Nordstrom 2004 Annual Report Download - page 10

alesperson tailor alterations store manager operator department manager café nordstrom server chef visual merchandiser
oncierge stockperson piano player personal shopper shoeshine valet skincare specialist beauty director espresso bar
arista buyer corporate merchandise manager regional merchandiser divisional merchandise manager designer creator
vent planner web designer housekeeper salesperson tailor alterations store manager operator department manager café
ordstrom server chef visual merchandiser concierge stockperson piano player personal shopper shoeshine valet skincare
pecialist beauty director espresso bar barista buyer corporate merchandise manager regional merchandiser divisional
erchandise manager designer creator event planner web designer housekeeper salesperson tailor alterations store
anager operator department manager café nordstrom server chef visual merchandiser concierge stockperson piano player
ersonal shopper shoeshine valet skincare specialist beauty director espresso bar barista buyer corporate merchandise
anager regional merchandiser divisional merchandise manager designer creator event planner web designer housekeeper
alesperson tailor alterations store manager operator department manager café nordstrom server chef visual merchandiser
oncierge stockperson piano player personal shopper shoeshine valet skincare specialist beauty director espresso bar
arista buyer corporate merchandise manager regional merchandiser divisional merchandise manager designer creator
vent planner web designer housekeeper salesperson tailor alterations store manager operator department manager café
ordstrom server chef visual merchandiser concierge stockperson piano player personal shopper shoeshine valet skincare
pecialist beauty director espresso bar barista buyer corporate merchandise manager regional merchandiser divisional
erchandise manager designer creator event planner web designer housekeeper salesperson tailor alterations store
anager operator department manager café nordstrom server chef visual merchandiser concierge stockperson piano player
ersonal shopper shoeshine valet skincare specialist beauty director espresso bar barista buyer corporate merchandise
anager regional merchandiser divisional merchandise manager designer creator event planner web designer housekeeper
alesperson tailor alterations store manager operator department manager café nordstrom server chef visual merchandiser
oncierge stockperson piano player personal shopper shoeshine valet skincare specialist beauty director espresso bar
arista buyer corporate merchandise manager regional merchandiser divisional merchandise manager designer creator
vent planner web designer housekeeper salesperson tailor alterations store manager operator department manager café
ordstrom server chef visual merchandiser concierge stockperson piano player personal shopper shoeshine valet skincare
pecialist beauty director espresso bar barista buyer corporate merchandise manager regional merchandiser divisional
erchandise manager designer creator event planner web designer housekeeper salesperson tailor alterations store
anager operator department manager café nordstrom server chef visual merchandiser concierge stockperson piano player
ersonal shopper shoeshine valet skincare specialist beauty director espresso bar barista buyer corporate merchandise
anager regional merchandiser divisional merchandise manager designer creator event planner web designer housekeeper
alesperson tailor alterations store manager operator department manager café nordstrom server chef visual merchandiser
oncierge stockperson piano player personal shopper shoeshine valet skincare specialist beauty director espresso bar
arista buyer corporate merchandise manager regional merchandiser divisional merchandise manager designer creator
vent planner web designer housekeeper salesperson tailor alterations store manager operator department manager café
ordstrom server chef visual merchandiser concierge stockperson piano player personal shopper shoeshine valet skincare
pecialist beauty director espresso bar barista buyer corporate merchandise manager regional merchandiser divisional
erchandise manager designer creator event planner web designer housekeeper salesperson tailor alterations store
anager operator department manager café nordstrom server chef visual merchandiser concierge stockperson piano player
ersonal shopper shoeshine valet skincare specialist beauty director espresso bar barista buyer corporate merchandise
anager regional merchandiser divisional merchandise manager designer creator event planner web designer housekeeper
alesperson tailor alterations store manager operator department manager café nordstrom server chef visual merchandiser
oncierge stockperson piano player personal shopper shoeshine valet skincare specialist beauty director espresso bar
arista buyer corporate merchandise manager regional merchandiser divisional merchandise manager designer creator
vent planner web designer housekeeper salesperson tailor alterations store manager operator department manager café
ordstrom server chef visual merchandiser concierge stockperson piano player personal shopper shoeshine valet skincare
pecialist beauty director espresso bar barista buyer corporate merchandise manager regional merchandiser divisional
erchandise manager designer creator event planner web designer housekeeper salesperson tailor alterations store
anager operator department manager café nordstrom server chef visual merchandiser concierge stockperson piano player
ersonal shopper shoeshine valet skincare specialist beauty director espresso bar barista buyer corporate merchandise
anager regional merchandiser divisional merchandise manager designer creator event planner web designer housekeeper
alesperson tailor alterations store manager operator department manager café nordstrom server chef visual merchandiser
oncierge stockperson piano player personal shopper shoeshine valet skincare specialist beauty director espresso bar
arista buyer corporate merchandise manager regional merchandiser divisional merchandise manager designer creator
vent planner web designer housekeeper salesperson tailor alterations store manager operator department manager café
ordstrom server chef visual merchandiser concierge stockperson piano player personal shopper shoeshine valet skincare
pecialist beauty director espresso bar barista buyer corporate merchandise manager regional merchandiser divisional
erchandise manager designer creator event planner web designer housekeeper salesperson tailor alterations store
anager operator department manager café nordstrom server chef visual merchandiser concierge stockperson piano player
ersonal shopper shoeshine valet skincare specialist beauty director espresso bar barista buyer corporate merchandise
anager regional merchandiser divisional merchandise manager designer creator event planner web designer housekeeper
alesperson tailor alterations store manager operator department manager café nordstrom server chef visual merchandiser
oncierge stockperson piano player personal shopper shoeshine valet skincare specialist beauty director espresso bar
arista buyer corporate merchandise manager regional merchandiser divisional merchandise manager designer creator
vent planner web designer housekeeper salesperson tailor alterations store manager operator department manager café
table of contents
17 management’s discussion and analysis
26 management reports
27 auditors’ report on internal control over financial reporting
28 auditors’ report on consolidated financial statements
29 consolidated statements of earnings
30 consolidated balance sheets
31 consolidated statements of shareholders’ equity
32 consolidated statements of cash flows
33 notes to consolidated financial statements
50 eleven-year statistical summary
52 retail store facilities
54 officers of the corporation and executive team
55 board of directors and committees
56 shareholder information
management’s discussion and analysis
Management’s Discussion and Analysis
Nordstrom is a fashion specialty retailer offering a wide selection
of high-quality apparel, shoes, cosmetics and accessories for women,
men and children. Nordstrom offers classic and contemporary brand
name and private label merchandise as well as exclusive couture
designs. We offer our products through multiple retail channels
including our Full-Line Nordstrom stores, our discount Nordstrom Rack
stores, our Façonnable boutiques, our catalogs and on the Internet at
www.nordstrom.com. Our stores are primarily located throughout the
United States. In addition, our credit operations offer customers a
variety of payment products and services including our loyalty program.
STRATEGIC INITIATIVES FOR 2005
Our long-term goal is to deliver industry-leading performance.
We have two overarching initiatives in 2005 that will take us towards
that goal.
Drive top-line growth — One of our top goals is to drive and
sustain positive same-store sales into the future. Our ultimate
success in accomplishing this goal starts and ends with the experience
each customer has in our stores. We believe the foundation of that
customer experience is based upon providing superior service and
compelling products. These two key elements of our business will be
an ongoing focus for our company as we work to sustain our same-store
sales momentum.
Customers want fashion, and we strive to be a leader in the
marketplace with products and trends. One of the core elements of
what we do is give customers a reason to buy something new. We
believe this is a core strength of our merchant team, but the dynamic
nature of our business means that there will always be opportunities
in this area to improve the speed and flexibility by which we respond
to fashion trends. In addition, to maximize our inventory investment,
we will continue to develop proficiency with our existing perpetual
inventory tools.
In 2005, our service-focused initiative is to use our Personal Book
system. Personal Book is a dynamic tool that helps our people build
and strengthen customer relationships by better anticipating and
responding to customer needs. With Personal Book, our salespeople are
able to set and manage their customer follow-ups, organize and track
customer preferences and easily reference customer purchases and
contact information. The result is that our salespeople are able to tailor
our service to the needs of each customer. We are able to stay
connected with our customers and invite them back in for the new
trends, merchandise, sales and events that interest them. Overall,
Personal Book provides us with increased opportunities to exceed
expectations, build customer loyalty and drive additional sales volume.
Improve operational efficiencies — In addition to delivering solid
top-line results, we are continuing to focus on improving operational
efficiencies. We focus on managing the costs which do not impact
customer service. Our current expense initiatives focus on the areas
of logistics, information technology, and merchandising. In addition,
we expect planned system enhancements to result in additional
opportunities to streamline our processes and reduce costs over the
next few years. Our planning processes are also more rigorous,
challenging our organization to make better business decisions.
OVERVIEW
For the year we are pleased to report improved profitability for the
company and our investors, with diluted earnings per share up 57.4%
to $2.77. Our strong business performance in the latter half of 2003
and throughout 2004 generated significant increases in our operating
cash flows, which we have used to invest in our business, prepay debt
and repurchase common stock. Key highlights include:
• Total net sales were $7.1 billion, which is the first time in our
history that sales have exceeded $7.0 billion. Also, in 2004, same-store
sales increased 8.5% (see our GAAP sales reconciliation on page 21).
This was our third consecutive year with same-store sales increases
and indicates that our existing store base continues to gain
market share.
• Gross profit increased from 34.6% of sales in 2003 to 36.1% in 2004.
Continued improvement in merchandise management and sales growth
leverage on our buying and occupancy expenses were the primary
drivers. In 2004, inventory turn was 4.51, up from 4.10 in 2003.
• With our strong sales performance in 2004, management was focused
on ensuring that fixed costs were controlled and that variable costs
fluctuated at a rate consistent with the sales growth. Such disciplined
expense management resulted in significant improvement in selling,
general and administrative expense as a percentage of sales and
maximized the flow through of incremental sales to earnings.
• Pre-tax earnings as a percentage of sales increased from 6.2% in
2003 to 9.1% in 2004, demonstrating that we were able to transform
top-line growth into significant incremental earnings.
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