Nordstrom, Inc. (JWN)
Q2 2010 Earnings Call
August 12, 2010 4:45 pm ET
Rob Campbell - Treasurer and VP of IR
Blake Nordstrom - President
Mike Koppel - EVP and CFO
Deborah Weinswig - Citigroup
Lorraine Hutchinson - Bank of America
Edward Yruma - Keybanc
Charles Grom - JPMorgan
Jennifer Black - Jennifer Black & Associates
Adrianne Shapira - Goldman Sachs
Neely Tamminga - Piper Jaffray
Wayne Hood - BMO Capital
Richard Jaffe - Stifel Nicolaus
Bob Drbul - Barclays
Erika Maschmeyer - Robert W. Baird
Previous Statements by JWN
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Hello and welcome to the Nordstrom 2010 second quarter conference call. (Operator Instructions) I will now introduce Rob Campbell, Treasurer and Vice President of Investor Relations for Nordstrom.
Good afternoon, everyone, and thank you for joining us. Today's earnings call will last approximately 45 minutes and will include about 30 minutes for your questions. As a reminder, all forward-looking statements on this call are subject to risks and uncertainties that could cause the company's actual results to differ materially from the expectations and assumptions discussed due to a variety of factors that affect the company, including the risks specified in the company's most recently filed Forms 10-Q and 10-K.
Participating in today's call are Blake Nordstrom, President of Nordstrom, Inc.; and Mike Koppel, Executive Vice President and Chief Financial Officer, who will discuss the company's second quarter 2010 performance and outlook for the remainder of 2010. And now, I will turn the call over to Blake.
Thanks, Rob, and good afternoon, everyone. I wanted to let you know that both Peter and Erik Nordstrom have previous commitments that prevent them from being on this call today. So Mike and I will do our best in our remarks and in the Q&A section to address any questions you may have at this juncture.
On behalf of our team, we feel we had a solid second quarter and the first half of the year has exceeded our expectations. We're particularly encouraged by our sales results and how the customer is responding to our merchandize and services. Our merchants continue to strive, to have an offering that is compelling with fresh fashionable goods, while also striving to provide a seamless multi-channel shop in experience.
July typically represents the second highest sales month of the year, reflecting the impact of the anniversary sale, it was a great event overall. Throughout the event we offered a quality mix of merchandize with strong brand names that attracted prices that resonated with our customers.
We also benefited from having a shared inventory platform for both our full-line and direct channels, including having more anniversary sale items in our direct fulfillment center, which allowed us to better fulfill customer demand. This helped us achieve an anniversary event multi-channel same-store sales increase of 9%.
For sometime now, we worked hard to maintain strong disciplines in both inventory management and SG&A. Some of you may recall that last year at this time, we found ourselves slightly below our plans on inventory, and we were chasing a few things.
As the first half of the year progressed, our merchants made some adjustments to their inventory plans for the anniversary sale that in aggregate was closer to our peak performance from 2007. So, though we had a very good performance with a 9% comp store gain, our actual inventory came in a little higher. We've been very forthcoming about how critical the content, balance and quantity of our inventory is to our bottomline results. While we continue to be very disciplined with our overall inventory management, we do recognize there are some pockets that need some adjustments. We were able to address this very quickly.
On the expense side of the business, Mike will give you some more detailed information in his comments. I would note that at the beginning of the year, we felt it prudent to budget a slightly higher expense level for the year to address some initiatives that we felt were important with our business and our customers.
At the beginning of the year, we gave you our year-end guidance, and we still felt good about meeting or beating those plans. Obviously, one of the big questions is the economy and the overall say of the customer. From our point of view, we have not seen any change throughout this year, nor do we expect in the foreseeable future a change upward or downward with our customers.
We're fully prepared to continue to operate in that market and feel good about the strengths within our portfolio to take advantage of those opportunities. We've often shared with you, how our customers are choosing those establishments that provide an efficient seamless multi-channel experience. For over five years now, we've been behind the scenes investing capital and people towards this.
The anniversary sale in the first half of the year, are reflective of our ability to respond to the customer in that manner, and their appreciation of this functionality. We're serving the customer in more ways as a result of our one view of inventory and able to say, "Yes," more often to the customer. By no means how we arrived or exhausted, what needs to be done.
As a matter of fact, we're even more committed to pursuing those initiatives that will continue to allow our company to operate as the customer expects from us. We're learning everyday new rhythms, approaches and where we should be focusing our resources to best execute. It's an exciting part of the business.
I want to emphasize again on behalf of our team, how encouraged we are. But mindful of the economy, our customers and the challenges we face.