Nordstrom same-store sales fall 6% for Q2

18 Aug '08

4 min read

Nordstrom Inc reported net earnings of $143 million, or $0.65 per diluted share, for the second quarter ended August 2, 2008. For the same quarter last year, Nordstrom reported net earnings of $180 million and earnings per diluted share of $0.71.

Total sales in the second quarter were $2.29 billion, a decrease of 4.3 percent compared to sales of $2.39 billion during the same period in fiscal 2007. Second quarter same-store sales decreased 6.0 percent.

Second Quarter Highlights:
The recently ended quarter is the second largest of the year for Nordstrom, with three of the company's five annual sales events held during the second quarter. Second quarter earnings per share decreased 8.5 percent, mainly due to lower sales and higher levels of discounts in the quarter. Second quarter highlights include:

• Nordstrom Inc same-store sales decreased 6.0 percent for the quarter, within the company's planned 5 to 7 percent same-store sales decline. Results in full-line stores continued to be challenging, as same-store sales decreased 9.0 percent in the quarter. Nordstrom Rack continued its multi-year run of strong sales growth, with same-same store sales increasing 6.3 percent for the quarter. Sales for Nordstrom Direct were also strong, increasing 14.6 percent in the quarter.

• Gross profit, as a percentage of sales, decreased 168 basis points compared to last year's second quarter. Although inventories remained in line with plan, the overall operating environment was challenging and highly promotional. Quarter-end inventory per square foot was down 12.8 percent from the prior year. Approximately 3 percent of the decline was due to the company's sale of Faconnable in the third quarter of 2007.

• Selling, general and administrative expenses decreased 5 percent, or $32 million, compared to last year's second quarter as we continue to execute against the revised expense plan we shared in the first quarter. The decrease in expense from last year was driven by this continued focus on controlling expenses and reduced incentives tied to company performance.

• In the second quarter of 2008, Nordstrom repurchased 1.5 million shares of stock totaling $50 million, with an average price of $32.42. Second quarter share repurchases had a minimal impact on second quarter earnings per diluted share.

Expansion Update:
In the third quarter of 2008, Nordstrom plans to open three full-line stores:
• On September 5, 2008, a 138,000 square-foot store at The Oaks Shopping Center in Thousand Oaks, Calif.;
• On September 19, 2008, a 131,000-square-foot store at Fashion Mall at Keystone in Indianapolis, Ind.;
• On October 24, 2008, a 138,000-square foot-store at Ross Park Mall in Pittsburgh, Pa.

On October 3, 2008, Nordstrom plans to relocate and open a new full-line store at the Tacoma Mall in Tacoma, Wash. In the third quarter of 2008, Nordstrom also plans to open four new Rack stores at City Center Shopping Center in White Plains, N.Y., the Laguna Hills Mall in Laguna Hills, Calif., the Springbrook Prairie Pavilion in Naperville, Ill., and Legacy Village Shopping Center in Lyndhurst, Ohio.

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