maintain an investment-grade credit rating as well as operate with an efficient capital structure for our size, growth plans and industry. Investment-grade credit ratings are important to maintaining access to a variety of short-term and long-term sources of funding, and we rely on these funding sources to continue to grow our business. We believe a higher ratio, among other factors, could result in rating agency downgrades. In contrast, we believe a lower ratio would result in a higher cost of capital and could negatively impact shareholder returns. As of April 28, 2012 and April 30, 2011, our Adjusted Debt to EBITDAR was 2.1.

Adjusted Debt to EBITDAR is not a measure of financial performance under GAAP and should not be considered a substitute for debt to net earnings, net earnings or debt as determined in accordance with GAAP. In addition, Adjusted Debt to EBITDAR does have limitations:

 

•

Adjusted Debt is not exact, but rather our best estimate of the total company debt we would hold if we had purchased the property and issued debt associated with our operating leases;

 

•

EBITDAR does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments, including leases, or the cash requirements necessary to service interest or principal payments on our debt; and

 

•

Other companies in our industry may calculate Adjusted Debt to EBITDAR differently than we do, limiting its usefulness as a comparative measure.

To compensate for these limitations, we analyze Adjusted Debt to EBITDAR in conjunction with other GAAP financial and performance measures impacting liquidity, including operating cash flows, capital spending and net earnings. The closest measure calculated using GAAP amounts is debt to net earnings, which was 4.6 for the first quarter of 2012 and 4.3 for the first quarter of 2011. The following is a comparison of debt to net earnings and Adjusted Debt to EBITDAR:

 

		20121				20111
Debt		$	3,143			$	2,782
Add: rent expense x 82			667				525
Less: fair value hedge adjustment included in long-term debt			(69	)			(27	)
Adjusted Debt		$	3,741			$	3,280
Net earnings			687				641
Add: income tax expense			431				403
Add: interest expense, net			139				127
Earnings before interest and income taxes			1,257				1,171
Add: depreciation and amortization expenses			386				333
Add: rent expense			83				66
Add: non-cash acquisition-related charges			22				-
EBITDAR		$	1,748			$	1,570
Debt to Net Earnings			4.6				4.3
Adjusted Debt to EBITDAR			2.1				2.1

¹The components of Adjusted Debt are as of April 28, 2012 and April 30, 2011, while the components of EBITDAR are for the 12 months ended April 28, 2012 and April 30, 2011.

²The multiple of eight times rent expense used to calculate Adjusted Debt is a commonly used method of estimating the debt we would record for our leases that are classified as operating if they had met the criteria for a capital lease, or we had purchased the property.

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NORDSTROM, INC.

FREE CASH FLOW (NON-GAAP FINANCIAL MEASURE)

(unaudited; amounts in millions)

We use various financial measures in our conference calls, investor meetings and other forums which may be considered non-GAAP financial measures within the meaning of Regulation G of the Securities and Exchange Commission. The following disclosure provides additional information regarding our Free Cash Flow for the quarters ended April 28, 2012 and April 30, 2011:

Free Cash Flow is one of our key liquidity measures, and in conjunction with GAAP measures, provides us with a meaningful analysis of our cash flows. We believe that our ability to generate cash is more appropriately analyzed using this measure. Free Cash Flow is not a measure of liquidity under GAAP and should not be considered a substitute for operating cash flows as determined in accordance with GAAP. In addition, Free Cash Flow does have limitations:

 

•

Free Cash Flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs; and

•

Other companies in our industry may calculate Free Cash Flow differently than we do, limiting its usefulness as a comparative measure.

To compensate for these limitations, we analyze Free Cash Flow in conjunction with other GAAP financial and performance measures impacting liquidity, including operating cash flows. The closest GAAP measure calculated using GAAP amounts is net cash provided by operating activities, which was $159 and $209 for the quarters ended April 28, 2012 and April 30, 2011. The following is a reconciliation of our net cash provided by operating activities and Free Cash Flow:

 

		Quarter Ended
		4/28/12				4/30/11
Net cash provided by operating activities		$	159			$	209
Less: capital expenditures			(98	)			(116	)
Less: cash dividends paid			(56	)			(50	)
Add: change in credit card receivables originated at third parties			17				30
Add (Less): change in cash book overdrafts			48				(9	)
Free Cash Flow		$	70			$	64
Net cash provided by (used in) investing activities		$	119			$	(88	)
Net cash used in financing activities		$	(508	)		$	(194	)

Exhibit 99.2

 

FOR RELEASE:					INVESTOR CONTACT:			Trina Schurman
May 10, 2012 at 5:30 AM PDT								Nordstrom, Inc.
								206-233-6503
					MEDIA CONTACT:			Colin Johnson
								Nordstrom, Inc.
								206-303-3036

Nordstrom Board of Directors Approves Quarterly Dividend

SEATTLE, Wash. – (May 10, 2012) – Nordstrom, Inc. (NYSE: JWN) announced today that its board of directors has approved a quarterly dividend of 27 cents per share payable on June 15, 2012 to shareholders of record at the close of business on May 31, 2012.

ABOUT NORDSTROM

Nordstrom, Inc. is one of the nation’s leading fashion specialty retailers. Founded in 1901 as a shoe store in Seattle, today Nordstrom operates 231 stores in 31 states, including 117 full-line stores, 110 Nordstrom Racks, two Jeffrey boutiques, one treasure&bond store and one clearance store. Nordstrom also serves customers through Nordstrom.com and through its catalogs. Additionally, the Company operates in the online private sale marketplace through its subsidiary HauteLook. Nordstrom, Inc.’s common stock is publicly traded on the NYSE under the symbol JWN.

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