<page> Exhibit 99.1
For Immediate Release
- ---------------------
February 26, 2007
NORDSTROM REPORTS FOURTH QUARTER EARNINGS PER SHARE INCREASE OF 29 PERCENT
SEATTLE - February 26, 2007 - Nordstrom, Inc. (NYSE: JWN) today reported net
earnings of $232.3 million, or $0.89 per diluted share, for the fourth quarter
ended February 3, 2007. For the same period last year, net earnings and
earnings per diluted share were $190.4 million and $0.69, respectively.
Total sales for the fourth quarter of 2006 increased 14.6 percent, to $2.6
billion, compared to sales of $2.3 billion in the same period last year.
Same-store sales increased 8.3 percent. Similar to many other retailers,
Nordstrom follows the retail 4-5-4 reporting calendar, which included an extra
week in the fourth quarter of fiscal 2006 (the 53rd week). In the 53rd week,
the company had sales of $117.7 million. Sales for the 53rd week represented
5.1 percentage points of the total sales percent increase versus the prior
year. The 53rd week is not included in same-store sales calculations.
FOURTH QUARTER HIGHLIGHTS
Earnings per diluted share in the fourth quarter increased 29 percent compared
to the same quarter last year, reflecting strong sales momentum primarily due
to the company's improved execution of its merchandising strategy. This
growth in earnings per diluted share occurred on top of last year's 38 percent
increase in the fourth quarter. The company continues to focus on providing
customers with compelling merchandise and service in its full-line, Rack and
online stores.
- Same-store sales increased 8.3 percent for the quarter, exceeding the
company's one to three percent same-store sales plan. Strong regular price
sales across all major merchandise categories throughout the quarter and a
successful holiday season drove the sales increase.
- Gross profit, as a percent of sales, increased 81 basis points over the
fourth quarter fiscal 2005 result. Merchandise margin improved versus the
prior year, driven mainly by lower markdowns and higher sell-through of
inventory, especially in women's apparel.
- Selling, general and administrative expenses as a percent to sales
decreased 20 basis points versus the prior year. Overall, expenses during the
fourth quarter trended in line with the improved performance in sales and
gross profit compared to last year. In the fourth quarter, performance-based
incentive compensation costs driven by goals for total year results and share
price appreciation accelerated above plan, as fiscal 2006 sales, gross profit,
and earnings before tax results exceeded expectations.
- As a result of the adoption of SFAS No. 123(R), "Share-Based Payment,"
the company recorded $8.4 million in share-based compensation expense for the
quarter, which resulted in a $0.02 impact on diluted earnings per share. Of
the total expense, $3.6 million was recorded in buying and occupancy and $4.8
million was recorded in selling, general and administrative expenses.
- Sales of $117.7 million in the 53rd week period resulted in earnings of
$0.02 per diluted share for the quarter.
FULL YEAR RESULTS
For the fiscal year ended February 3, 2007, net earnings increased 23
percent to $678.0 million compared to net earnings of $551.3 million last
year. Earnings per diluted share for the same periods were $2.55 and $1.98,
respectively.
<page>
Total sales for the year increased 10.8 percent to $8.6 billion compared to
prior year sales of $7.7 billion, with sales for the 53rd week representing
1.5 percentage points of the total increase versus last year. As noted
previously, same-store sales calculations do not include the 53rd week. For
the year, same-store sales increased 7.5 percent.
EXPANSION UPDATE
Nordstrom opened a new 35,000-square-foot Nordstrom Rack store at Grand Plaza
in San Marcos, Calif., on November 16, 2006.
In 2007, Nordstrom plans to open three new full-line stores:
- On September 7, 2007, a 144,000-square-foot store at the Natick Mall in
Natick, Mass.;
- On September 28, 2007, a 165,000-square-foot store at the Twelve Oaks Mall
in Novi, Mich.;
- On October 19, 2007, a 140,000-square foot-store in the Cherry Creek Mall
in Denver, Colo.
In the fall of 2007, Nordstrom plans to open a new Rack store at Southcenter
Square in Tukwila, Wash.
SHARE REPURCHASE
Nordstrom repurchased approximately 0.5 million shares of its common stock
during the fourth quarter for $26.0 million. This reduction in weighted
average shares outstanding had no material effect on diluted earnings per
share for the quarter.
2007 OUTLOOK
<table>
<caption>
The company is providing the following 2007 forecast:
Full-Year 2007 Full-Year 2007
Adjusted for comparability
-------------- --------------
<s> <c> <c>
Same-store Sales 3% to 4% 3% to 4%
Gross Profit (%) 30 to 40 basis point increase 30 to 40 basis point increase
Selling, General and
Admin. Expense (%) 5 to 15 basis point increase 35 to 45 basis point decrease
Interest Expense Flat $20 to $25 million decrease
Other Income including
Finance Charges $25 to $35 million increase Flat
Effective Tax Rate 38.5% 38.5%
Earnings per Diluted Share $2.78 to $2.84 $2.86 to $2.92
Diluted Shares Outstanding 261 million 261 million
Prior Year Earnings
per Diluted Share $2.55 $2.55
</table>
Notes on comparability of fiscal year 2007 to 2006:
The 53rd week in fiscal 2006 creates a timing shift in the 4-5-4 calendar for
fiscal 2007. The months of fiscal 2007 begin and end one week later than in
fiscal 2006. Our same-store sales reporting basis compares weeks 1 through 52
for both years, excluding the 53rd week of 2006. This timing shift is
anticipated to impact the cadence of monthly same-store sales results
throughout the year, as many normal sales trends, events and holiday periods
are aligned differently than last year.
<page>
The company expects to complete an $800 to $900 million securitization
transaction backed by the company's co-branded Visa receivables in the first
quarter of fiscal 2007. With that securitization transaction, we begin a new
accounting treatment for the co-branded Visa receivables and debt secured by
those receivables. The co-branded Visa receivables will be recorded on the
balance sheet initially at fair value with no allowance for credit losses.
Normal write-offs for uncollectible Visa receivables, estimated at $19 million
along with other costs net at $4 million, will be recorded in Other Income and
Expenses over the eight month period following the transaction. This period
is equal to the average repayment life of the acquired receivables. This
activity will impact annual earnings per diluted share by $0.05.
Also as a result of the securitization transaction, income and expenses from
our co-branded Visa receivables that were previously reported net in Other
Income and Expenses (under securitization accounting guidance) will be
reclassified in our earnings statement. Bad debt and write-off expense is
expected to increase approximately $25 to $35 million and impact the SG&A rate
by 30 to 40 basis points. Interest expense, partially offset by interest
income, will increase approximately $20 to $25 million. Other income
including finance charges will increase $45 to $55 million. The offsetting
combination of these expenses and income is not anticipated to impact annual
earnings per diluted share.
Pre-opening costs for new stores in fiscal 2007 and 2008 will incrementally
increase general and administrative costs by approximately $12 million in
fiscal 2007. These expenses are projected to impact the SG&A rate by
approximately 15 basis points and earnings per diluted share by $0.03.
For the first quarter of 2007, the company expects mid-single digit same-store
sales growth. Due to the one week timing shift in 2007 caused by the 53rd
week of 2006, same-store sales are expected to vary monthly versus the planned
quarterly rate as follows: in line in February, above in March, and below in
April. Earnings per diluted share for the first quarter are expected in the
range of $0.51 to $0.54, including a $0.02 impact from the first quarter
portion of incremental expenses associated with the securitization transaction
described in the notes above.
CONFERENCE CALL INFORMATION
Company management will be hosting a conference call and webcast to discuss
fourth quarter and annual results at 4:30 p.m. (ET) today. Access to the
conference call is open to the press and general public in a listen-only mode.
To participate, please dial 212-547-0138 ten minutes prior to the call
(passcode: NORD). A telephone replay will be available for 48 hours beginning
approximately one hour after the conclusion of the call by dialing 866-448-
4802. Interested parties may also access the call over the Internet by
visiting the Investor Relations section of the company's corporate Web site at
http://about.nordstrom.com/aboutus/investor/webcasts.asp. An archived version
of the webcast will be available at this location for 30 days.
Nordstrom, Inc. is one of the nation's leading fashion specialty retailers,
with 155 US stores located in 27 states. Founded in 1901 as a shoe store in
Seattle, today Nordstrom operates 98 full-line stores, 50 Nordstrom Racks,
four Faconnable boutiques in the United States, one free-standing shoe store,
and two clearance stores. Nordstrom also operates 36 Faconnable boutiques in
Europe. In addition, Nordstrom serves customers through its online presence
at http://www.nordstrom.com and through its catalogs. Nordstrom, Inc. 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
involves risks and uncertainties, including anticipated results for the fiscal
year ending February 2, 2008, and its first quarter, store openings and trends
in company operations. Actual future results and trends may differ materially
from historical results or current expectations depending upon factors
including, but not limited to, the impact of economic and competitive market
forces, the impact of terrorist activity or the impact of a war on the
<page>
company, its customers and the retail industry, the company's ability to
predict fashion trends, consumer apparel buying patterns, trends in personal
bankruptcies and bad debt write-offs, changes in interest rates, employee
relations, the company's ability to continue its expansion plans, the timely
completion of construction associated with newly planned stores, changes in
government or regulatory requirements, the company's ability to control costs,
weather conditions and hazards of nature. Our SEC reports, including our Form
10-K for the fiscal year ended January 28, 2006, and our Form 10-K for the
fiscal year ended February 3, 2007, to be filed with the SEC on or about March
23, 2007, 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.
Investor Contact: Media Contact:
RJ Jones, 206-303-3007 Deniz Anders, 206-373-3038
<page>
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - 4th Quarter
-----------------------------------------------------
(unaudited; amounts in thousands, except per share data and percentages)
<table>
<caption>
Quarter % of sales (1) Quarter % of sales (1)
ended (except as ended (except as
2/3/07 indicated) 1/28/06 indicated)
---------- ---------- ---------- ---------
<s> <c> <c> <c> <c>
Net sales $2,630,904 100.0% $ 2,295,818 100.0%
Cost of sales and related
buying & occupancy costs (1,624,190) (61.7%) (1,435,891) (62.5%)
---------- ----------
Gross profit 1,006,714 38.3% 859,927 37.5%
Selling, general and
administrative expenses (684,881) (26.0%) (602,280) (26.2%)
---------- ----------
Operating income 321,833 12.2% 257,647 11.2%
Interest expense, net (7,805) (0.3%) (11,509) (0.5%)
Other income including
finance charges, net 65,017 2.5% 61,302 2.7%
---------- ----------
Earnings before income tax expense 379,045 14.4% 307,440 13.4%
Income tax expense (146,704) (38.7%) (2) (117,010) (38.1%) (2)
---------- ----------
Net earnings $ 232,341 8.8% $190,430 8.3%
========== ==========
Earnings per share
Basic $0.90 $0.71
Diluted $0.89 $0.69
</table>
ADDITIONAL DATA
- ---------------
<table>
<caption>
Weighted average shares outstanding
<s> <c> <c>
Basic 257,259 269,783
Diluted 262,230 275,662
</table>
(1) Subtotals and totals may not foot due to rounding.
(2)Percent of earnings before income tax expense.
<page>
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - Year to Date
-----------------------------------------------------
(unaudited; amounts in thousands, except per share data and percentages)
<table>
<caption>
Year % of sales (1) Year % of sales (1)
ended (except as ended (except as
2/3/07 indicated) 1/28/06 indicated)
---------- ---------- ---------- ---------
<s> <c> <c> <c> <c>
Net sales $ 8,560,698 100.0% $7,722,860 100.0%
Cost of sales and related
buying & occupancy costs (5,353,949) (62.5%) (4,888,023) (63.3%)
---------- ----------
Gross profit 3,206,749 37.5% 2,834,837 36.7%
Selling, general and
administrative expenses (2,296,863) (26.8%) (2,100,666) (27.2%)
---------- ----------
Operating income 909,886 10.6% 734,171 9.5%
Interest expense, net (42,758) (0.5%) (45,300) (0.6%)
Other income including
finance charges, net 238,525 2.8% 196,354 2.5%
---------- ----------
Earnings before income tax expense 1,105,653 12.9% 885,225 11.5%
Income tax expense (427,654) (38.7%) (2) (333,886) (37.7%) (2)
---------- ----------
Net earnings $ 677,999 7.9% $551,339 7.1%
========== ==========
Earnings per share
Basic $2.60 $2.03
Diluted $2.55 $1.98
</table>
ADDITIONAL DATA
- ---------------
<table>
<caption>
Weighted average shares outstanding
<s> <c> <c>
Basic 260,689 271,958
Diluted 265,712 277,776
</table>
(1) Subtotals and totals may not foot due to rounding.
(2) Percent of earnings before income tax expense.
<page>
NORDSTROM, INC.
NORDSTROM, INC.
CONSOLIDATED BALANCE SHEETS
-----------------------------------------------------
(unaudited; amounts in thousands)
<table>
<caption>
2/3/07 1/28/06
----------- -----------
<s> <c> <c>
Assets
Current assets:
Cash and cash equivalents $ 402,559 $ 462,656
Short-term investments - 54,000
Accounts receivable, net 684,376 639,558
Investment in asset backed securities 428,175 561,136
Merchandise inventories 997,289 955,978
Current deferred tax assets, net 169,320 145,470
Prepaid expenses and other 60,474 55,359
----------- -----------
Total current assets 2,742,193 2,874,157
Land, buildings and equipment, net 1,757,215 1,773,871
Goodwill 51,714 51,714
Acquired tradename 84,000 84,000
Other assets 186,456 137,607
----------- -----------
Total assets $ 4,821,578 $4,921,349
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 576,796 $ 540,019
Accrued salaries, wages and related benefits 339,965 285,982
Other current liabilities 433,487 409,076
Income taxes payable 76,095 81,617
Current portion of long-term debt 6,800 306,618
----------- -----------
Total current liabilities 1,433,143 1,623,312
Long-term debt, net 623,652 627,776
Deferred property incentives, net 356,062 364,382
Other liabilities 240,200 213,198
Shareholders' equity:
Common stock, no par value: 1,000,000 shares
authorized; 257,313 and 269,549 shares
issued and outstanding 826,421 685,934
Unearned stock compensation - (327)
Retained earnings 1,350,680 1,404,366
Accumulated other comprehensive
(loss) earnings (8,580) 2,708
----------- -----------
Total shareholders' equity 2,168,521 2,092,681
----------- -----------
Total liabilities and shareholders' equity $4,821,578 $4,921,349
=========== ===========
</table>
<page>
NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------------
(unaudited; amounts in thousands)
<table>
<caption>
Year Year
ended ended
2/3/07 1/28/06
----------- -----------
<s> <c> <c>
Operating Activities
Net earnings $ 677,999 $ 551,339
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of
buildings and equipment 284,520 276,328
Amortization of deferred property
incentives and other, net (36,293) (33,350)
Stock-based compensation expense 37,362 13,285
Deferred income taxes, net (58,274) (11,238)
Tax benefit of stock-based payments 43,552 41,092
Excess tax benefit from stock-based payments (38,293) -
Provision for bad debt expense 17,064 20,918
Change in operating assets and liabilities:
Accounts receivable (61,301) (15,140)
Investment in asset backed securities 127,984 (135,790)
Merchandise inventories (38,649) (20,804)
Prepaid expenses (4,723) (1,035)
Other assets (7,661) (3,473)
Accounts payable 84,291 31,721
Accrued salaries, wages and related benefits 48,719 (11,284)
Other current liabilities 23,533 38,755
Income taxes payable (5,522) (33,877)
Deferred property incentives 30,723 49,480
Other liabilities 17,334 19,305
----------- -----------
Net cash provided by operating activities 1,142,365 776,232
----------- -----------
Investing Activities
Capital expenditures (264,437) (271,659)
Proceeds from sale of assets 224 107
Purchases of short-term investments (109,550) (542,925)
Sales of short-term investments 163,550 530,750
Other, net (8,067) (8,366)
----------- -----------
Net cash used in investing activities (218,280) (292,093)
----------- -----------
Financing Activities
Principal payments on long-term debt (307,559) (101,047)
(Decrease) increase in cash book overdrafts (50,853) 4,946
Proceeds from exercise of stock options 50,900 73,023
Proceeds from employee stock purchase plan 16,300 15,600
Excess tax benefit from stock-based payments 38,293 -
Cash dividends paid (110,158) (87,196)
Repurchase of common stock (621,527) (287,080)
Other, net 422 (352)
----------- -----------
Net cash used in financing activities (984,182) (382,106)
----------- -----------
Net (decrease) increase in cash and cash equivalents (60,097) 102,033
Cash and cash equivalents at beginning of year 462,656 360,623
----------- -----------
Cash and cash equivalents at end of year $ 402,559 $ 462,656
=========== ===========
</table>