Nordstrom 2006 Annual Report Download - page 12

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We’re pleased to report that 2006 was another year of strong financial performance and exciting progress
for Nordstrom. Before we get into the highlights, we’d like to thank our customers for their continued support
and assure you that we’re dedicating all our resources to improving the shopping experience you have
with Nordstrom in the days, months and years ahead.
Across every aspect of our business, we’re gaining a more clear understanding of how to best serve our
customers. While we continue to remain true to the roots of our company, our approach to the business has
evolved. Our investments in new technology and systems over the last five years have laid the foundation for
more accurate decision making. Improved operating disciplines and cost controls have led to a higher return
on investment. And a focus on continuous improvement by our entire team is helping us enhance the customer
experience — through service and merchandise — one customer at a time.
We are incredibly proud of our salespeople, merchants and all the individuals behind the scenes who have
contributed so much to our achievements this past year. Let’s review the highlights:
• Total sales increased 10.8% to a record $8.6 billion — our fifth consecutive year
of same-store sales gains.
• Improving store productivity translated to a return on investment (ROIC) of over 20%,
and sales of $388 per square foot on a 52-week basis.
• Our Gross Profit rate was 37.5%, which topped last year’s record of 36.7%.
• Our SG&A rate (expenses as a percentage of net sales) improved for the sixth year in a row,
at 26.8%. This year our SG&A includes stock option expense.
• Our Earnings Before Taxes (EBT) exceeded $1 billion for the first time ever.
• Another milestone: due to an increase in regular price selling and improved operational efficiencies,
our EBT margin of 12.9% was a record high, exceeding last year’s record of 11.5%.
• Nordstrom stock reached its highest level in our company’s history at over $57
after adjusting for splits.
DEAR customers, employees and shareholders,