SEATTLE, Aug 11, 2011 (BUSINESS WIRE) -- Nordstrom, Inc. (NYSE:JWN) today reported net earnings of $175 million,
or $0.80 per diluted share, for the second quarter ended July 30, 2011.
This represented an increase of 20 percent compared with net earnings of
$146 million, or $0.66 per diluted share, for the same quarter last year.
Second quarter same-store sales increased 7.3 percent compared with the
same period in fiscal 2010. Net sales in the second quarter were $2.72
billion, an increase of 12.4 percent compared with net sales of $2.42
billion during the same period in fiscal 2010.
SECOND QUARTER SUMMARY
Nordstrom's second quarter performance benefitted from the company's
continued efforts to enhance the customer experience in stores and
online. During the quarter, Nordstrom held three of its five annual
promotional events. The Half-Yearly Sale for Women and Kids and the
Half-Yearly Sale for Men are both clearance events, while the
Anniversary Sale offers new merchandise at a discounted price. All of
these events achieved same-store sales increases, reflecting strong
execution.
-
Nordstrom net sales, which include results from the full-line and
Direct businesses, increased $186 million, or 8.8 percent, compared
with the same period in fiscal 2010, with same-store sales up 7.9
percent. Top-performing merchandise categories included Shoes,
Cosmetics and Designer. The South and Midwest regions were the
top-performing geographic areas for full-line stores relative to the
second quarter of 2010. The Direct channel continued to show strong
sales growth, outpacing the overall Nordstrom increase.
-
Nordstrom Rack net sales increased $92 million, or 23.4 percent,
compared with the same period in fiscal 2010, with same-store sales up
4.8 percent.
-
Gross profit, as a percentage of net sales, increased approximately
135 basis points compared with last year's second quarter. The
improvement was driven by increases in gross margin from continued
strength in regular-price selling and inventory turn, and to a lesser
extent, by the ability to leverage buying and occupancy expenses
during the quarter.
-
Retail selling, general and administrative expenses increased $95
million compared with last year's second quarter. The increase is
primarily due to higher sales volume, HauteLook operating and purchase
accounting expenses and 21 new stores since last year's second quarter.
-
The Credit segment continued to contribute to an improved customer
experience and to overall performance. Customer payment rates
increased, resulting in improved delinquency and write-off trends, and
a corresponding decrease in finance charge revenue. Annualized net
write-offs were 7.2 percent of average credit card receivables during
the quarter, down from 9.0 percent in the second quarter of 2010.
Delinquencies as a percentage of credit card receivables at the end of
the second quarter were 2.7 percent, down from 3.5 percent at the end
of the second quarter of 2010. As a result, the reserve for bad debt
was reduced by $10 million to $125 million.
-
Earnings before interest and taxes increased $48 million to $320
million, or 11.4 percent of total revenues, from $272 million, or 10.8
percent of total revenues, in last year's second quarter. This year's
second quarter earnings before interest and taxes were reduced by
approximately $13 million, or $0.05 per share, related to HauteLook,
including purchase accounting charges and the impact from share
dilution. This reduction in earnings from HauteLook was in line with
the company's internal plans.
EXPANSION UPDATE
During the second quarter of 2011, the company opened the following
Nordstrom Rack stores:
| Location |
|
Store Name |
|
Square Footage
(000's)
|
|
Timing |
|
Cherry Hill, New Jersey
|
|
Towne Place at Garden State Park
|
|
36
|
|
May 5
|
|
Washington, D.C.
|
|
Friendship Center
|
|
41
|
|
May 19
|
|
Annapolis, Maryland
|
|
Annapolis Harbour Center
|
|
35
|
|
May 19
|
FISCAL YEAR 2011 OUTLOOK
The company's revised expectations for fiscal 2011 are as follows:
|
|
|
|
Same-store sales
|
|
4 to 6 percent increase
|
|
HauteLook sales1 |
|
$160 to $180 million
|
|
Credit card revenues
|
|
$0 to $10 million decrease
|
|
Gross profit (%)
|
|
30 to 50 basis point increase
|
|
Retail selling, general and administrative expenses ($)2 |
|
$310 to $350 million increase
|
|
Credit selling, general and administrative expenses ($)
|
|
$20 to $30 million decrease
|
|
Interest expense, net
|
|
$0 to $5 million decrease
|
|
Effective tax rate
|
|
39.4 percent
|
|
Earnings per diluted share
|
|
$2.95 to $3.10
|
|
Diluted shares outstanding
|
|
219.9 million
|
|
|
|
|
1HauteLook sales are not included in same-store sales.
|
|
|
|
|
2Retail SG&A expenses include approximately $115
million of operating expenses and purchase accounting charges
associated with the HauteLook acquisition.
|
|
CONFERENCE CALL INFORMATION
The company's senior management will host a conference call to discuss
second quarter results at 4:45 p.m. Eastern Daylight Time today. To
listen, please dial 517-308-9140 (passcode: NORD). A telephone replay
will be available beginning approximately one hour after the conclusion
of the call by dialing 203-369-1658 (passcode: 6673) until the close of
business on August 18, 2011. Interested parties may also listen to the
live call over the Internet by visiting the Investor Relations section
of the company's corporate Web site at http://investor.nordstrom.com.
An archived webcast will be available in the webcasts section for one
year.
ABOUT NORDSTROM
Nordstrom, Inc. is one of the nation's leading fashion specialty
retailers, with 213 stores located in 29 states. Founded in 1901 as a
shoe store in Seattle, today Nordstrom operates 115 Nordstrom full-line
stores, 95 Nordstrom Rack stores, two Jeffrey boutiques and one
clearance store. Nordstrom serves customers through its online presence
at www.Nordstrom.com
and through its catalogs. Nordstrom also operates in the online private
sale marketplace through its subsidiary HauteLook. Nordstrom, Inc.'s
common stock is publicly traded on the NYSE under the symbol JWN.
Certain statements in this news release contain "forward-looking"
information (as defined in the Private Securities Litigation Reform Act
of 1995) that involve risks and uncertainties, including, but not
limited to, anticipated financial outlook for the fiscal year ending
January 28, 2012, anticipated annual same-store sales rate and trends in
company operations. Such statements are based upon the current beliefs
and expectations of the company's management and are subject to
significant risks and uncertainties. Actual future results may differ
materially from historical results or current expectations depending
upon factors including but not limited to: the impact of economic and
market conditions and the resultant impact on consumer spending
patterns; our ability to maintain our relationships with vendors; our
ability to respond to the business environment, consumer preferences and
fashion trends; effective inventory management; successful execution of
our growth strategy, including possible expansion into new markets,
technological investments and acquisitions, including our ability to
realize the anticipated benefits from such acquisitions, and the timely
completion of construction associated with newly planned stores,
relocations and remodels, which may be impacted by the financial health
of third parties; our ability to maintain relationships with our
employees and to effectively train and develop our future leaders;
successful execution of our multi-channel strategy; our compliance with
applicable banking and related laws and regulations impacting our
ability to extend credit to our customers; impact of the current
regulatory environment and financial system and health care reforms; our
compliance with information security and privacy laws and regulations,
employment laws and regulations and other laws and regulations
applicable to us; trends in personal bankruptcies and bad debt
write-offs; changes in interest rates; efficient and proper allocation
of our capital resources; availability and cost of credit; our ability
to safeguard our brand and reputation; successful execution of our
information technology strategy; disruptions in our supply chain; the
geographic locations of our stores; public health concerns and the
resulting impact on consumer spending patterns, supply chain and
employee health; weather conditions and hazards of nature that affect
consumer traffic and consumers' purchasing patterns; the effectiveness
of planned advertising, marketing and promotional campaigns; our ability
to control costs; and the timing and amounts of share repurchases by the
company, if any, or any share issuances by the company, including
issuances associated with option exercises or other matters. Our SEC
reports, including our Form 10-K for the fiscal year ended January 29,
2011, and our Form 10-Q for the fiscal quarter ended April 30, 2011,
contain other information on these and other factors that could affect
our financial results and cause actual results to differ materially from
any forward-looking information we may provide. The company undertakes
no obligation to update or revise any forward-looking statements to
reflect subsequent events, new information or future circumstances.
|
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited; amounts in millions, except per share data)
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Six Months Ended
|
|
|
7/30/11
|
|
|
7/31/10
|
|
|
7/30/11
|
|
|
7/31/10
|
|
|
Net sales
|
|
$
|
2,716
|
|
|
$
|
2,417
|
|
|
$
|
4,945
|
|
|
$
|
4,407
|
|
|
Credit card revenues
|
|
|
94
|
|
|
|
98
|
|
|
|
188
|
|
|
|
195
|
|
|
Total revenues
|
|
|
2,810
|
|
|
|
2,515
|
|
|
|
5,133
|
|
|
|
4,602
|
|
|
Cost of sales and related buying and
occupancy costs
|
|
|
(1,723
|
)
|
|
|
(1,565
|
)
|
|
|
(3,108
|
)
|
|
|
(2,808
|
)
|
|
Selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
Retail
|
|
|
(708
|
)
|
|
|
(613
|
)
|
|
|
(1,319
|
)
|
|
|
(1,146
|
)
|
|
Credit
|
|
|
(59
|
)
|
|
|
(65
|
)
|
|
|
(114
|
)
|
|
|
(157
|
)
|
|
Earnings before interest and income taxes
|
|
|
320
|
|
|
|
272
|
|
|
|
592
|
|
|
|
491
|
|
|
Interest expense, net
|
|
|
(30
|
)
|
|
|
(32
|
)
|
|
|
(61
|
)
|
|
|
(63
|
)
|
|
Earnings before income taxes
|
|
|
290
|
|
|
|
240
|
|
|
|
531
|
|
|
|
428
|
|
|
Income tax expense
|
|
|
(115
|
)
|
|
|
(94
|
)
|
|
|
(211
|
)
|
|
|
(166
|
)
|
| Net earnings |
|
$
|
175
|
|
|
$
|
146
|
|
|
$
|
320
|
|
|
$
|
262
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.81
|
|
|
$
|
0.67
|
|
|
$
|
1.47
|
|
|
$
|
1.20
|
|
|
Diluted
|
|
$
|
0.80
|
|
|
$
|
0.66
|
|
|
$
|
1.44
|
|
|
$
|
1.18
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
215.9
|
|
|
|
219.2
|
|
|
|
217.5
|
|
|
|
218.8
|
|
|
Diluted
|
|
|
220.3
|
|
|
|
222.8
|
|
|
|
221.8
|
|
|
|
222.6
|
|
|
NORDSTROM, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited; amounts in millions)
|
|
|
|
|
|
|
|
|
|
7/30/11
|
|
1/29/11
|
|
7/31/10
|
| Assets |
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,090
|
|
|
$
|
1,506
|
|
|
$
|
1,137
|
|
|
Accounts receivable, net
|
|
|
2,204
|
|
|
|
2,026
|
|
|
|
2,153
|
|
|
Merchandise inventories
|
|
|
1,152
|
|
|
|
977
|
|
|
|
1,055
|
|
|
Current deferred tax assets, net
|
|
|
228
|
|
|
|
236
|
|
|
|
245
|
|
|
Prepaid expenses and other
|
|
|
89
|
|
|
|
79
|
|
|
|
75
|
|
|
Total current assets
|
|
|
4,763
|
|
|
|
4,824
|
|
|
|
4,665
|
|
|
|
|
|
|
|
|
|
Land, buildings and equipment (net of accumulated depreciation of
$3,686, $3,520 and $3,465)
|
|
|
2,422
|
|
|
|
2,318
|
|
|
|
2,279
|
|
|
Goodwill
|
|
|
200
|
|
|
|
53
|
|
|
|
53
|
|
|
Other assets
|
|
|
351
|
|
|
|
267
|
|
|
|
299
|
|
| Total assets |
|
$
|
7,736
|
|
|
$
|
7,462
|
|
|
$
|
7,296
|
|
|
|
|
|
|
|
|
| Liabilities and Shareholders' Equity |
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,087
|
|
|
$
|
846
|
|
|
$
|
1,050
|
|
|
Accrued salaries, wages and related benefits
|
|
|
292
|
|
|
|
375
|
|
|
|
273
|
|
|
Other current liabilities
|
|
|
696
|
|
|
|
652
|
|
|
|
617
|
|
|
Current portion of long-term debt
|
|
|
506
|
|
|
|
6
|
|
|
|
6
|
|
|
Total current liabilities
|
|
|
2,581
|
|
|
|
1,879
|
|
|
|
1,946
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
|
|
2,296
|
|
|
|
2,775
|
|
|
|
2,794
|
|
|
Deferred property incentives, net
|
|
|
505
|
|
|
|
495
|
|
|
|
486
|
|
|
Other liabilities
|
|
|
351
|
|
|
|
292
|
|
|
|
260
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
Common stock, no par value: 1,000 shares
authorized; 214.2, 218.0 and 219.1 shares
issued and outstanding
|
|
|
1,402
|
|
|
|
1,168
|
|
|
|
1,120
|
|
|
Retained earnings
|
|
|
629
|
|
|
|
882
|
|
|
|
709
|
|
|
Accumulated other comprehensive loss
|
|
|
(28
|
)
|
|
|
(29
|
)
|
|
|
(19
|
)
|
|
Total shareholders' equity
|
|
|
2,003
|
|
|
|
2,021
|
|
|
|
1,810
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
7,736
|
|
|
$
|
7,462
|
|
|
$
|
7,296
|
|
|
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; amounts in millions)
|
|
|
|
|
|
Six Months Ended
|
|
|
7/30/11
|
|
7/31/10
|
|
Operating Activities
|
|
|
|
|
|
Net earnings
|
|
$
|
320
|
|
|
$
|
262
|
|
|
Adjustments to reconcile net earnings to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization expenses
|
|
|
179
|
|
|
|
162
|
|
|
Amortization of deferred property incentives and other, net
|
|
|
(28
|
)
|
|
|
(27
|
)
|
|
Deferred income taxes, net
|
|
|
(8
|
)
|
|
|
(34
|
)
|
|
Stock-based compensation expense
|
|
|
28
|
|
|
|
20
|
|
|
Tax benefit from stock-based compensation
|
|
|
13
|
|
|
|
9
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
(15
|
)
|
|
|
(9
|
)
|
|
Provision for bad debt expense
|
|
|
51
|
|
|
|
97
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
|
(170
|
)
|
|
|
(128
|
)
|
|
Merchandise inventories
|
|
|
(136
|
)
|
|
|
(148
|
)
|
|
Prepaid expenses and other assets
|
|
|
(9
|
)
|
|
|
14
|
|
|
Accounts payable
|
|
|
285
|
|
|
|
276
|
|
|
Accrued salaries, wages and related benefits
|
|
|
(87
|
)
|
|
|
(63
|
)
|
|
Other current liabilities
|
|
|
34
|
|
|
|
15
|
|
|
Deferred property incentives
|
|
|
42
|
|
|
|
50
|
|
|
Other liabilities
|
|
|
14
|
|
|
|
(7
|
)
|
|
Net cash provided by operating activities
|
|
|
513
|
|
|
|
489
|
|
|
|
|
|
|
| Investing Activities |
|
|
|
|
|
Capital expenditures
|
|
|
(248
|
)
|
|
|
(192
|
)
|
|
Change in credit card receivables originated at third parties
|
|
|
(57
|
)
|
|
|
(88
|
)
|
|
Other, net
|
|
|
(3
|
)
|
|
|
-
|
|
|
Net cash used in investing activities
|
|
|
(308
|
)
|
|
|
(280
|
)
|
|
|
|
|
|
| Financing Activities |
|
|
|
|
|
Proceeds from long-term borrowings, net of discounts
|
|
|
-
|
|
|
|
498
|
|
|
Principal payments on long-term borrowings
|
|
|
(3
|
)
|
|
|
(353
|
)
|
|
(Decrease) increase in cash book overdrafts
|
|
|
(111
|
)
|
|
|
31
|
|
|
Cash dividends paid
|
|
|
(100
|
)
|
|
|
(78
|
)
|
|
Payments for repurchase of common stock
|
|
|
(472
|
)
|
|
|
-
|
|
|
Proceeds from exercise of stock options
|
|
|
43
|
|
|
|
20
|
|
|
Proceeds from employee stock purchase plan
|
|
|
7
|
|
|
|
7
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
15
|
|
|
|
9
|
|
|
Other, net
|
|
|
-
|
|
|
|
(1
|
)
|
|
Net cash (used in) provided by financing activities
|
|
|
(621
|
)
|
|
|
133
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(416
|
)
|
|
|
342
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
1,506
|
|
|
|
795
|
|
| Cash and cash equivalents at end of period |
|
$
|
1,090
|
|
|
$
|
1,137
|
|
|
NORDSTROM, INC.
STATEMENTS OF EARNINGS BY SEGMENT
(unaudited; amounts in millions, except percentages)
|
|
|
|
|
|
|
|
|
|
|
Retail
Our Retail business includes our Nordstrom branded full-line and
online stores, our Nordstrom Rack stores, and our other retail
channels including our HauteLook online private sale subsidiary
and our Jeffrey stores. It also includes unallocated corporate
center expenses. The following tables summarize the results of our
Retail business for the quarter and six months ended July 30, 2011
compared with the quarter and six months ended July 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
7/30/11
|
|
% of sales1 |
|
Quarter
Ended
7/31/10
|
|
% of sales1 |
|
Net sales
|
|
$
|
2,716
|
|
|
100.0
|
%
|
|
$
|
2,417
|
|
|
100.0
|
%
|
|
Cost of sales and related buying and
occupancy costs
|
|
|
(1,701
|
)
|
|
(62.6
|
%)
|
|
|
(1,547
|
)
|
|
(64.0
|
%)
|
|
Gross profit
|
|
|
1,015
|
|
|
37.4
|
%
|
|
|
870
|
|
|
36.0
|
%
|
|
Selling, general and administrative expenses
|
|
|
(708
|
)
|
|
(26.0
|
%)
|
|
|
(613
|
)
|
|
(25.3
|
%)
|
|
Earnings before interest and income taxes
|
|
|
307
|
|
|
11.3
|
%
|
|
|
257
|
|
|
10.7
|
%
|
|
Interest expense, net
|
|
|
(27
|
)
|
|
(1.0
|
%)
|
|
|
(27
|
)
|
|
(1.1
|
%)
|
|
Earnings before income taxes
|
|
$
|
280
|
|
|
10.3
|
%
|
|
$
|
230
|
|
|
9.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
7/30/11
|
|
% of sales1 |
|
Six Months
Ended
7/31/10
|
|
% of sales1 |
|
Net sales
|
|
$
|
4,945
|
|
|
100.0
|
%
|
|
$
|
4,407
|
|
|
100.0
|
%
|
|
Cost of sales and related buying and
occupancy costs
|
|
|
(3,072
|
)
|
|
(62.1
|
%)
|
|
|
(2,774
|
)
|
|
(63.0
|
%)
|
|
Gross profit
|
|
|
1,873
|
|
|
37.9
|
%
|
|
|
1,633
|
|
|
37.0
|
%
|
|
Selling, general and administrative expenses
|
|
|
(1,319
|
)
|
|
(26.7
|
%)
|
|
|
(1,146
|
)
|
|
(26.0
|
%)
|
|
Earnings before interest and income taxes
|
|
|
554
|
|
|
11.2
|
%
|
|
|
487
|
|
|
11.1
|
%
|
|
Interest expense, net
|
|
|
(54
|
)
|
|
(1.1
|
%)
|
|
|
(51
|
)
|
|
(1.2
|
%)
|
|
Earnings before income taxes
|
|
$
|
500
|
|
|
10.1
|
%
|
|
$
|
436
|
|
|
9.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Subtotals and totals may not foot due to rounding.
|
|
NORDSTROM, INC.
STATEMENTS OF EARNINGS BY SEGMENT
(unaudited; amounts in millions, except percentages)
|
|
|
|
|
|
|
Credit
Our Credit business earns finance charges, interchange fees and
late fee income through operation of the Nordstrom private label
and Nordstrom VISA credit cards. The following tables summarize
the results of our Credit business for the quarter and six months
ended July 30, 2011 compared with the quarter and six months ended
July 31, 2010:
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Six Months Ended
|
|
|
7/30/11
|
|
7/31/10
|
|
7/30/11
|
|
7/31/10
|
|
Credit card revenues
|
|
$
|
94
|
|
|
$
|
98
|
|
|
$
|
188
|
|
|
$195
|
|
|
Interest expense
|
|
|
(3
|
)
|
|
|
(5
|
)
|
|
|
(7
|
)
|
|
(12
|
)
|
|
Net credit card income
|
|
|
91
|
|
|
|
93
|
|
|
|
181
|
|
|
183
|
|
|
Cost of sales - loyalty program
|
|
|
(22
|
)
|
|
|
(18
|
)
|
|
|
(36
|
)
|
|
(34
|
)
|
|
Selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
Operational and marketing expenses
|
|
|
(33
|
)
|
|
|
(31
|
)
|
|
|
(63
|
)
|
|
(60
|
)
|
|
Bad debt expense
|
|
|
(26
|
)
|
|
|
(34
|
)
|
|
|
(51
|
)
|
|
(97
|
)
|
|
Earnings (loss) before income taxes
|
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
31
|
|
|
$(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table illustrates the activity in our allowance for
credit losses for the quarter and six months ended July 30, 2011
and July 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Six Months Ended
|
|
|
7/30/11
|
|
|
|
7/31/10
|
|
|
|
7/30/11
|
|
|
7/31/10
|
|
|
Allowance at beginning of period
|
|
$ 135
|
|
|
$
|
190
|
|
|
$
|
145
|
|
|
$190
|
|
|
Bad debt provision
|
|
26
|
|
|
|
34
|
|
|
|
51
|
|
|
97
|
|
|
Write-offs
|
|
(42
|
)
|
|
|
(53
|
)
|
|
|
(82
|
)
|
|
(120
|
)
|
|
Recoveries
|
|
6
|
|
|
|
4
|
|
|
|
11
|
|
|
8
|
|
|
Allowance at end of period
|
|
$ 125
|
|
|
$
|
175
|
|
|
$
|
125
|
|
|
$175
|
|
|
|
|
|
|
|
|
|
|
|
Annualized net write-offs as a percentage of average credit card
receivables
|
|
7.2
|
%
|
|
|
9.0
|
%
|
|
|
7.1
|
%
|
|
10.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/30/11
|
|
7/31/10
|
|
30+ days delinquent as a percentage of ending credit card receivables
|
|
|
2.7
|
%
|
|
3.5
|
%
|
|
Allowance as a percentage of ending credit card receivables
|
|
|
|
|
5.6
|
%
|
|
7.8
|
%
|
NORDSTROM, INC.
ADJUSTED DEBT TO EBITDAR (NON-GAAP FINANCIAL
MEASURE)
(unaudited; amounts in millions)
We use various financial measures in our conference calls, investor
meetings and other forums which may be considered non-GAAP financial
measures within the meaning of Regulation G of the Securities and
Exchange Commission. The following disclosure provides additional
information regarding our Adjusted Debt to EBITDAR as of July 30, 2011:
Adjusted Debt to EBITDAR is one of our key financial metrics, and we
believe that our debt levels are best analyzed using this measure. Our
current goal is to manage debt levels to maintain an investment-grade
credit rating as well as operate with an efficient capital structure for
our size, growth plans and industry. Investment-grade credit ratings are
important to maintaining access to a variety of short-term and long-term
sources of funding, and we rely on these funding sources to continue to
grow our business. We believe a higher ratio, among other factors, could
result in rating agency downgrades. In contrast, we believe a lower
ratio would result in a higher cost of capital and could negatively
impact shareholder returns. As of July 30, 2011, our Adjusted Debt to
EBITDAR was 2.0 compared with 2.4 as of July 31, 2010.
Adjusted Debt to EBITDAR is not a measure of financial performance under
GAAP and should not be considered a substitute for debt to net earnings,
net earnings or debt as determined in accordance with GAAP. In addition,
Adjusted Debt to EBITDAR does have limitations:
-
Adjusted Debt is not exact, but rather our best estimate of the total
company debt we would hold if we had purchased the property and issued
debt associated with our operating leases;
-
EBITDAR does not reflect our cash expenditures, or future requirements
for capital expenditures or contractual commitments, including leases,
or the cash requirements necessary to service interest or principal
payments on our debt; and
-
Other companies in our industry may calculate Adjusted Debt to EBITDAR
differently than we do, limiting its usefulness as a comparative
measure.
To compensate for these limitations, we analyze Adjusted Debt to EBITDAR
in conjunction with other GAAP financial and performance measures
impacting liquidity, including operating cash flows, capital spending
and net earnings. The closest measure calculated using GAAP amounts is
debt to net earnings, which was 4.2 and 5.4 for the second quarter of
2011 and 2010. The following is a comparison of debt to net earnings and
Adjusted Debt to EBITDAR:
|
|
20111
|
|
20101
|
|
|
|
|
|
|
Debt
|
|
$
|
2,802
|
|
|
$
|
2,800
|
|
|
Add: rent expense x 82 |
|
|
549
|
|
|
|
428
|
|
|
Less: fair value of interest rate swaps included in long-term debt
|
|
|
(48
|
)
|
|
|
(41
|
)
|
| Adjusted Debt |
|
$
|
3,303
|
|
|
$
|
3,187
|
|
|
|
|
|
|
|
Net earnings
|
|
|
670
|
|
|
|
517
|
|
|
Add: income tax expense
|
|
|
424
|
|
|
|
321
|
|
|
Add: interest expense, net
|
|
|
125
|
|
|
|
134
|
|
|
Earnings before interest and income taxes
|
|
|
1,219
|
|
|
|
972
|
|
|
|
|
|
|
|
Add: depreciation and amortization expenses
|
|
|
343
|
|
|
|
319
|
|
|
Add: rent expense
|
|
|
69
|
|
|
|
54
|
|
|
Add: non-cash acquisition-related charges
|
|
|
8
|
|
|
|
-
|
|
| EBITDAR |
|
$
|
1,639
|
|
|
$
|
1,345
|
|
|
|
|
|
|
| Debt to Net Earnings |
|
|
4.2
|
|
|
|
5.4
|
|
| Adjusted Debt to EBITDAR |
|
|
2.0
|
|
|
|
2.4
|
|
1The components of Adjusted Debt are as of July 30, 2011 and
July 31, 2010, while the components of EBITDAR are for the 12 months
ended July 30, 2011 and July 31, 2010.
2The multiple of eight times rent expense used to calculate
Adjusted Debt is a commonly used method of estimating the debt we would
record for our leases that are classified as operating if they had met
the criteria for a capital lease, or we had purchased the property.
NORDSTROM, INC.
FREE CASH FLOW (NON-GAAP FINANCIAL MEASURE)
(unaudited; amounts in millions)
We use various financial measures in our conference calls, investor
meetings and other forums which may be considered non-GAAP financial
measures within the meaning of Regulation G of the Securities and
Exchange Commission. The following disclosure provides additional
information regarding our Free Cash Flow for the six months ended July
30, 2011 and July 31, 2010:
Free Cash Flow is one of our key liquidity measures, and, in conjunction
with GAAP measures, provides us with a meaningful analysis of our cash
flows. We believe that our ability to generate cash is more
appropriately analyzed using this measure. Free Cash Flow is not a
measure of liquidity under GAAP and should not be considered a
substitute for operating cash flows as determined in accordance with
GAAP. In addition, Free Cash Flow does have limitations:
-
Free Cash Flow does not necessarily represent funds available for
discretionary use and is not necessarily a measure of our ability to
fund our cash needs; and
-
Other companies in our industry may calculate Free Cash Flow
differently than we do, limiting its usefulness as a comparative
measure.
To compensate for these limitations, we analyze Free Cash Flow in
conjunction with other GAAP financial and performance measures impacting
liquidity, including operating cash flows. The closest measure
calculated using GAAP amounts is net cash provided by operating
activities, which was $513 and $489 for the six months ended July 30,
2011 and July 31, 2010. The following is a reconciliation of our net
cash provided by operating activities and Free Cash Flow:
|
Six Months Ended
|
|
7/30/11
|
|
7/31/10
|
|
|
|
|
| Net cash provided by operating activities |
$
|
513
|
|
|
$
|
489
|
|
|
Less: capital expenditures
|
|
(248
|
)
|
|
|
(192
|
)
|
|
Less: cash dividends paid
|
|
(100
|
)
|
|
|
(78
|
)
|
|
Less: change in credit card receivables originated at third parties
|
|
(57
|
)
|
|
|
(88
|
)
|
|
(Less) Add: change in cash book overdrafts
|
|
(111
|
)
|
|
|
31
|
|
|
Add: adjustment to cash book overdrafts for balances at
disbursement bank
|
|
141
|
|
|
|
-
|
|
| Free Cash Flow |
$
|
138
|
|
|
$
|
162
|
|
|
|
|
|
| Net cash used in investing activities |
$
|
(308
|
)
|
|
$
|
(280
|
)
|
| Net cash (used in) provided by financing activities |
$
|
(621
|
)
|
|
$
|
133
|
|
SOURCE: Nordstrom, Inc.
Nordstrom, Inc.
INVESTOR CONTACT: Rob Campbell, 206-233-6550
MEDIA CONTACT: Colin Johnson, 206-303-3036
|
