- Third quarter net loss was $10 million and earnings before interest and taxes (EBIT) was $55 million, or 1.6 percent of net sales, compared with net earnings of $81 million and EBIT of $155 million, or 4.8 percent of net sales, during the same period in fiscal 2015.
- Retail EBIT decreased $126 million compared with the same quarter last year due to the impairment charge of $197 million, partially offset by continued sales growth.
- Credit EBIT increased $26 million, which primarily reflected transaction costs incurred in 2015 associated with the sale of the credit card portfolio.
- Total Company net sales of $3.5 billion for the third quarter increased 7.2 percent compared with net sales of $3.2 billion during the same period in fiscal 2015. Total Company comparable sales for the third quarter increased 2.4 percent.
- In the Nordstrom brand, including U.S. and Canada full-line stores and Nordstrom.com, net sales when combined with Trunk Club, increased 2.4 percent and comparable sales increased 0.9 percent.
- Across U.S. full-line stores and Nordstrom.com, the top-performing merchandise categories were Women's Apparel and Men's Apparel. The younger customer-focused departments in Women's Apparel continued to outperform, reflecting strength in denim and collaborations with new and emerging limited distribution brands. The West was the top-performing geographic region.
- In the Nordstrom Rack brand, which consists of Nordstrom Rack stores and Nordstromrack.com/HauteLook, net sales increased 10.1 percent and comparable sales increased 3.9 percent. The East was the top-performing geographic region.
- Retail gross profit, as a percentage of net sales, of 34.8 percent increased 93 basis points compared with the same period in fiscal 2015. This reflected strong inventory execution, which resulted in net sales growth outpacing inventory growth, in addition to leverage of buying and occupancy costs.
- Selling, general and administrative expenses, as a percentage of net sales, of 29.6 percent decreased 218 basis points compared with the same period in fiscal 2015. This was primarily due to transaction costs incurred in 2015 associated with the sale of the credit card portfolio in addition to the shift in sales volume from the Anniversary Sale resulting in expense leverage. Expense performance exceeded the Company's expectations by approximately 70 basis points, reflecting ongoing progress to improve operational efficiencies.
- During the quarter ended October 29, 2016, the Company recognized approximately $10 million in tax benefits related to the resolution of certain federal income tax issues. The impact to the quarter is estimated to be $0.06 per share.
- To build on the success of the Nordstrom Rewards loyalty program, the Company expanded its program in the second quarter to enable all customers to earn benefits regardless of how they choose to pay. Through this expanded program, the Company has more than 7 million active Rewards customers in the U.S. and Canada, up over 40 percent, from approximately 5 million a year ago. Sales from Nordstrom Rewards customers represented 45 percent of third quarter sales, compared with 39 percent a year ago.
- During the nine months ended October 29, 2016, the Company repurchased 1.9 million shares of its common stock for $93 million. A total capacity of $718 million remains available under its existing share repurchase board authorization. The actual number, price, manner and timing of future share repurchases, if any, will be subject to market and economic conditions and applicable Securities and Exchange Commission ("SEC") rules.
- Return on invested capital ("ROIC") for the 12 fiscal months ended October 29, 2016 was 7.2 percent compared with 11.4 percent in the prior 12-month period. This decrease was primarily due to a 340 basis point impact from the non-cash goodwill impairment of Trunk Club. A reconciliation of this non-GAAP financial measure to the closest GAAP measure is included below. Additionally, the impact of the impairment on ROIC is quantified.
|Location||Store Name||Square Footage (000's)||Timing|
|Nordstrom full-line - U.S.|
|Austin, Texas||The Domain||131||September 30|
|Nordstrom full-line - Canada|
|Toronto, Ontario||Toronto Eaton Centre||233||September 16|
|Toronto, Ontario||Yorkdale Shopping Centre||208||October 21|
|Tustin, California||The Market Place||35||August 26|
|Novi, Michigan||West Oaks||33||August 26|
|Allentown, Pennsylvania||Hamilton Crossing||36||August 26|
|Pittsburgh, Pennsylvania||The Block Northway||40||August 26|
|Honolulu, Hawaii||Waikiki Trade Center||34||September 1|
|Santa Rosa, California||Coddingtown Mall||31||September 30|
|Rosemont, Illinois||Fashion Outlets||28||September 30|
|Braintree, Massachusetts||The Marketplace at Braintree||37||September 30|
|New Orleans, Louisiana||Outlet Collection at Riverwalk||35||October 6|
|Albuquerque, New Mexico||Winrock Town Center||34||October 6|
|King of Prussia, Pennsylvania||KOP Town Center 1||36||October 6|
|La Jolla, California||The Shops at La Jolla Village||32||October 21|
|Fort Lauderdale, Florida||1600 Commons||35||October 21|
|Langhorne, Pennsylvania||Lincoln Plaza||27||October 21|
|Sacramento, California||HBA 2||35||October 27|
|Algonquin, Illinois||Algonquin Commons||31||October 27|
|Washington, D.C.||District Center||37||October 27|
|Charleston, South Carolina||Charleston, South Carolina||3||September 13|
|Lombard, Illinois||Yorktown Center||47||October 20|
|Number of stores||October 29, 2016||October 31, 2015|
|Nordstrom full-line - U.S.||118||118|
|Nordstrom full-line - Canada||5||3|
|1 Other includes Trunk Club clubhouses, Jeffrey boutiques and our Last Chance stores.|
|Gross square footage||29,783,000||28,610,000|
|Prior Outlook||Current Outlook, excluding impairment charge||Current Outlook|
|Net sales (percent)||2.5 to 4.5 increase||Approximately 3.5 increase||Approximately 3.5 increase|
|Comparable sales (percent)||1 decrease to 1 increase||Approximately flat||Approximately flat|
|Retail EBIT (percent)||10 to 15 decrease||5 to 10 decrease||30 to 35 decrease|
|Credit EBIT (million)||Approximately $80||Approximately $90||Approximately $90|
|Earnings per diluted share (excluding the impact of any future share repurchases)||$2.60 to $2.75||$2.85 to $2.95||$1.70 to $1.80|