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Wednesday, February 16, 2005 - Page updated at 12:00 a.m.

Retailer toes line, reaps benefits

Seattle Times retail reporter

Nordstrom to Wall Street: Analytical rigor is "in."

The upscale retailer yesterday reported a 34.1 percent jump in its fourth-quarter profit — a 62 percent jump for the year — as it continued to refine its ability to select the right merchandise in the right quantities and the right colors.

For the 2004 fiscal year, the company improved its gross profit — the difference between what it pays for merchandise and what it charges — by 1.5 percent.

Chief Financial Officer Michael Koppel told analysts that Nordstrom has learned to take a much more balanced and disciplined approach to managing all aspects of the business, "which is allowing us to deliver more consistent financial performance."

The company earned $140 million, or $1 per share, in the fourth quarter, compared with $104.3 million, or 74 cents a share, a year ago. Sales rose 9.4 percent to $2.1 billion.

The company's earnings were reduced by $4.7 million, or 3 cents a share, because of a correction in how it accounts for leased property. Retailers from Target to Starbucks have restated earnings, or said they might have to, in response to a clarification of lease accounting rules by the U.S. Securities and Exchange Commission.

SEC staff earlier this month indicated that many companies may have understated depreciation related to improvements to their leased facilities.

Nordstrom says its earnings show it has continued to reap the benefits of its computerized inventory system.

Introduced three years ago, the system has given buyers and salespeople the information to make smarter decisions about what the store sells.

Making sure a popular trench coat is always in stock, while a slow-selling sweater is not, translates into higher sales and fewer markdowns.

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The company gave 2005 profit guidance that eclipsed analysts' expectations.

Nordstrom said it expect to earn $3.25 to $3.35 a share for the 2005 fiscal year — an increase of 16 to 20 percent.

The company's shares yesterday closed at $51.56, up 81 cents, but fell 65 cents in extended trading. Nordstrom announced its financial results after the bell.

Monica Soto Ouchi: 206-515-5632 or msoto@seattletimes.com

Nordstrom's

annual results

%
Annual 20042003CHG
Profit$393,450,000$242,841,000+62.0
Per share2.771.76+57.4
Sales7,131,388,0006,448,678,000+10.6

Copyright © 2005 The Seattle Times Company

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