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Nordstrom, Inc. and subsidiaries 7
EMPLOYMENT AND DISCRIMINATION LAWS
State and federal employment and discrimination laws and the related case law continue to evolve, making ongoing compliance in this area a
challenge. Failure to comply with these laws may result in damage to our reputation, legal and settlement costs, disruption of our business, and loss
of customers and employees, which would result in a loss of net sales and increased employment costs, low employee morale and attendant harm to
our business and results of operations.
TECHNOLOGY STRATEGY
We make investments in information technology to sustain our competitive position. We expect to spend approximately $170 million each year
on information technology operations and system development, which is key to our growth strategy. We must monitor and choose the right
investments and implement them at the right pace. Targeting the wrong opportunities, failing to make the best investment, or making an investment
commitment significantly above or below the requirements of the business opportunity may result in the loss of our competitive position. In addition,
an inadequate investment in maintaining our current systems may result in a loss of system functionality and increased future costs to bring our
systems up to date.
We may implement too much technology, or change too fast, which could result in failure to adopt the new technology if the business is not ready or
capable of accepting it. Excessive technological change affects the effectiveness of adoption, and could adversely affect the realization of benefits
from the technology. However, not implementing enough technology could compromise our competitive position.
REGULATORY COMPLIANCE
Our policies and procedures are designed to comply with all applicable laws and regulations, including those imposed by the SEC, NYSE, the banking
industry, and foreign countries. Additional legal and regulatory requirements such as the Sarbanes-Oxley Act have increased the complexity
of the regulatory environment. In addition, foreign laws may conflict with domestic laws. Failure to comply with the various regulations may
result in damage to our reputation, civil and criminal liability, fines and penalties, increased cost of regulatory compliance, and restatements
of financial statements.
ANTI-TAKEOVER PROVISIONS
We are incorporated in the state of Washington and subject to Washington state law. Some provisions of Washington state law could interfere with
or restrict takeover bids or other change in control events affecting us. For example, one statutory provision prohibits us, except under specified
circumstances, from engaging in any significant business transaction with any shareholder who owns 10% or more of our common stock (which
shareholder, under the statute, would be considered an “acquiring person”) for a period of five years following the time that such shareholder
became an acquiring person.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
The following table summarizes the number of retail stores owned or leased by us, and the percentage of total store square footage represented
by each listed category at February 3, 2007:
Number of Stores
% of total store
square footage
Owned stores
32
25.3%
Owned on leased land
45
43.1%
Leased stores
111
30.1%
Partly owned and partly leased
3
1.5%
Total
191
100.0%
We also own six merchandise distribution centers located in Portland, Oregon; Dubuque, Iowa; Ontario, California; Newark, California; Upper Marlboro,
Maryland; and Gainesville, Florida, which are utilized by the Retail Stores segment. The Direct segment utilizes one fulfillment center in Cedar Rapids,
Iowa, which is owned on leased land. Our administrative offices in Seattle, Washington are a combination of leased and owned space. For one of our
corporate office buildings in Seattle, we own a 49% interest in a limited partnership which constructed the office building in which we are the primary
tenant. During 2002, the limited partnership refinanced its construction loan obligation with a mortgage secured by the property. This mortgage is
included in our long-term debt and is amortized as we make rental payments to the limited partnership over the life of the mortgage. We also lease
an office building in the Denver, Colorado metropolitan area that serves as an office of Nordstrom fsb and Nordstrom Credit, Inc.