Nordstrom 2008 Annual Report Download - page 18

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18
Selling, General and Administrative Expenses
Fiscal year 2008 2007 2006
Selling, general and administrative expenses $2,111 $2,183 $2,205
Selling, general and administrative rate1 25.5% 24.7% 25.8%
1Selling, general and administrative rate is calculated as selling, general and administrative expenses for our Retail Stores, Direct and Other segments as a percentage of net sales.
2008 VS 2007 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Our selling, general and administrative expenses decreased $72 due to lower variable expenses as well as costs savings resulting from our focus on
controlling fixed expenses, partially offset by the additional expenses related to our new stores. During 2008, we opened eight new full-line stores and
six new Rack stores, which contributed $72 of additional expenses.
Our selling, general and administrative expenses as a percentage of net sales increased 79 basis points. The increase as a percentage of net sales was
due to the fixed nature of many of our selling, general and administrative expenses and the impact of declining sales.
2007 VS 2006 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were relatively flat in 2007 compared with 2006. The decrease in selling, general and administrative
expenses as a percentage of net sales was primarily due to decreases in our incentive costs tied to company performance.
2009 FORECAST OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
In 2009, our selling, general and administrative dollars are expected to decrease $85 to $175, dependent on our sales performance in 2009. We
anticipate our variable expense model to continue to adjust to sales trends. Additionally, continuing to manage headcount to our business, as well as
targeted reductions in merit-based salary awards, discretionary spending and marketing and technology will reduce our fixed expenses. We expect $42
of additional selling, general and administrative expenses from new stores, which will partially offset the reduction in fixed and variable expenses.
We expect our selling, general and administrative expenses as a percentage of net sales to be slightly higher in 2009 compared with 2008, due to the
fixed nature of many of these expenses in relation to our expected decline in net sales.
Gain on Sale of Façonnable
During the third quarter of 2007, we completed the sale of the Façonnable business in exchange for cash of $216, net of transaction costs, and realized
a gain on sale of $34. The impact to reported earnings per diluted share for the year was $0.09, net of tax of $13.