Nordstrom (JWN) 10-Q 8 Jun 10 2010 Q1 Quarterly report Financial data

Document and entity information

Document and entity information
	3 Months Ended May. 01, 2010	Jun. 04, 2010
Document Type	10-Q
Document Period End Date	2010-05-01
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,010
Amendment Flag	false
Entity Registrant Name	NORDSTROM INC
Entity Central Index Key	0000072333
Current Fiscal Year End Date	--01-29
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		219,093,484

Condensed Consolidated Statemen

Condensed Consolidated Statements of Earnings (USD $)
In Millions, except Per Share data	3 Months Ended May. 01, 2010	3 Months Ended May. 02, 2009
Net sales	$1,990	$1,706
Credit card revenues	97	86
Total revenues	2,087	1,792
Cost of sales and related buying and occupancy costs	(1,243)	(1,107)
Selling, general and administrative expenses:
Retail	(533)	(447)
Credit	(92)	(92)
Earnings before interest and income taxes	219	146
Interest expense, net	(31)	(31)
Earnings before income taxes	188	115
Income tax expense	(72)	(34)
Net earnings	$116	$81
Earnings per basic share	0.53	0.38
Earnings per diluted share	0.52	0.37
Basic shares	218.4	215.9
Diluted shares	222.4	217.4

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (USD $)
In Millions	3 Months Ended May. 01, 2010	3 Months Ended May. 02, 2009	12 Months Ended Jan. 30, 2010
Assets
Cash and cash equivalents	$1,040	$78	$795
Accounts receivable, net	1,964	1,921	2,035
Merchandise inventories	1,067	1,004	898
Current deferred tax assets, net	234	220	238
Prepaid expenses and other	84	70	88
Total current assets	4,389	3,293	4,054
Land, buildings and equipment, (net of accumulated depreciation of $3,388, $3,170 and $3,316)	2,262	2,231	2,242
Goodwill	53	53	53
Other assets	252	183	230
Total assets	6,956	5,760	6,579
Liabilities and Shareholders' Equity
Commercial paper		125
Accounts payable	908	594	726
Accrued salaries, wages and related benefits	216	182	336
Other current liabilities	621	539	596
Current portion of long-term debt	6	375	356
Total current liabilities	1,751	1,815	2,014
Long-term debt, net	2,756	2,002	2,257
Deferred property incentives, net	481	459	469
Other liabilities	274	210	267
Commitments and contingencies
Shareholders' equity:
Common stock, no par value: 1,000 shares authorized; 218.9, 216.2 and 217.7 shares issued and outstanding	1,107	1,014	1,066
Retained earnings	607	269	525
Accumulated other comprehensive loss	(20)	(9)	(19)
Total shareholders' equity	1,694	1,274	1,572
Total liabilities and shareholders' equity	$6,956	$5,760	$6,579

1_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions	May. 01, 2010	Jan. 30, 2010	May. 02, 2009
Accumulated depreciation	$3,388	$3,316	$3,170
Shareholders' equity:
Common stock, par value	0	0	0
Common stock, shares authorized	1,000	1,000	1,000
Common stock, shares issued	218.9	217.7	216.2
Common stock, shares outstanding	218.9	217.7	216.2

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Shareholders Equity (USD $)
In Millions	Common Stock	Retained Earnings	Accumulated Other Comprehensive Earnings (Loss)	Total
Balance, Shares at Jan. 31, 2009	215.4
Balance, Value at Jan. 31, 2009	$997	$223	($10)	$1,210
Net earnings		81		81
Other comprehensive earnings (loss), net of tax			1	1
Comprehensive net earnings				82
Dividends ($0.16 per share)		(35)		(35)
Issuance of common stock for:
Stock option plans, Value	4			4
Stock option plans, Shares	0.3
Employee stock purchase plan, Value	7			7
Employee stock purchase plan, Shares	0.5
Stock-based compensation	6			6
Balance, Value at May. 02, 2009	1,014	269	(9)	1,274
Balance, Shares at May. 02, 2009	216.2
Balance, Shares at Jan. 30, 2010	217.7
Balance, Value at Jan. 30, 2010	1,066	525	(19)	1,572
Net earnings		116		116
Other comprehensive earnings (loss), net of tax			(1)	(1)
Comprehensive net earnings				115
Dividends ($0.16 per share)		(34)		(34)
Issuance of common stock for:
Stock option plans, Value	25			25
Stock option plans, Shares	1
Employee stock purchase plan, Value	7			7
Employee stock purchase plan, Shares	0.2
Stock-based compensation	9			9
Balance, Value at May. 01, 2010	$1,107	$607	($20)	$1,694
Balance, Shares at May. 01, 2010	218.9

3_Condensed Consolidated Statem

Condensed Consolidated Statements of Shareholders Equity (Parenthetical) (USD $)
	3 Months Ended May. 01, 2010	3 Months Ended May. 02, 2009
Cash Dividends paid (per share)	0.16	0.16

4_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (USD $)
In Millions	3 Months Ended May. 01, 2010	3 Months Ended May. 02, 2009
Operating Activities
Net earnings	$116	$81
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization of buildings and equipment, net	79	77
Amortization of deferred property incentives and other, net	(15)	(10)
Deferred income taxes, net	(11)	(20)
Stock-based compensation expense	10	7
Tax benefit from stock-based compensation	7	1
Excess tax benefit from stock-based compensation	(7)	(1)
Provision for bad debt expense	63	67
Change in operating assets and liabilities:
Accounts receivable	13	(16)
Merchandise inventories	(159)	(114)
Prepaid expenses and other assets		(1)
Accounts payable	172	84
Accrued salaries, wages and related benefits	(120)	(32)
Other current liabilities	20	31
Deferred property incentives	28	42
Other liabilities	8	9
Net cash provided by operating activities	204	205
Investing Activities
Capital expenditures	(95)	(102)
Change in credit card receivables originated at third parties	(4)	(30)
Other, net	1
Net cash used in investing activities	(98)	(132)
Financing Activities
Repayments of commercial paper borrowings, net		(10)
Proceeds from long-term borrowings, net of discounts	498
Principal payments on long-term borrowings	(352)	(1)
Decrease in cash book overdrafts	(3)	(32)
Cash dividends paid	(34)	(35)
Proceeds from exercise of stock options	17	3
Proceeds from employee stock purchase plan	7	7
Excess tax benefit from stock-based compensation	7	1
Other, net	(1)
Net cash provided by (used in) financing activities	139	(67)
Net increase in cash and cash equivalents	245	6
Cash and cash equivalents at beginning of period	795	72
Cash and cash equivalents at end of period	1,040	78
Supplementary Cash Flow Information
Interest (net of capitalized interest)	17	19
Income taxes	$57	$5

BASIS OF PRESENTATION

BASIS OF PRESENTATION
	3 Months Ended May. 01, 2010
BASIS OF PRESENTATION	NOTE 1: BASIS OF PRESENTATION The accompanying condensed consolidated financial statements include the financial statements of Nordstrom, Inc. and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation. The interim condensed consolidated financial statements have been prepared on a basis consistent in all material respects with the accounting policies described and applied in our 2009 Annual Report on Form 10-K, and reflect all adjustments that are, in management's opinion, necessary for the fair presentation of the results of operations, financial position and cash flows for the periods presented. The condensed consolidated financial statements as of and for the periods ended May 1, 2010 and May 2, 2009 are unaudited. The condensed consolidated balance sheet as of January 30, 2010 has been derived from the audited consolidated financial statements included in our 2009 Annual Report on Form 10-K. The interim condensed consolidated financial statements should be read together with the consolidated financial statements and related footnote disclosures contained in our 2009 Annual Report on Form 10-K. The preparation of our financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. Our business, like that of other retailers, is subject to seasonal fluctuations. Due to our Anniversary Sale in July, the holidays in December and the half-yearly sales that occur in the second and fourth quarters, our sales are historically higher in the second and fourth quarters of the fiscal year than in the first and third quarters. Accordingly, results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.

ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE
	3 Months Ended May. 01, 2010
ACCOUNTS RECEIVABLE	NOTE 2: ACCOUNTS RECEIVABLE The following table illustrates the allowance for doubtful accounts activity for the quarter ended May 1, 2010 and May 2, 2009: Quarter Ended May1,2010 May2,2009 Allowance at beginning of period $ 190 $ 138 Bad debt provision 63 67 Net write-offs (63 ) (44 ) Allowance at end of period $ 190 $ 161

DEBT AND CREDIT FACILITIES

DEBT AND CREDIT FACILITIES
	3 Months Ended May. 01, 2010
DEBT AND CREDIT FACILITIES	NOTE 3: DEBT AND CREDIT FACILITIES Debt A summary of our long-term debt is as follows: May1,2010 January30,2010 May2,2009 Secured Series 2007-1 ClassA Notes, 4.92%, retired April 2010 $ - $ 326 $ 326 Series 2007-1 Class B Notes, 5.02%, retired April 2010 - 24 24 Series 2007-2 ClassA Notes, one-month LIBOR plus 0.06%per year, due April 2012 454 454 454 Series 2007-2 Class B Notes, one-month LIBOR plus 0.18%per year, due April 2012 46 46 46 Mortgage payable, 7.68%, due April 2020 58 60 62 Other 15 15 16 573 925 928 Unsecured Commercial paper - - 140 Senior notes, 6.75%, due June 2014, net of unamortized discount 399 399 - Senior notes, 6.25%, due January 2018, net of unamortized discount 647 647 647 Senior notes, 4.75%, due May 2020, net of unamortized discount 498 - - Senior debentures, 6.95%, due March 2028 300 300 300 Senior notes, 7.00%, due January 2038, net of unamortized discount 343 343 343 Other 2 (1 ) 19 2,189 1,688 1,449 Total long-term debt 2,762 2,613 2,377 Less: current portion (6 ) (356 ) (375 ) Total due beyond one year $ 2,756 $ 2,257 $ 2,002 On April 15, 2010, we retired our $350 Series 2007-1 Class A B Notes. On April 23, 2010, we issued $500 of senior unsecured notes at 4.75%, due May 2020. After deducting the original issue discount of $2, net proceeds from the offering were $498. We intend to use the net proceeds from the issuance of the Notes for general corporate purposes. As of May 1, 2010, the estimated fair value of long-term debt, including current maturities, based on quoted market prices of the same or similar issues, was $2,998. The estimated fair value of associated interest rate swap agreements was a $2 asset, included in other assets on the condensed consolidated balance sheet, as of May 1, 2010. Credit Facilities As of May 1, 2010, we had total short-term borrowing capacity available for general corporate purposes of $950. Of the total capacity, we had $650 under our commercial paper program, which is backed by our unsecured revolving credit facility (revolver) that expires in August 2012 and $300 under our Variable Funding Note facility (2007-A VFN) that expires in January 2011. As of May 1, 2010, we had no outstanding issuances under our commercial paper program and no outstanding borrowings under our revolver or our 2007-A VFN. The revolver includes certain customary financial covenants. As of May 1, 2010, we were in compliance with these covenants.

CONTINGENT LIABILITIES

CONTINGENT LIABILITIES
	3 Months Ended May. 01, 2010
CONTINGENT LIABILITIES	NOTE 4: CONTINGENT LIABILITIES We are subject from time to time to various claims and lawsuits arising in the ordinary course of business, including lawsuits alleging violations of state and/or federal wage and hour laws. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. While we cannot predict the outcome of these matters with certainty, we do not believe any such claim, proceeding or litigation, either alone or in aggregate, will have a material impact on our results of operations, financial position or cash flows.

STOCK COMPENSATION PLANS

STOCK COMPENSATION PLANS
	3 Months Ended May. 01, 2010
STOCK COMPENSATION PLANS	NOTE 5: STOCK COMPENSATION PLANS On May 18, 2010, our shareholders approved the adoption of the Nordstrom, Inc. 2010 Equity Incentive Plan (2010 Plan), which replaced the 2004 Equity Incentive Plan (2004 Plan). The 2010 Plan authorizes the grant of stock options, performance share units, restricted stock units, stock appreciation rights and both restricted and unrestricted shares of common stock to employees. The aggregate number of shares to be issued under the 2010 Plan may not exceed 11.6 plus any shares currently underlying awards outstanding under the 2004 Plan, but which are forfeited or which expire during the term of the 2010 Plan. No future grants will be made under the 2004 Plan. During the quarters ended May 1, 2010 and May 2, 2009 we granted 2.6 and 4.9 options with weighted average grant-date fair values per option of $13 and $7.

EARNINGS PER SHARE

EARNINGS PER SHARE
	3 Months Ended May. 01, 2010
EARNINGS PER SHARE	NOTE 6: EARNINGS PER SHARE The computation of earnings per share is as follows: Quarter Ended May1,2010 May2,2009 Net earnings $ 116 $ 81 Basic shares 218.4 215.9 Dilutive effect of stock options and performance share units 4.0 1.5 Diluted shares 222.4 217.4 Earnings per basic share $ 0.53 $ 0.38 Earnings per diluted share $ 0.52 $ 0.37 Anti-dilutive stock options and other 6.7 12.7

SEGMENT REPORTING

SEGMENT REPORTING
	3 Months Ended May. 01, 2010
SEGMENT REPORTING	NOTE 7: SEGMENT REPORTING Through January 30, 2010, our reportable segments consisted of Retail Stores, Direct and Credit. Our Retail Stores segment included our Nordstrom full-line stores and our Nordstrom Rack off-price stores. Our Direct segment consisted of our online store, nordstrom.com. Effective with the first quarter of 2010, we now view our Nordstrom full-line stores and our Nordstrom online store as a single, multi-channel operating segment. Through our multi-channel initiatives, we have substantially integrated the operations, merchandising and technology of our Nordstrom full-line and online stores, consistent with our customers expectations of a seamless shopping experience regardless of channel. As a result, we have also realigned our internal reporting to our chief operating decision maker to be consistent with these multi-channel initiatives. We aggregate our Nordstrom multi-channel and Nordstrom Rack operating segments into a single reportable segment, which we refer to as Retail, based on their similar economic characteristics. Through our Credit segment, we offer our customers a variety of payment products and services, including a Nordstrom private label card, two Nordstrom VISA credit cards and a debit card for Nordstrom purchases. Our card products also include a loyalty program that provides benefits to our cardholders based on their level of spending. Amounts in the Corporate/Other column include unallocated corporate expenses and assets, inter-segment eliminations and other adjustments to segment results necessary for the presentation of consolidated financial results in accordance with generally accepted accounting principles. The segment information for the quarter ended May 2, 2009 presented below has been adjusted to reflect our 2010 reportable segments. Quarter Ended May1, 2010 Retail Credit Corporate/Other Total Net sales $ 2,015 $ - $ (25 ) $ 1,990 Credit card revenues - 97 - 97 Earnings (loss) before interest and income taxes 303 (11 ) (73 ) 219 Interest expense, net - (7 ) (24 ) (31 ) Earnings (loss) before income taxes 303 (18 ) (97 ) 188 Total assets 3,127 1,984 1,845 6,956 Quarter Ended May2, 2009 Retail Credit Corporate/Other Total Net sales $ 1,732 $ - $ (26 ) $ 1,706 Credit card revenues - 86 - 86 Earnings (loss) before interest and income taxes 231 (18 ) (67 ) 146 Interest expense, net - (10 ) (21 ) (31 ) Earnings (loss) before income taxes 231 (28 ) (88 ) 115 Total assets 2,999 1,937 824 5,760 Within our reportable segments we also report sales by channel to our chief operating decision maker as we believe sales are an important measure of our performance. Net sales by channel were as follows: Quarter Ended May1,2010 May2,2009 Sales by channel: Full-line stores $ 1,473 $ 1,296 Direct