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


Walter’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

)


 

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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