Nordstrom, Inc. reported earnings in the third quarter declined 6.2 percent to $137 million, or 69 cents a share, from $146 million, or 71 cents, a year ago.

The Anniversary Sale, which historically is the company’s largest sale event of the year, occurred in the second quarter this year, while in fiscal 2012 it occurred during both the second and third quarters. The estimated impact of this event shift increased earnings per diluted share in the second quarter and reduced earnings per diluted share in the third quarter by approximately 6 cents.

Year-to-date earnings per diluted share of $2.35 increased 8.3 percent compared with $2.17 for the same period last year. Year-to-date net earnings were $466 million compared with $451 million for the same period last year.

Third quarter total company same-store sales increased 0.1 percent and total Company net sales of $2.8 billion increased 2.9 percent compared with the same period in fiscal 2012. Combined second and third quarter same-store sales, which eliminates the impact of the Anniversary Sale event shift, increased 2.4 percent compared with the same period in 2012. Year-to-date total company same-store sales increased 2.5 percent and total Company net sales of $8.6 billion increased 4.7 percent compared with the same period last year.

The company’s third quarter performance was consistent with its full-year outlook, with strong Direct sales growth and improving trends in the Rack mitigating softer sales trends in full-line stores. The company maintained its disciplined execution around inventory and expenses while continuing to add new technology and capabilities to enable a better customer experience. Based on the company’s year-to-date performance, the company updated its full-year earnings per diluted share outlook to $3.65 to $3.70 compared to its prior outlook of $3.60 to $3.70. This reflected same-store sales expectations of approximately 2.5 percent compared to prior outlook of 2 to 3 percent.

THIRD QUARTER SUMMARY

  • Nordstrom same-store sales, which consist of the full-line and Direct businesses, decreased 0.7 percent compared with last year’s same-store sales increase of 11.2 percent. Top-performing merchandise categories included Cosmetics, Women’s Apparel, and Women’s Shoes. Momentum continued in Women’s Apparel, outperforming the Nordstrom average on a year-to-date basis.
  • Full-line same-store sales decreased 4.2 percent compared with last year’s same-store sales increase of 8.1 percent. The Southwest and Southern California regions were the top-performing geographic areas.
  • Direct net sales increased 23 percent in the third quarter, on top of last year’s increase of 38 percent, driven by expanded merchandise selection and ongoing technology investments to enhance the online experience.
  • Nordstrom Rack net sales increased $95 million, or 16 percent, compared with the same period in fiscal 2012, reflecting 20 store openings since the third quarter of fiscal 2012. Nordstrom Rack same-store sales increased 3.7 percent on top of last year’s same-store sales increase of 8.1 percent.
  • HauteLook net sales increased by 22 percent in the third quarter.
  • Gross profit, as a percentage of net sales, decreased 41 basis points compared with the same period in fiscal 2012 primarily due to higher occupancy costs related to accelerated Rack store expansion.
  • Selling, general and administrative expenses, as a percentage of net sales, increased 65 basis points compared with the same period in fiscal 2012, primarily due to expense deleverage from the Anniversary Sale event shift. The increase was also due to planned growth-related investments including technology, fulfillment, the Rack, and Canada expansion.
  • Earnings before interest and taxes of $253 million, or 9.1 percent of net sales, decreased 8.6 percent compared to $277 million, or 10.2 percent of net sales, for the same quarter last year. The estimated impact of the Anniversary Sale event shift reduced earnings before interest and taxes by approximately $20 million.
  • During the quarter, the Company repurchased 2.7 million shares of its common stock for $155 million. A total of $824 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.
  • Return on invested capital (ROIC) for the 12 months ended November 2, 2013 of 14.0 percent increased from 12.9 percent in the prior 12-month period.


 

 
NORDSTROM, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

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


 


Quarter Ended
Nine Months Ended


November 2, 2013
 
 October 27, 2012
November 2, 2013
 
 October 27, 2012

Net sales
$ 2,791


$
2,713

$ 8,552


$
8,166

Credit card revenues
93
 

92
 
277
 

270
 

Total revenues
2,884


2,805

8,829


8,436

Cost of sales and related buying and occupancy costs
(1,791 )

(1,730
)
(5,468 )

(5,193
)

Selling, general and administrative expenses
(840 )

(798
)
(2,498 )

(2,396
)

Earnings before interest and income taxes
253


277

863


847

Interest expense, net
(35 )

(38
)
(111 )

(118
)

Earnings before income taxes
218


239

752


729

Income tax expense
(81 )

(93
)
(286 )

(278
)
Net earnings
$ 137
 

$
146
 
$ 466
 

$
451
 









 

Earnings per share:








Basic
$ 0.70


$
0.73

$ 2.39


$
2.21

Diluted
$ 0.69


$
0.71

$ 2.35


$
2.17