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Nordstrom Rack outperforms most of its off-price competitors
15 May '09
3 min read
Nordstrom Inc reported net earnings of $81 million, or $0.37 per diluted share, for the first quarter ended May 2, 2009. For the same quarter last year, Nordstrom reported net earnings of $119 million, or $0.54 per diluted share.
Included in the 2009 first quarter results was a benefit of approximately $12 million, or $0.06 per diluted share, related to the closure of the company's 2007 federal tax return audit. Excluding this benefit, 2009 first quarter net earnings were $69 million, or $0.31 per share.
Net sales in the first quarter were $1.71 billion, a decrease of 9.2 percent compared with sales of $1.88 billion during the same period in fiscal 2008. First quarter same-store sales decreased 13.2 percent compared with the same period in fiscal 2008.
FIRST QUARTER SUMMARY
In the first quarter, overall business trends were consistent with the company's business plans. The company planned sales based on recent trends and maintained its discipline with respect to inventory and expenses, allowing it to exceed earnings plans.
Full-line same-store sales decreased 16.5 percent. Sales for Nordstrom Direct were approximately flat. Top-performing merchandise categories were dresses, junior women's apparel and cosmetics, while the South and Mid-Atlantic regions were the top-performing geographic areas.
Nordstrom Rack outperformed most of its off-price competitors with a same-store sales increase of 1.2 percent.
Gross profit, as a percentage of net sales, decreased 215 basis points compared with last year's first quarter. Approximately half of the decline was due to the impact of fixed buying and occupancy costs as a percentage of reduced sales. The company was effective in aligning its inventory levels with its current sales trends. Quarter-end total inventory per square foot was down 12 percent from the prior year, which is better than total company sales trends.
Retail selling, general and administrative expenses decreased $46 million compared with last year's first quarter. Excluding $17 million in additional expenses from stores opened since the first quarter of 2008, retail selling, general and administrative expenses decreased $63 million. The company opened 6 full-line stores and 10 Nordstrom Rack stores since the first quarter of 2008, increasing retail square footage by 1.2 million or 5.7 percent.
Credit selling, general and administrative expenses increased $42 million compared with last year's first quarter due to higher charge-offs and additions to reserves for bad debt.
EXPANSION UPDATE
On March 6, 2009, Nordstrom relocated and opened a full-line store at Fashion Place in Murray, Utah. On March 27, 2009, it opened a 143,000-square-foot full-line store at Cherry Hill Mall in Cherry Hill, New Jersey, and on April 17, 2009, it opened a 143,000-square-foot full-line store at Northshore Mall in Peabody, Massachusetts.
During the first quarter of fiscal 2009, Nordstrom also opened four Nordstrom Rack stores at Bergen Town Center in Paramus, New Jersey, Park Lane in Dallas, Texas, The Commons at Southtowne in Sandy, Utah and Orland Park Place in Orland Park, Illinois. On May 7, 2009, Nordstrom opened a Nordstrom Rack store at Ravenswood 101 in East Palo Alto, California.
FISCAL YEAR 2009 OUTLOOK
Based on first quarter performance, the company is revising its outlook for the 2009 fiscal year to reflect increases in gross profit and credit card revenue, partly offset by an increase in bad debt expense. For the 2009 fiscal year, Nordstrom expects earnings per diluted share in the range of $1.25 to $1.50, increased from the previous range of $1.10 to $1.40.
Included in the 2009 first quarter results was a benefit of approximately $12 million, or $0.06 per diluted share, related to the closure of the company's 2007 federal tax return audit. Excluding this benefit, 2009 first quarter net earnings were $69 million, or $0.31 per share.
Net sales in the first quarter were $1.71 billion, a decrease of 9.2 percent compared with sales of $1.88 billion during the same period in fiscal 2008. First quarter same-store sales decreased 13.2 percent compared with the same period in fiscal 2008.
FIRST QUARTER SUMMARY
In the first quarter, overall business trends were consistent with the company's business plans. The company planned sales based on recent trends and maintained its discipline with respect to inventory and expenses, allowing it to exceed earnings plans.
Full-line same-store sales decreased 16.5 percent. Sales for Nordstrom Direct were approximately flat. Top-performing merchandise categories were dresses, junior women's apparel and cosmetics, while the South and Mid-Atlantic regions were the top-performing geographic areas.
Nordstrom Rack outperformed most of its off-price competitors with a same-store sales increase of 1.2 percent.
Gross profit, as a percentage of net sales, decreased 215 basis points compared with last year's first quarter. Approximately half of the decline was due to the impact of fixed buying and occupancy costs as a percentage of reduced sales. The company was effective in aligning its inventory levels with its current sales trends. Quarter-end total inventory per square foot was down 12 percent from the prior year, which is better than total company sales trends.
Retail selling, general and administrative expenses decreased $46 million compared with last year's first quarter. Excluding $17 million in additional expenses from stores opened since the first quarter of 2008, retail selling, general and administrative expenses decreased $63 million. The company opened 6 full-line stores and 10 Nordstrom Rack stores since the first quarter of 2008, increasing retail square footage by 1.2 million or 5.7 percent.
Credit selling, general and administrative expenses increased $42 million compared with last year's first quarter due to higher charge-offs and additions to reserves for bad debt.
EXPANSION UPDATE
On March 6, 2009, Nordstrom relocated and opened a full-line store at Fashion Place in Murray, Utah. On March 27, 2009, it opened a 143,000-square-foot full-line store at Cherry Hill Mall in Cherry Hill, New Jersey, and on April 17, 2009, it opened a 143,000-square-foot full-line store at Northshore Mall in Peabody, Massachusetts.
During the first quarter of fiscal 2009, Nordstrom also opened four Nordstrom Rack stores at Bergen Town Center in Paramus, New Jersey, Park Lane in Dallas, Texas, The Commons at Southtowne in Sandy, Utah and Orland Park Place in Orland Park, Illinois. On May 7, 2009, Nordstrom opened a Nordstrom Rack store at Ravenswood 101 in East Palo Alto, California.
FISCAL YEAR 2009 OUTLOOK
Based on first quarter performance, the company is revising its outlook for the 2009 fiscal year to reflect increases in gross profit and credit card revenue, partly offset by an increase in bad debt expense. For the 2009 fiscal year, Nordstrom expects earnings per diluted share in the range of $1.25 to $1.50, increased from the previous range of $1.10 to $1.40.
Nordstrom Inc
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