Nordstrom 2013 Annual Report Download - page 21

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Nordstrom, Inc. and subsidiaries 21
Credit Card Revenues
Fiscal year 2013 2012 2011
Finance charge revenue $244 $246 $240
Interchange — third party 86 84 82
Late fees and other revenue 44 42 41
Total Credit card revenues $374 $372 $363
Credit card revenues include finance charges, interchange fees, late fees and other revenue. Finance charges represent interest earned on
unpaid balances while interchange fees are earned from the use of Nordstrom VISA credit cards at merchants outside of Nordstrom. Late
fees are assessed when a credit card account becomes past due. We consider an account delinquent if the minimum payment is not
received by the payment due date. Credit card revenues are recorded net of estimated uncollectible finance charges and fees.
CREDIT CARD REVENUES – 2013 VS 2012
Credit card revenues were flat compared with 2012. This was due to growth in total volume that was offset by continued improvements in
cardholder payment rates.
CREDIT CARD REVENUES – 2012 VS 2011
Credit card revenues increased $9 in 2012 compared with 2011 primarily due to an extra week (the 53rd week) of revenue in 2012 as a result
of our 4-5-4 retail reporting calendar. The increase was also due to growth in total volume that was offset by continued improvements in
cardholder payment rates. Our average credit card receivable balance in 2012 was $2,076, a decrease of $29, or 1.4%, from 2011.
Credit Expenses
Fiscal year 2013 2012 2011
Operational expenses $129 $143 $127
Bad debt expense 52 42 84
Occupancy expenses 55 4
Total Credit expenses $186 $190 $215
CREDIT EXPENSES – 2013 VS 2012
Total Credit expenses decreased $4 in 2013 compared with 2012, due to lower operational and marketing expenses resulting primarily from
the conversion of our Nordstrom Rewards travel benefit into Nordstrom Notes during 2013. Bad debt expense was lower in 2012 due to the
$30 reduction of our allowance for credit losses in 2012 compared to a $5 reduction in 2013. We experienced continued improvement in our
portfolio delinquencies and write-off results during 2013, which are further discussed below.
CREDIT EXPENSES – 2012 VS 2011
Total Credit expenses decreased $25 in 2012 compared with 2011, primarily due to lower bad debt expense, partially offset by higher
operational expenses. The decrease in bad debt expense reflected continued improvement in our portfolio and overall economic trends.
Operational and marketing expenses increased primarily due to increased account acquisition expenses.
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