Nordstrom Q2 Sales Fall on 12.3% Drop in Comps

Nordstrom, Inc. reported net earnings of $105.0 million, or 48 cents per diluted share, for the second quarter ended August 1, 2009. For the same quarter last year, Nordstrom reported net earnings of $143.0 million, or 65 cents per diluted share.

Net sales in the second quarter were $2.14 billion, a decrease of 6.2% compared with sales of $2.29 billion during the same period in fiscal 2008. Second quarter same-store sales decreased 9.8% compared with the same period in fiscal 2008.

SECOND QUARTER SUMMARY

The company’s second quarter typically is the second largest of the year in terms of net sales, containing three of the company’s five annual sales events: Half-Yearly Sale for Women and Kids, Half-Yearly Sale for Men, and the Anniversary Sale. For the second quarter, solid execution of the Anniversary sale combined with disciplined inventory and expense management allowed the company to exceed its earnings plans.

•Full-line same-store sales in the second quarter decreased 12.3% and sales for Nordstrom Direct increased 3.5% compared with the same period in fiscal 2008. Sales performance during the Anniversary event was better than expected at negative 6.6% for full-line stores compared with the Anniversary event last year. For the second quarter, top-performing merchandise categories for full-line stores and Nordstrom Direct combined were Dresses, Kids’ Shoes and Apparel, and Fashion Jewelry, while the South and Mid-Atlantic regions were the top-performing geographic areas for full-line stores.

EXPANSION UPDATE

In the third quarter of 2009, Nordstrom plans to open a 138,000-square-foot full-line store at Kenwood Towne Centre in Cincinnati, Ohio on September 25th. During the third quarter of 2009, Nordstrom also plans to open six Nordstrom Rack stores at the Shops of Southlake in Southlake, Texas; Arbor Lakes in Maple Grove, Minnesota; Beverly Connection in Los Angeles, California; Hastings Village in Pasadena, California; Westfield Oakridge in San Jose, California, and Gateway Center in Austin, Texas.

FISCAL YEAR 2009 OUTLOOK

The company is revising its outlook for the 2009 fiscal year to reflect the better than expected second quarter performance. For the 2009 fiscal year, Nordstrom expects earnings per diluted share in the range of $1.50 to $1.65, increased from the previous range of $1.25 to $1.50. The company’s revised expectations for fiscal 2009 are as follows:

Same-store Sales                       9 percent to 12 percent decrease 
Credit Card Revenue                 $75 to $80 million increase 
Gross Profit (%)                        50 to 100 basis point decrease 
Retail Selling, General and Admin. Expense ($)   $100 to $150 million decrease 
Credit Selling, General and Admin. Expense ($)   $35 to $45 million increase 
Total Selling, General and Admin. Expense (%)   80 to 100 basis point increase 
Interest Expense, net                              $20 to $25 million increase 
Effective Tax Rate                               36.5 percent to 37.0 percent 
Earnings per Diluted Share                                       $1.50 to $1.65 
Diluted Shares Outstanding                                      219 million 
    

NEW REVOLVING CREDIT FACILITY

Nordstrom plans to enter into a new three-year $650 million unsecured revolving credit facility to replace the existing $650 million unsecured revolving credit facility which matures in November 2010. The new facility is intended to be used for general corporate purposes and will mature in August 2012. The closing is subject to satisfaction of customary closing conditions, including documentation. The company has obtained commitments from lenders for the new revolving credit facility of $650 million, which it intends to complete later this week.

NORDSTROM, INC.