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NORDSTROM, INC. Nicole Conte ACG2021- Sec. 004

NORDSTROM, INC. Nicole Conte ACG2021- Sec. 004. Executive Summary.

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NORDSTROM, INC. Nicole Conte ACG2021- Sec. 004

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  1. NORDSTROM, INC.Nicole ConteACG2021- Sec. 004

  2. Executive Summary Nordstrom's had a huge growth increase this past year. Nordstrom's is a very reputable and well known corporation and with the statistics they are showing from previous years, we see how well the company works to increase sales as well as having a great growth strategy. This is a great investment and we hope to see future potential growth just as we have seen recently. www.nordstroms.com

  3. Introduction • Phyllis J. Campbell, President and CEO • 1617 Sixth Avenue Seattle, Washington 98101 • Derived revenue from sales of high quality apparel, shoes, cosmetics and accessories including their Full-Line and Rack stores • Nordstrom’s sells nationwide as well as worldwide to foreign countries : 156 stores in 27 states as well as 32 international boutiques in Belgian, France and Portugal

  4. Audit Report • Deloitte & Touche LLP. • Seattle Washington Deloitte & Touche LLP are Nordstrom’s independent registered and public accounting firm and have maintained their financial statement schedule of Nordstrom, Inc. and “management’s report of the effectiveness of internal control over financial reporting for the year ended January 28, 2006.”

  5. Stock Market Information • Average price per share - $21.71 • 12 month trading range- $13.59-$21.71 • Cash dividends paid per share of common stock outstanding - $ 0.32 • Earnings per share - $2.03 • Dividend yield- 1.7%

  6. Industry Situation & Company Plans • In 2007, Nordstrom's, Inc. has plans to open four more full-line stores. By offering private labeled Nordstrom’s VISA credit cards and a debit card for Nordstrom’s purchases only that comes with a rewards program, through this shopping based loyalty program including merchandise gift certificates, they continue to increase visits and spending. They also order in merchandise from a wide variety of high- quality suppliers to ensure that they please each customers desire. Through wonderful customer service, product quality, environment, fashion, and store locations as well as depth, Nordstrom’s aims to please its customers and has shown this through their financials.

  7. Income Statement The format is most like a multi step format.

  8. Balance Sheet There is an increase in both assets and liabilities but a much higher increase in the amount of assets they have obtained.

  9. Statement of Cash Flows • Net cash provided by operating activities is greater than the net income for the past two years by $224,893 in 2005 and by $212,896 in 2004 • Nordstrom’s has had two principal investing activities: capital expenditures & short-term investments– they are busy constructing new stores, remodeling old ones, and other capital projects • A primary source of financing in by repurchasing shares of their common stock with their excess in cash flow • Cash has increased from 606.3 to 776.3 million, an increase of 169.9 million.

  10. Accounting Policies • Inventory is stated at the lower of cost or market using the retail inventory method. • Nordstrom’s recognizes revenues net of estimated returns and excluding sales tax. • Topics of the notes to the financial statements: -Goodwill -Retirement Benefits -Income Taxes -Long-term Debt

  11. Financial Analysis & Liquidity Ratios • Working Capital= $1,250,845/ $1,231,292 • Current Ratio= 1.8%/ 1.9% • Receivable Turnover= 12 times/ 11 times • Average Days’ Sales Uncollected= 30 days/ 35 days • Inventory Turnover= 4.84/ 5.23 • Average Days’ Inventory on Hand= 79.2/ 72.3

  12. Financial Analysis & Profitability Ratios Profit Margin= 7.1%/ 5.5% Asset Turnover= 1.6 times/ 2.2 times Return on Assets= 11%/8.5% Return on Equity=26%/ 22%

  13. Financial Analysis Solvency Ratio • Debt to equity = 1.35 / 1.57 • Total liabilities are one and a half times as large as stockholder’s equity, meaning creditors are more interested, because there is that much more debt.

  14. Part E. Financial AnalysisMarket Strength Ratios • Price earnings per share = $2.03 / $2.12 • Dividend yield = 1.7% / 1.8% • In 2004, the higher price earnings per share meant the stock was much riskier for stockholders to own/ purchase. • The dividend yield decreased due to an increased in market price.

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