Nordstrom, Inc. reported a a 24 percent increase in earnings per diluted
share of 93 cents for the second quarter ended Aug. 3, 2013, compared
to 75 cents per diluted share for the same quarter last year. Net sales
for the second quarter were $3.1 billion, and increase of 6.4 percent.

Net earnings were $184 million compared with $156 million for the same quarter last year.

Total company same-store sales for the second quarter increased 4.4 percent on top of last year’s same-store sales increase of 4.5 percent. Nordstrom same-store sales during the Anniversary Sale increased in the low single-digit range. Total company net sales of $3.1 billion for the second quarter increased 6.4 percent, compared with net sales of $2.9 billion during the same period in fiscal 2012.

Sales trends throughout the second quarter showed moderate improvement relative to the first two months of the year but remained softer than anticipated. The impact of this was mitigated by disciplined execution of inventory and expenses, including a reduction in variable expenses associated with company performance.

The Anniversary Sale, which historically is the Company’s largest sale event of the year, occurred in the second quarter, while in fiscal 2012 it overlapped the second and third quarters. This event shift resulted in a favorable comparison in the second quarter, which the Company expects will be offset by an unfavorable comparison in the third quarter. In the second quarter, the impact of the Anniversary Sale event shift increased same-store sales by approximately 250 basis points and increased earnings per diluted share by approximately $0.06.

Based on current sales trends, the company reduced its full-year earnings per diluted share outlook to $3.60 to $3.70 compared to its prior outlook of $3.65 to $3.80. This reflects full-year same-store sales expectations of 2 to 3 percent compared to its prior outlook of 3 to 5 percent.

SECOND QUARTER SUMMARY

  • Nordstrom same-store sales, which consist of the full-line and Direct businesses, increased 4.2 percent. Top-performing merchandise categories included Men’s Shoes, Men’s Apparel, and Kids’ Apparel.
  • Full-line same-store sales decreased 0.7 percent compared with last year’s same-store sales increase of 1.1 percent. The Southeast and Southwest regions were the top-performing geographic areas.
  • Direct sales increased 37 percent in the second quarter, on top of last year’s increase of 40 percent, fueled by expanded merchandise selection and ongoing technology investments to enhance the online experience.
  • Nordstrom Rack net sales increased $69 million, or 12 percent, compared with the same period in fiscal 2012, reflecting 17 new store openings since the second quarter of fiscal 2012. Nordstrom Rack same-store sales increased 2.4 percent on top of last year’s same-store sales increase of 7.7 percent.

Gross profit, as a percentage of net sales, decreased 13 basis points compared with the same period in fiscal 2012 primarily due to higher expenses associated with the growth in the Fashion Rewards customer loyalty program. The company reached 3.6 million active Fashion Reward members, an increase of 18 percent over last year.

Selling, general and administrative expenses, as a percentage of net sales, decreased 105 basis points compared with the same period in fiscal 2012, primarily due to the combination of expense leverage from increased sales volume, including the impact of the Anniversary Sale event shift, and a reduction in variable expenses associated with company performance. This was partially offset by investments in technology coupled with higher fulfillment expenses supporting online growth, in addition to incremental expenses related to the planned entry into Canada and accelerated Rack store expansion.

Earnings before interest and taxes of $335 million, or 10.8 percent of net sales, increased 16 percent compared to $290 million, or 9.9 percent of net sales, for the same quarter last year.

During the quarter, the company repurchased 0.8 million shares of its common stock for $48 million. A total of $979 million remains under existing share repurchase board authorizations. The actual number and timing of future share repurchases, if any, will be subject to market and economic conditions and applicable Securities and Exchange Commission rules.