Nordstrom 2013 Annual Report Download - page 59

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Nordstrom, Inc. and subsidiaries 59
NOTE 16: SEGMENT REPORTING
Segments
As of the end of 2013, we have two reportable segments: Retail and Credit. Our Retail segment includes our “Nordstrom” operating
segment, which is composed of our Nordstrom full-line stores and our online store at Nordstrom.com. Through our multi-channel initiatives,
we have integrated the operations, merchandising and technology of our Nordstrom full-line and online stores, consistent with our customers’
expectations of a seamless shopping experience, regardless of channel. Our internal reporting to our president, who is our chief operating
decision maker, is consistent with these multi-channel initiatives. We aggregate our Nordstrom Rack operating segment into the Retail
reporting segment, based on similar economic and other qualitative characteristics. Additionally, we include HauteLook and Jeffrey in the
Retail reporting segment.
Through our Credit segment, we provide our customers with a variety of payment products and services, including a Nordstrom private label
card, two Nordstrom VISA credit cards and a debit card for Nordstrom purchases. Our credit and debit card products also include a loyalty
program that provides benefits to our cardholders based on their level of spending.
Amounts in the Corporate/Other column include unallocated corporate expenses and assets, our Canadian operations, sales return reserve,
inter-segment eliminations and other adjustments to segment results necessary for the presentation of consolidated financial results in
accordance with generally accepted accounting principles.
Reclassification
As discussed in Note 1: Nature of Operations and Summary of Significant Accounting Policies, beginning in the first quarter of 2013, we
reclassified amounts in our financial statements to better reflect the way we view and measure our business. As we continue to execute our
long-term growth strategy and make investments across operating segments, aligning expenses with the associated benefits enhances our
ability to evaluate segment performance. Historical results were also reclassified to match the current period presentation. These
reclassifications did not impact net earnings, earnings per share, financial position or cash flows.
We previously recorded all of our Nordstrom Rewards loyalty program expenses in our Credit segment. We now allocate all of our Nordstrom
Rewards expenses to the Retail segment, including the face value of Nordstrom Notes, which customers earn based on their level of
spending and which can be redeemed for goods or services. Our Corporate/Other column now includes an adjustment to reduce the
Nordstrom Notes expense from face value to their estimated cost.
In addition, certain technology expenses we previously included in Corporate/Other are now allocated to the Retail and Credit segments.
In our Credit segment, we previously presented bad debt expense associated with finance charges and fees as part of selling, general and
administrative expenses. We reclassified these amounts and now present them as a reduction of credit card revenue. There was no impact to
Credit earnings before income taxes for this reclassification.
Accounting Policy
In general, we use the same measurements to compute earnings before income taxes for reportable segments as we do for the consolidated
company. However, redemptions of our Nordstrom Notes are included in net sales for our Retail segment. The sales amount in our
Corporate/Other column includes an entry to eliminate these transactions from our consolidated net sales. The related Nordstrom Notes
expenses are included in our Retail segment at face value. Our Corporate/Other column includes an adjustment to reduce the Nordstrom
Notes expense from face value to their estimated cost. In addition our sales return reserve and other corporate adjustments are recorded in
the Corporate/Other column. Other than as described above, the accounting policies of the operating segments are the same as those
described in Note 1: Nature of Operations and Summary of Significant Accounting Policies.
Table of Contents
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts