Nordstrom, Inc. earned $212 million, or $0.92 per diluted share for the fourth quarter ended Feb. 2, 2008, compared to $232 million and $0.89, respectively, for the same quarter a year ago.



Total sales in the fourth quarter were $2.5 billion, a decrease of 4.4 percent compared to sales of $2.6 billion for the same period in fiscal 2006. Fourth quarter same-store sales decreased 0.7 percent.



Similar to many other retailers, Nordstrom follows the retail 4-5-4 reporting calendar, which included an extra week in the fourth quarter of fiscal 2006 (the 53rd week) compared to the normal operating calendar of 52 weeks. Excluding the extra week of sales in the fourth quarter of 2006, total sales were approximately flat in the fourth quarter of 2007. The 53rd week is not included in same-store sales calculations.



Fourth quarter highlights


The fourth quarter presented a challenging consumer and retail environment, but the company continued to make good progress aligning inventory and expenses to sales trends.


  • Merchandise categories with performance above the same-store average for the quarter were designer products across categories, accessories, and women's shoes.
  • Gross profit, as a percent of sales, decreased 66 basis points compared to last year's fourth quarter.
  • Merchandise margins declined over prior year as the company continued to align inventory with sales trends.
  • Year end inventory per square foot was $47, down from $49 in the prior year.
  • The decline in merchandise margin rate was partially offset by lower performance based buying costs.
  • Selling, general and administrative expenses, as a percent to sales, improved 68 basis points compared to last year's fourth quarter, primarily due to lower incentive costs tied to company performance, partially offset by increased bad debt expense related to the company's credit card business.

Full year results


For the fiscal year ended Feb. 2, 2008, net earnings increased 5.5 percent to $715 million compared to net earnings of $678 million last year. Earnings per diluted share for the same periods were $2.88 and $2.55, respectively.



Full year results include a gain of $20.9 million, net of tax, or $0.09 per diluted share, for the sale of the Faconnable business, which closed during the third quarter.



Total sales for the year increased 3.1 percent to $8.8 billion compared to prior year sales of $8.6 billion. As noted previously, fiscal 2006 included a 53rd week of sales totaling $117.7 million.

Excluding the extra week of sales in fiscal 2006, total sales increased 4.6 percent in fiscal year 2007. For the year, same-store sales increased 3.9 percent. As noted previously, same-store sales calculations do not include the 53rd week.



Expansion update


Nordstrom opened a new 165,000-square-foot full-line store at Aventura Mall in Aventura, Fla., on February 15, 2008.


In 2008, Nordstrom plans to open seven additional new full-line stores:


  • On March 7, a 210,000-square-foot store at the Ala Moana Center in Honolulu, Hawaii;
  • On March 28, a 138,000-square-foot store at the Burlington Mall in Burlington, Mass.;
  • On April 18, a 118,000-square-foot store at The Mall at Partridge Creek in Clinton Township, Mich.;
  • On Sept. 5, a 138,000-square-foot store at The Oaks Shopping Center in Thousand Oaks, Calif.;
  • On Sept. 19, a 127,000-square-foot store at the Fashion Mall at Keystone in Indianapolis, Ind.;
  • On Oct. 24, a 138,000-square-foot store at the Ross Park Mall in Pittsburgh, Pa.;
  • On November 7, a 77,000-square-foot store at the Waterside Shops in Naples, Fla.;
  • On Oct. 3, 2008, Nordstrom plans to open the newly relocated full-line store at the Tacoma Mall in Tacoma, Wash.
  • In the fall of 2008, Nordstrom also plans to open two new Rack stores at the Springbrook Prairie Pavilion in Naperville, Ill., and the Laguna Hills Mall in Laguna Hills, Calif.



2008 outlook


The company is providing the following 2008 forecast:

 Fiscal 2008
    Same-store Sales                             flat to a 2% decrease
    Gross Profit (%)                             30 to 60 basis point decrease
    Selling, General and Admin. Expense (%)      60 to 80 basis point increase
    Interest Expense, net                        $55 to $60 million increase
    Finance Charges and Other, net               $50 to $60 million increase
    Effective Tax Rate                           38.7%
    Earnings per Diluted Share                   $2.75 to $2.90
    Diluted Shares Outstanding                   228 million


For the first quarter of 2008, the company expects a decline of 3 percent to 5 percent in same-store sales. Earnings per diluted share for the first quarter are expected in the range of $0.49 to $0.54.

NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS – 4th Quarter
(unaudited; amounts in millions, except per share data and percentages)

Quarter % of sales(1) Quarter % of sales(1)
ended (except as ended (except as
2/2/08 indicated) 2/3/07 indicated)
——– ————- ——– ————-
Net sales $2,514 100.0% $2,631 100.0%
Cost of sales and
related buying
& occupancy costs (1,569) (62.4%) (1,624) (61.7%)
——– ——–
Gross profit 945 37.6% 1,007 38.3%
Selling, general and
administrative
expenses (637) (25.4%) (685) (26.0%)
Finance charges and
other, net 76 3.0% 65 2.5%
——– ——–
Earnings before
interest expense, net
and income tax expense 384 15.3% 387 14.7%
Interest expense, net (30) (1.2%) (8) (0.3%)
——– ——–
Earnings before income
tax expense 354 14.1% 379 14.4%
Income tax expense (142) (40.2%)(2) (147) (38.7%)(2)
——– ——–
Net earnings $212 8.4% $232 8.8%
======== ========
Earnings per share
Basic $0.93 $0.90
Diluted $0.92 $0.89

ADDITIONAL DATA
Weighted average shares
outstanding
Basic 229 257
Diluted 232 262


(1) Subtotals and totals may not foot due to rounding.

(2) Percent of earnings before income taxes.