Nordstrom, Inc. reported net earnings of $60.0 million, or $0.44 per diluted share, for the fourth quarter of 2002, which ended January 31, 2003. For the same period last year, net earnings and earnings per diluted share were $50.7 million and $0.38, respectively. The 18 percent improvement in fourth quarter earnings was primarily driven by increased sales and lower selling, general and administrative expense as a percentage of sales.
Net sales for the fourth quarter of 2002 increased 7.3 percent, to $1.8 billion, compared to sales of $1.6 billion in the same period last year. On a calendar basis, fourth quarter 2002 same-store sales increased 1.9 percent.
For fiscal 2002, which consists of the twelve-month period ended January 31, 2003, net earnings and earnings per diluted share were $90.2 million and $0.66, respectively, compared to net earnings and earnings per diluted share of $124.7 million and $0.93 for the same period last year, a 28 percent decline. Excluding $71.0 million (net of tax) in non-recurring and impairment charges related to the cumulative effect of an accounting change, the purchase of a minority interest in Nordstrom.com and associated reintegration costs, and the write-down of an information technology investment(C), fiscal 2002 net earnings and earnings per diluted share were $161.3 million and $1.19, respectively. Higher-than-planned increases in same-store sales coupled with planned improvements in gross profit and selling, general and administrative expense, drove the 29 percent increase in earnings, excluding non-recurring and impairment charges.
Fiscal 2002 net sales of $6.0 billion increased 6.1 percent, compared to sales of $5.6 billion in the same period in 2001. On a calendar basis, fiscal 2002 same-store sales increased 1.4 percent.
The company said it made progress executing its 2002 key initiatives, which included driving sales increases, continuing to improve operational disciplines related to gross margin and selling, general and administrative expense, and completing the implementation of perpetual inventory. Progress towards these objectives included same-store sales increases for eight of the last nine months and modest improvements in both gross margin and expense levels, on a percentage of sales basis. In addition, all major elements of the perpetual inventory implementation were completed according to plan and under budget.
“We are proud of our people and the job that they did this past year,” said President Blake Nordstrom. “We are also encouraged by the opportunities we see to continue to improve both performance and service to our customers.”
During fiscal 2002 Nordstrom opened eight full-line stores, four Nordstrom Rack stores and one U.S. Faconnable boutique. Gross square footage for the year increased approximately 8.0 percent, from 17,048,000 to 18,428,000.
The Company is providing the following 2003 forecasts:
First Quarter 2003 Full-Year 2003
Comp-store Sales Flat Flat to low
single-digit positive
Gross Profit Moderate improvement Moderate improvement
Selling, General and
Administrative Expenses Slight improvement Slight improvement
Service Charge Income Increase $1-3 million Increase $6-10 million
Interest Expense Flat Flat
Effective Tax Rate 39% 39%
Earnings per Share $0.23 - $0.27 $1.33 - $1.39
Square footage growth 4%
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - 4th Quarter
(unaudited;amounts in thousands, except per share data and percentages)
3 months % of sales 3 months % of sales
ended (except as ended (except as
1/31/03 indicated) 1/31/02 indicated)
Net sales(A) $1,750,586 100.0 $1,631,090 100.0
Cost of sales and
related buying &
occupancy (1,168,963) (66.8) (1,089,560) (66.8)
Gross profit 581,623 33.2 541,530 33.2
Selling, general and
administrative
expenses (499,180) (28.5) (468,920) (28.8)
Operating income 82,443 4.7 72,610 4.4
Interest expense, net (21,435) (1.2) (18,321) (1.1)
Service charge income
and other, net 37,326 2.1 29,050 1.8
Earnings before
income taxes 98,334 5.6 83,339 5.1
Income tax expense (38,300) (38.9)(B) (32,600) (39.1)(B)
Net earnings $60,034 3.4 $50,739 3.1
2002 sales increase/(decrease)
presented on a 4-5-4 basis
(compared to prior-year period) 3 months 3 months
ended ended
Nov Dec Jan 1/31/03 1/31/02
Total sales 4.3% 9.2% 6.7% 7.1% (2.8%)
Same-store sales
Full-Line stores (1.9%) 2.9% 0.5% 0.9% (4.4%)
Rack & other 9.3% 9.4% 2.9% 7.6% (6.0%)
Total (1.0%) 3.4% 0.8% 1.5% (4.6%)
(A) Nordstrom reports quarterly financial results on a calendar basis.
The Company reports monthly sales according to the 4-5-4 Retail
Calendar. Total sales for fourth quarter 2002 and 2001 were
$1,729.3 million and $1,615.2 million, respectively, on a 4-5-4 Retail
Calendar basis.
(B) Percent of earnings before income taxes.
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - Year-to-Date
(unaudited;amounts in thousands, except per share data and percentages)
12 months % of sales 12 months % of sales
ended (except as ended (except as
1/31/03 indicated) 1/31/02 indicated)
Net sales(A) $5,975,076 100.0 $5,634,130 100.0
Cost of sales and
related buying
& occupancy (3,971,372) (66.5) (3,765,859) (66.8)
Gross profit 2,003,704 33.5 1,868,271 33.2
Selling, general
and administrative
expenses (1,813,968) (30.3) (1,722,635) (30.6)
Operating income 189,736 3.2 145,636 2.6
Interest expense, net (81,921) (1.4) (75,038) (1.4)
Minority interest
purchase and
reintegration costs (53,168) (0.9) -- --
Service charge
income and other, net 140,977 2.4 133,890 2.4
Earnings before
income taxes and
cumulative effect of
accounting change 195,624 3.3 204,488 3.6
Income tax expense (92,041) (47.0)(B) (79,800) (39.0)(B)
Earnings before
cumulative effect
of accounting change 103,583 1.7 124,688 2.2
Cumulative effect of
accounting change
(net of $8,541 tax) (13,359) (0.2) -- --
Net earnings $90,224 1.5 $124,688 2.2
