Nordstrom FY14 comparable sales exceed expectations

Nordstrom registered fiscal 2014 earnings per diluted share of 3.72 dollars, in-line with the company's full-year outlook of 3.70 dollars to 3.75 dollars. During the year, the company opened three full-line stores, including its first store in Canada, and 27 Nordstrom Rack stores, launched Nordstromrack.com and acquired Trunk Club. These growth initiatives contributed to net sales growth of 7.8 percent compared with the same period last year. Comparable sales increased 4 percent in fiscal 2014, exceeding the company's full-year outlook of approximately 3.5 percent.

For the fourth quarter ended January 31, 2015, earnings per diluted share were 1.32 dollars compared with 1.37 dollars for the same quarter last year. Net sales increased 9 percent and comparable sales increased 4.7 percent compared with the same period last year. Fourth quarter net earnings were 255 million dollars compared with 268 million dollars during the same period last year. Earnings before interest and taxes were 465 million dollars, or 11.8 percent of net sales, compared with 487 million dollars, or 13.5 percent of net sales, for the same quarter last year. The Trunk Club acquisition reduced earnings before interest and taxes in the fourth quarter of 2014 by 11 million dollars.

Nordstrom comparable sales, which consist of the full-line and Nordstrom.com businesses, increased 4.5 percent. Top-performing merchandise categories included cosmetics, accessories and men's apparel. Full-line net sales increased 1.2 percent, compared with the same period in fiscal period 2013, reflecting two US store openings since the fourth quarter of fiscal 2013. Full-line comparable sales increased 0.5 percent relative to last year. The Southeast and Southwest regions were the top-performing geographic areas.

Nordstrom.com net sales increased 19 percent on top of last year's increase of 30 percent. Nordstrom Rack net sales increased 130 million dollars, or 17 percent, compared with the same period in fiscal 2013. Nordstromrack.com/HauteLook net sales increased 28 percent, on top of last year's increase of 30 percent, primarily driven by expanded merchandise selection associated with the launch of Nordstromrack.com. Gross profit, as a percentage of net sales, of 36.7 percent decreased 53 basis points compared with the same period in fiscal 2013 primarily due to increased markdowns at Nordstrom Rack.

Full year net earnings were 720 million dollars compared with 734 million dollars last year. Earnings before interest and taxes were 1,323 million dollars, or 10.1 percent of net sales, compared with 1,350 million dollars, or 11.1 percent of net sales last year. The Trunk Club acquisition reduced earnings before interest and taxes in fiscal 2014 by approximately 25 million dollars. Nordstrom comparable sales, which consist of the full-line and Nordstrom.com businesses, increased 3.6 percent compared with last year's comparable sales increase of 2.3 percent. Top-performing merchandise categories included accessories, cosmetics and men's apparel.

Nordstrom.com net sales increased 23 percent, on top of last year's increase of 30 percent, driven by expanded merchandise selection and ongoing technology investments to enhance the customer experience. This represented the fifth consecutive year of net sales growth in excess of 20 percent. Nordstrom Rack net sales increased 17 percent. Nordstrom Rack comparable sales increased 3.8 percent on top of last year's comparable sales increase of 2.7 percent. Nordstromrack.com/HauteLook net sales increased by 22 percent on top of last year's increase of 27 percent. Gross profit, as a percentage of net sales, of 35.9 percent decreased 52 basis points due to increased markdowns and Nordstrom Rack's accelerated store expansion.

In 2015, Nordstrom plans to continue to invest and build upon its foundation for achieving sustainable growth in sales, earnings and ROIC. The company expects its ongoing expansion into Canada to continue to be dilutive to earnings due to infrastructure and pre-opening costs. For fiscal 2015, the company anticipates net sales rise of 7 to 9 percent and comparable sales to increase 2 to 4 percent. Gross profit is expected to decrease 5 to 15 basis points and earnings per diluted share to be in the range of 3.65 to 3.80 dollars.