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Dresses, kids' shoes & apparel – key performer at Nordstrom

14
Aug '09
Nordstrom Inc reported net earnings of $105 million, or $0.48 per diluted share, for the second quarter ended August 1, 2009. For the same quarter last year, Nordstrom reported net earnings of $143 million, or $0.65 per diluted share.

Net sales in the second quarter were $2.14 billion, a decrease of 6.2 percent compared with sales of $2.29 billion during the same period in fiscal 2008. Second quarter same-store sales decreased 9.8 percent compared with the same period in fiscal 2008.

Second Quarter Summary
The company's second quarter typically is the second largest of the year in terms of net sales, containing three of the company's five annual sales events: Half-Yearly Sale for Women and Kids, Half-Yearly Sale for Men, and the Anniversary Sale. For the second quarter, solid execution of the Anniversary sale combined with disciplined inventory and expense management allowed the company to exceed its earnings plans.

• Full-line same-store sales in the second quarter decreased 12.3 percent and sales for Nordstrom Direct increased 3.5 percent compared with the same period in fiscal 2008. Sales performance during the Anniversary event was better than expected at negative 6.6 percent for full-line stores compared with the Anniversary event last year. For the second quarter, top-performing merchandise categories for full-line stores and Nordstrom Direct combined were Dresses, Kids' Shoes and Apparel, and Fashion Jewelry, while the South and Mid-Atlantic regions were the top-performing geographic areas for full-line stores.
• Nordstrom Rack continued its positive performance with a same-store sales increase of 0.8 percent in the second quarter compared with the same period in fiscal 2008.
• Gross profit, as a percentage of net sales, decreased 106 basis points compared with last year's second quarter. The decline was mostly attributable to the impact of fixed buying and occupancy expenses as a percentage of reduced sales. Merchandise margin, as a percentage of net sales, was flat compared to last year's second quarter. Inventory levels remained aligned with the company's sales trends. Quarter-end inventory per square foot was down 12 percent from the same period in the prior year, compared to sales per square foot down 11 percent.
Retail selling, general and administrative expenses decreased $14 million compared with last year's second quarter, despite an additional $15 million in expenses from stores opened since the second quarter of 2008. The company opened 6 full-line stores and 11 Nordstrom Rack stores since the second quarter of 2008, increasing retail square footage by 1.2 million or 5.7 percent.
• Credit selling, general and administrative expenses increased $20 million compared with last year's second quarter primarily due to higher charge-offs.

Expansion Update
In the third quarter of 2009, Nordstrom plans to open a 138,000-square-foot full-line store at Kenwood Towne Centre in Cincinnati, Ohio on September 25th. During the third quarter of 2009, Nordstrom also plans to open six Nordstrom Rack stores at the Shops of Southlake in Southlake, Texas; Arbor Lakes in Maple Grove, Minnesota; Beverly Connection in Los Angeles, California; Hastings Village in Pasadena, California; Westfield Oakridge in San Jose, California, and Gateway Center in Austin, Texas.


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