Nordstrom Reports Record Earnings in 1998; Earnings Per Share Up 17.5%

Business Wire, Feb 22, 1999

SEATTLE--(BUSINESS WIRE)--Feb. 22, 1999--Nordstrom, Inc. (Nasdaq:NOBE) today reported diluted earnings per share of $1.41 for its 1998 fiscal year (ended January 31, 1999), an increase of 17.5 percent over $1.20 in 1997.

Net income rose 11.0 percent to $207 million in 1998, and sales totaled $5.0 billion, up 3.6 percent from $4.9 billion a year ago. Fiscal year 1998 earnings were reduced by two cents per share of non-recurring store closing costs incurred in the fourth quarter.

"1998 was a record earnings year for Nordstrom," said chairman and chief executive officer John Whitacre. "We're delighted with the progress we made, particularly in bringing inventory levels more in line with sales volumes, leading to a substantial improvement in gross margin." As of year end, total inventory at cost declined more than nine percent from last year. Gross margin increased 1.40 percentage points to 33.5 percent of sales in 1998.

Of the annual sales, 5.2 percent was attributable to new stores and 1.0 percent to the catalog division, offset by a 2.6 percent decline in existing stores.

"Although comparable store sales declined, margins expanded and costs were better controlled," Whitacre commented. "We are well positioned to focus on achieving our long-term aspiration of sustained, peer-group-leading sales and profit growth."

In 1998 the company opened three new full-line stores: Perimeter Mall, in Atlanta, Ga; Oak Park Mall, in Overland Park, Kan.; and Fashion Square, in Scottsdale, Ariz. It also added Nordstrom Rack stores in Beaverton, Ore.; Bloomington, Minn.; San Jose, Calif.; and Littleton, Colo. Additionally, the company relocated its hometown store in Seattle, Wash., achieving the highest opening-day sales volume in the company's history, and expanded square footage in a full-line store in San Diego, Calif.

For the 1998 fourth quarter, Nordstrom reported net earnings of $67 million and diluted earnings per share of 47 cents, up 12.5 percent and 23.7 percent, respectively, over prior year results. Total sales of $1.4 billion decreased 0.6 percent and comparable store sales declined 5.4 percent.

"We are extremely pleased with our fourth quarter," Whitacre said. "We are neither surprised nor satisfied with the sales performance. Our effort to better match inventory levels with sales volumes has impacted sales growth. However, this allows us to move forward with a more appropriate mix of merchandise."

In 1998, the company repurchased a total of 11.2 million shares at a cost of $346 million. The company has remaining share repurchase authorization of approximately $320 million.

In 1999, the company plans to add full-line stores in Norfolk, Va.; Columbia, Md.; Providence, R.I.; and Mission Viejo, Calif. It also will replace a full-line store in Spokane, Wash.. On February 12, a Nordstrom Rack store opened in Sacramento, Calif. The company also will open a Nordstrom Rack store in Brea, Calif., and will relocate a Nordstrom Rack store in Lynnwood, Wash.

Nordstrom, Inc. (Nasdaq:NOBE) is a fashion specialty retailer with 98 stores located in 22 states, including 67 full-line stores, 25 Nordstrom Racks, three Faconnable boutiques, two free-standing shoe stores and one clearance store. It also offers two direct sales catalogs -- Nordstrom, The Catalog and Nordstrom 2nd Nature -- and has an internet presence at http://www.nordstrom.com. Total square footage for the company is 13,647,000.

Certain statements contained in this news release contain "forward-looking" information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties, including anticipated store openings and distribution channels, planned capital expenditures and trends in company operations. Actual future results and trends may differ materially depending upon a variety of factors, including but not limited to, the company's ability to predict fashion trends, consumer apparel buying patterns, the company's ability to control costs and expenses, weather conditions and other hazards of nature such as earthquakes and floods, trends in personal bankruptcies and bad debt write-offs, employee relations, the company's ability to continue its expansion plans and the impact of economic and competitive market forces.

Our SEC reports may contain other information on these and other factors which could affect our financial results and cause actual results to differ from any forward-looking information we may provide. -0-

NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(amounts in thousands except per share)
(unaudited)
                         3 Months                3 Months
                          Ended      Pct. of       Ended     Pct. of
                         1/31/99      Sales       1/31/98     Sales
                        ---------    -------    ----------   -------
Net Sales              $1,446,042    100.00%    $1,454,748   100.00%

Expenses:
 Cost of sales
  and related
  buying and
  occupancy               958,302     66.27%     1,000,866    68.80%

Selling, general and
   administrative         388,262     26.85%      372,086     25.58%

 Interest, net             13,090       .91%        10,678      .73%

 Service charge income
   and other, net         (22,261)    (1.54%)      (26,415)   (1.81%)

Total costs & expenses  1,337,393     92.49%     1,357,215    93.30%

Earnings before
 income taxes             108,649      7.51%        97,533     6.70%

Income taxes (as a
 percentage of
 EBIT )                    42,100     38.75%        38,400    39.37%

Net earnings            $  66,549      4.60%       $59,133     4.07%

Basic earnings
 per share              $     .47                  $   .38

Diluted earnings
 per share              $     .47                  $   .38

Average number
 of shares                141,876                  154,228

Average number of
 diluted shares           142,646                  154,768

SALES RESULTS
                       Nov. `98    Dec. `98   Jan. '99    Qtr   YTD
                       --------    --------   --------    ---   ----
Comparable stores       -5.7%       -5.5%       -4.6%   -5.4%  -2.6%

New stores & catalog     5.2%        4.4%        5.0%    4.8%   6.2%

Total stores            -0.5%       -1.1%        0.4%   -0.6%   3.6%


NORDSTROM, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(amounts in thousands except per share)
(unaudited)
                       Year                      Year
                      Ended         Pct. of      Ended      Pct. of
                     1/31/99         Sales      1/31/98      Sales
                    --------        -------    ---------    -------
Net Sales          $5,027,890       100.00%   $4,851,624    100.00%

Expenses:
 Cost of sales
 and related
 buying and
 occupancy          3,344,945        66.53%    3,295,813     67.93%

 Selling,
  general and
  administrative    1,405,270        27.95%    1,322,929     27.27%

 Interest, net         47,091          .93%       34,250       .71%

 Service charge
  income and
  other, net         (107,139)       (2.13%)    (108,581)     (2.24%)

Total costs
  & expenses        4,690,167        93.28%    4,544,411      93.67%

Earnings before
  income taxes        337,723         6.72%      307,213       6.33%

Income taxes
 (as a percentage
  of EBIT )           131,000        38.79%      121,000      39.39%

Net earnings         $206,723         4.11%     $186,213       3.84%

Basic earnings
 per share              $1.41                      $1.20

Diluted earnings
 per share              $1.41                      $1.20

Average number
 of shares            146,241                    154,973

Average number of
 diluted shares       146,858                    155,350