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Nordstrom Conference Call Highlights

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Nordstrom (NYSE: JWN) reported its third quarter earnings on Thursday. Shares of the company are up 1 percent.

Below are some key highlights from its conference call.

Performance Metrics and Strategies:

• For the past several quarters, we've communicated that we are focused on a customer strategy, which we think is critical to our business in delivering a superior customer experience.
• This strategy provides clarity as we address allocation of our resources, both capital and people to serve our customers in the manner they expect from us.
• This focus has positioned us to engage with the customer across multiple channels in full price, off-price, stores and online.
• Most importantly, we know the customer views us simply as Nordstrom.
• Customers increasingly value speed, convenience, and personalization.
• We're focused to create synergies across our business through service and experience, product, customer acquisition and retention and company-wide customer capabilities.
• We had a number of new store openings this quarter, including three full line stores inclusive of a second store in Houston, Texas and our first store in Jacksonville, Florida.
• We also entered Canada in Calgary on September 19.
• We would like to call out the terrific job that our team led by Karen McKibbin, President of our Canada division has done leading up to our opening.
• For the past couple of years, they have been working behind the scenes to address the unique challenges of crossing the border with supply chain, inventory, loyalty, talent, systems and other material aspects of the business.
• The warm reception we've received from the customers in Calgary is encouraging.
• We're also pleased with the store's performance, which has significantly exceeded expectations.
• We believe we're going in the right direction and in a good position to open our second store on March 6, 2015 in Ottawa.
• In total, as you know, we're committed to six stores in Canada with Vancouver following Ottawa, and then three in Toronto.
• Also during the quarter, the Rack opened 16 stores for a total of 27 stores for the year.
• Next, as we discussed in the August call, we're excited about the acquisition of Trunk Club, which closed in late August.
• Trunk Club offers a differentiated way in serving customers on their terms to an experience that is personalized, relevant and convenient.
• This partnership clearly aligns with our strategic priorities to increase relevance with customers and strengthen our capabilities.
• The business is on track with its growth plans, which include a fifth showroom that will open on December 1 in Manhattan.
• We generated a top-line increase of 8.9% during the quarter.
• Our comparable sales increase of 3.9% was generally consistent with the trends we've experienced over the last year or two.
• In terms of our inventory, we've been making investments to support store and online growth throughout the year.
• That said, we ended the quarter with approximately 2% of our inventory that was unplanned which was attributable to the Rack.
• Though there are numerous factors that contributed to this, the simple fact is we bought more than we should have.
• We're still committed to meeting our year-end plans, and we're confident we can manage this appropriately.

Financial Metrics:

• Earnings per diluted share of $0.73 were in line with our expectations, reflecting sales trends that have been generally consistent throughout the year.
• Our quarterly results included a $0.04 dilutive impact related to the acquisition of Trunk Club.
• The multiple elements of our growth strategy contributed to our top-line increase of 8.9%, which aligns with our long-term goal of high single digit sales growth.
• Comparable sales increased 3.9% driven by our full price business, which reflected continued momentum in online sales and a slight improvement in full line stores.
• Moving to the Rack, total sales grew 15%, reflecting 27 store openings during the year.
• Comparable sales increased 1.7%, down from its year-to-date increase of 4%.

Guidance:

• Our earnings per diluted share outlook is $3.70 to $3.75, compared with the prior outlook of $3.80 to $3.90.
• Comparable sales are expected to increase roughly 3.5%, compared with an increase of 3% to 4% from the prior outlook, which is generally consistent with our year-to-date trend.
• In closing, we are on track with executing our customer strategy, which we believe will drive long-term profitable growth and deliver top-quartile total shareholder return.

Posted-In: conference callEarnings News Guidance

 

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