Credit segment continues to improve at Nordstrom
Nordstrom Inc reported net earnings of $119 million, or $0.53
per diluted share, for the third quarter ended October 30,2010. This represented an increase of 42.6 percent compared with net earnings of $83 million, or $0.38 per diluted share, for the same quarter last year.
Third quarter same-store sales increased 5.8 percent compared with the same period in fiscal 2009. Net sales in the third quarter were $2.09 billion, an increase of 11.7 percent 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 percent 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 percent
compared with the same period in fiscal 2009.Same-store sales declined 2.2 percent 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 percent and inventory per square foot up 4.5 percent 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 percent, which was flat compared with the end of the second quarter of 2010 and reduced from 4.9 percent 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 percent of total revenues, from $172 million, or 8.7 percent of total revenues in last year's third quarter.