Nordstrom, Inc. reported earnings jumped 42.6% in the third quarter, to $119 million, or 53 cents per diluted share, from $83 million, or 38 cents, for the same quarter last year. Third quarter same-store sales increased 5.8% compared with the same period in fiscal 2009. Net sales in the third quarter were $2.09 billion, an increase of 11.7% compared with net sales of $1.87 billion during the same period in fiscal 2009.
THIRD QUARTER SUMMARY
Nordstrom achieved its fifth straight quarter of earnings improvement due to continued positive sales trends, combined with disciplined execution.
* Multi-channel same-store sales increased 7.3% compared with the same period in fiscal 2009. Top-performing multi-channel merchandise categories included Jewelry, Dresses and Shoes. The Midwest and Northwest regions were the top-performing geographic areas for full-line stores relative to the third quarter of 2009. During the third quarter, the company opened one Nordstrom full-line store in Santa Monica, California (Santa Monica Place).
* Nordstrom Rack net sales increased $65 million, or 17.9% compared with the same period in fiscal 2009. Same-store sales declined 2.2% compared with the same period in fiscal 2009. During the third quarter the company opened nine Nordstrom Rack stores and relocated one store.
* Gross profit, as a percentage of net sales, increased approximately 100 basis points compared with last year's third quarter. The improvement was mainly driven by increased merchandise margin, but also resulted from reduced buying and occupancy costs, as a percentage of net sales. The company ended the quarter with sales per square foot up 6.5% and inventory per square foot up 4.5% compared with the third quarter of 2009.
* Retail selling, general and administrative expenses increased $69 million compared with last year's third quarter. New stores and higher volume accounted for the majority of this increase, with the remainder coming primarily from increased investments in marketing and technology. The company continues to evolve with customers' changing needs by investing more to improve the online and multi-channel shopping experience.
* The Credit segment continues to improve. Customer payment rates are increasing, resulting in improved delinquency and write-off trends. Delinquencies as a percentage of accounts receivable at the end of the third quarter were 3.5%, which was flat compared with the end of the second quarter of 2010 and reduced from 4.9% at the end of the third quarter of 2009. As a result, the reserve for bad debt was reduced by $15 million, which was partly offset by finance charge revenue lower than planned.
* Earnings before interest and taxes increased to $221 million, or 10.2% of total revenues, from $172 million, or 8.7% of total revenues in last year's third quarter.
EXPANSION UPDATE
During the third quarter of 2010, Nordstrom opened the following stores:
Location | Store Name |
Square
Footage
|
Date | |||
Full-line Stores
|
|
|
|
|
|
|
Santa Monica, California |
|
Santa Monica Place |
|
132,000 |
|
August 27 |
|
|
|
|
|
|
|
Nordstrom Rack Stores |
|
|
|
|
|
|
Arlington, Virginia |
|
Pentagon Centre |
|
34,000 |
|
August 26 |
Fairfax, Virginia |
|
Fair Lakes Promenade |
|
38,000 |
|
August 26 |
Durham, North Carolina |
|
Renaissance Center |
|
31,000 |
|
September 2 |
St. Louis, Missouri |
|
Brentwood Square |
|
34,000 |
|
September 16 |
Boca Raton, Florida |
|
University Commons |
|
36,000 |
|
September 23 |
Chicago, Illinois |
|
Chicago Avenue |
|
39,000 |
|
September 30 |
Tampa, Florida |
|
Walterâ€s Crossing neighborhood |
|
45,000 |
|
October 7 |
Lakewood, California |
|
Lakewood Center |
|
33,000 |
|
October 14 |
Burbank, California |
|
Burbank Empire Center |
|
35,000 |
|
October 21 |
On October 28th, Nordstrom relocated its Northtown Mall Nordstrom Rack in Spokane, Washington to Spokane Valley Plaza in Spokane Valley, Washington.
Following the third quarter, on November 11th, Nordstrom opened a Nordstrom Rack store at Arrowhead Crossing in Peoria, Arizona.
FISCAL YEAR 2010 OUTLOOK
Based on third quarter performance, Nordstrom is updating its outlook for fiscal 2010 during which Nordstrom expects earnings per diluted share in the range of $2.60 to $2.65.
The company's expectations for fiscal 2010 are as follows:
Same-store Sales |
Approximately 6 percent increase |
|
Credit Card Revenues |
|
$20 to $25 million increase |
Gross Profit (%) |
|
100 to 115 basis point increase |
Retail Selling, General and Admin. Expense ($) |
|
$260 to $270 million increase |
Credit Selling, General and Admin. Expense ($) |
|
$65 to $70 million decrease |
Total Selling, General and Admin. Expense (%) |
|
75 to 85 basis point decrease |
Interest Expense, net |
|
$10 to $15 million decrease |
Effective Tax Rate |
|
38.6 percent |
Earnings per Diluted Share |
|
$2.60 to $2.65 |
Diluted Shares Outstanding |
|
222.8 million |
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited; amounts in millions, except per share data)
|
Quarter Ended |
Nine Months Ended |
||||||||||||||
|
10/30/10 |
10/31/09 |
|
10/30/10 |
10/31/09 |
|||||||||||
Net sales |
|
$ |
2,087 |
|
|
$ |
1,868 |
|
|
$ |
6,494 |
|
|
$ |
5,719 |
|
Credit card revenues |
|
95 |
|
95 |
|
290 |
|
268 |
||||||||
Total revenues |
|
|
2,182 |
|
|
|
1,963 |
|
|
|
6,784 |
|
|
|
5,987 |
|
Cost of sales and related buying and
occupancy costs |
|
|
(1,331 |
) |
|
|
(1,210 |
) |
|
|
(4,139 |
) |
|
|
(3,735 |
) |
Selling, general and administrative expenses: |
|
|
|
|
|
|
|
|
||||||||
Retail |
|
|
(569 |
) |
|
|
(500 |
) |
|
|
(1,715 |
) |
|
|
(1,478 |
) |
Credit |
|
(61 |
) |
|
(81 |
) |
|
(218 |
) |
|
(250 |
) |
||||
Earnings before interest and income taxes |
|
|
221 |
|
|
|
172 |
|
|
|
712 |
|
|
|
524 |
|
Interest expense, net |
|
(31 |
) |
|
(38 |
) |
|
(94 |
) |
|