Nordstrom 2002 Annual Report Download - page 14

OVERVIEW
Nordstrom is a fashion specialty retailer offering a wide selection
of high-quality apparel, shoes and accessories for men, women and
children. We believe that we offer our customers an exceptional
shopping experience by providing superior service and distinctive
merchandise with an emphasis on quality and value. We also offer
our products through multiple retail channels including our full-line
stores, Nordstrom Rack stores, our catalogs and on the Internet.
Our financial performance is driven largely by our ability to generate
positive comparable store sales, successfully execute store openings,
manage inventory and control expenses. To that end, our goals for
2002 were to drive top-line growth, implement our new perpetual
inventory system and continue lowering expense levels as a percent
of sales.
During 2002, we were able to generate comparable store sales gains
of 1.4%. We are encouraged by these gains in this challenging retail
and economic environment. In recent years, our sales per square
foot have declined as we have ventured into new markets and
opened new stores. This year our sales per square foot decline
slowed. In 2002, sales per square foot declined from $321 to
$319, in spite of an 8% expansion in our retail square footage.
We substantially completed the implementation of our perpetual
inventory system, which allows us to more effectively manage
inventory. Additionally, we are implementing a new replenishment
system, which is scheduled for completion in the first quarter
of 2003.
Progress was made on controlling expenses in the current year.
In 2002, selling, general and administrative expenses as a percent
of sales were down 0.3% to 30.3%. This decrease is in addition
to the 1.0% decrease we achieved in 2001. While we have made
progress in this area, we are still focused on reaching our goal of
28.5% to 29.0% of sales in the next few years.
Our focus for 2003 is to increase top line growth through positive
comparable store sales and store openings, improve gross margin
performance through better inventory control, and further reduce
our expenses as a percent of sales.
RESULTS OF OPERATIONS:
Segment results are discussed in each of the following sections
as applicable.
Net Sales (in millions)
Sales increases and comparable store sales are shown in the table
below. Comparable stores are stores open at least one full fiscal
year at the beginning of the fiscal year.
Fiscal Year 2000 2001 2002
Net sales increase 7.4% 1.9% 6.1%
Comparable store sales:
Full-line stores 0.2% (2.6%) 0.7%
Nordstrom Rack & other 1.2% (5.9%) 7.4%
Total 0.3% (2.9%) 1.4%
management’s discussion
and analysis
12 NORDSTROM INC. AND SUBSIDIARIES
Percentage of 2002 Sales by Merchandise Category
Women’s Accessories 22%
Shoes 19%
Men’s Apparel and
Furnishings 17%
Children’s Apparel
and Accessories 4%
Women’s Apparel 35%
Other 3%
98 99 00 01 02
$6,000
$5,750
$5,500
$5,250
$5,000
$5,049 $5,149 $5,529 $5,634 $5,975
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