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Nordstrom to align key drivers of its biz to enhance free cash flow
24
Feb '09
Nordstrom Inc reported net earnings of $68 million, or $0.31 per diluted share, for the fourth quarter ended January 31, 2009. For the same quarter last year, Nordstrom reported net earnings of $212 million, or $0.92 per diluted share.

Total sales in the fourth quarter were $2.30 billion, a decrease of 8.5 percent compared with sales of $2.51 billion during the same period in fiscal 2007. Fourth quarter same-store sales decreased 12.5 percent compared with the same period in fiscal 2007.

Fourth Quarter Summary:
Although the retail operating environment was difficult, Nordstrom continued to align the key drivers of its business to the current economic realities. The company made good progress adjusting inventory levels to current sales trends, reducing expenses without compromising its commitment to the customer and lowering capital expenditures. Fourth quarter sales were slightly better than original expectations and earnings per share were in-line with consensus expectations of $0.30.

• Results in full-line stores continued to be challenging, as same-store sales decreased 15.8 percent.
• Nordstrom Rack was one of the top performers amongst its off-price competitors with a same-store sales decrease of 1.5 percent.
• Sales for Nordstrom Direct continued to be strong, increasing 9.7 percent.
• Gross profit, as a percentage of sales, decreased 561 basis points compared with last year's fourth quarter, due to significantly higher levels of markdowns. Nordstrom's merchant and store teams responded well to the intense competitive environment, preserving the company's market share. Year-end inventory per square foot was down 12 percent from the prior year, which is in-line with the fourth quarter same-store sales decrease of 12.5 percent.
• Selling, general and administrative expenses decreased $25 million, excluding additional expenses of $58 million from higher reserves for bad debt and new stores. The company opened 8 new full-line stores and 6 new Nordstrom Rack stores since the fourth quarter of 2007, increasing retail square footage by 1.4 million or 6.7 percent.

Full year results:
For the fiscal year ended January 31, 2009, net earnings were $401 million compared with net earnings of $715 million last year. Earnings per diluted share for the same periods were $1.83 and $2.88, respectively. Fiscal 2007 full year results include a gain of $20.9 million, net of tax, or $0.09 per diluted share, for the sale of the Faconnable business during the third quarter of 2007.

Total sales for the year decreased 6.3 percent to $8.3 billion compared with prior year sales of $8.8 billion. Full year same-store sales decreased 9.0 percent.

Expansion Update:
In 2009, Nordstrom plans to open three new full-line stores and relocate one full-line store:
• On March 6, a relocated full-line store at Fashion Place in Murray, Utah that replaces a store built in 1981
• On March 27, anew store at the Cherry Hill Mall in Cherry Hill, New Jersey


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