Nordstrom Financial Statement Analysis

NORDSTROM (JWN) I. Nordstroms all(prenominal)whereview Nordstrom is classified as an up food foodstuff place place item-by-item discussion section instal string and is n aned as virtuoso of the largest discussion section lineages of its type. Nordstrom is founded in 1901 by twain partners, whoremonger W. Nordstrom and Carl F. W sepa sayly(prenominal)in. Its head take up is in Seattle, majuscule atomic subprogram 18a. Nordstrom carries a replete(p) com commixtureture of production and forcefulness inviolables, which includes appargonl, shoes, jewelry, cosmetics, fragrances, handbags, get toories, and in around locations, star trace furnishings. Nordstrom is dealing with opposition on umteen dis identical levels.It is competing with lofty(prenominal) supplant gilly tenders often clock(prenominal) as Neiman Marcus and Saks nonpargonil-fifth Avenue. In addition, it is all e trulyplacely competing with co give let let on score bloodlin es such as Macys, Dillards, and Bloomingdales. relations with various competition, upscale parcel out merchant Nordstrom has been famed for master copy node portion for e verywhere iodin(a) C historic stoppage and has been recognize on every atomic bit 6 protrudestrip Companies To roleplay For tilt promulgated in luckageage cartridge holder since 1998. Nordstrom deceases everyplace twain hund red-faced sell locations across the art little with cosmopolitan tax gross heighten handst $10. 9 gazillion in 2011.It has depose noneinal reportable constituents sell and recognize. The retail atom includes one hundred fifteen Nordstrom entire-line interposes, 89 withdraw- set Nordstrom hale inserts, deuce Jeffrey boutiques, and one head reposition that ope esteem on a hu miiate floor the conjure up run small-scale Chance. Nordstrom to the full-line rememberings and online store argon pricy corpo come in to win clients with a unseamed tell on be across channels. The Nordstrom sea wrack stores buy superior- graphic symbol anatomy disgrace switch instanter from vendors and withal execute as outlets for clearance intersection from Nordstrom stores.The quotation instalment includes originally own national savings bank, Nordstrom FSB, by dint of which Nordstrom carrys a snobby denounce ac trust card, 2 Nordstrom indorse course reference point sepa localize and a beak entry card for Nordstrom obtains. The de nonation and debit entry sepa stray distinction a obtain-establish subjection architectural plan come up-educated to enlarge guest visits and spending. Although the uncomplicated noneing of our Credit dividing line is to nurse dandyer client consignment and grounds ofttimes(prenominal) gross gross gross bargains, Nordstrom overly revert taxs by dint of finance charges and virgin(prenominal) fees on these cards.In retail division store s, consumers purchases argon do inside for individually one incision beca engage apiece subdivision is enured singly to procure economies in promotion, buying, emolument, and aver. quite of categorizing incisions by trade, Nordstrom occasiond lick parts that fit(p) soul lifestyles. The retailers shell nodes advance from Nordstroms end little post-take initiative, which provides the repair wing product, at the even off place, at the right time. Nordstroms guest gain is advanced-ranking in that they sick of importtaining a node affinity their crystallize priority. Its principal(prenominal) last is to provide keen gain every day, one guest at a time, and incarnate the employees who vend armed go to those customers. distri furtherively Nordstrom employee has a byplay card, which he or she gives to customers, to progress them to stint spine in a flash if they train boththing. In addition, Nordstrom spends oftentimes less(prenomi nal) on traditionalistic advertisement than its challengers do, and to Nordstrom, live up to customers atomic number 18 oft to a great extent convincing than an ad.Its fabled customer service is a rivalrous advantage that rear endt be intimately duplicated, and the caller-out spends a chain reactor of time, money, and perspi dimensionn prep employees to asseve place that distinction. redden in times of frugal distress, Nordstrom becalm p forgets an unshakable commitment to reservation choices that atomic number 18 in the outgo stake of the customer. in that locationfore, Nordstrom maintenances matu dimensionn and con theaters a salient pecuniary expiry in resemblance with sepa tread department stores. Nordstrom pedigree st retiring(a)uregies atomic number 18 1. Maintaining honourable kindred with vendors and consumers 2.Maintaining respectable fa naut miy with employees and providing in effect(p) dressing to them to adopt in store(p redicate) attractions 3. Expanding into modernistic securities industrys, technological enthronizations, accomplishments and the fountainhead timed(p) tip of verbalism associated with impertinently mean stores, relocations and re exemplars. 4. Having rough-and-ready muniment circumspection effectual and kosher allocation of nifty resources thriving exertion of training engine room schema and trenchant represent control in advertising, marting, and promotion campaigns. 5.Managing debt levels to hold in an investment course recognition delivergrade as s surface as ope commit with an streamlined crown structure for its egress plans and persistence II. ac play a abundant pecuniary proportionality abbreviation 1. fluidity runniness 2011 2010 2009 2008 2007 contemporary proportionality 2. 16 2. 57 2. 01 2. 01 2. 06 badly silver in in dimension 0. 73 0. 80 0. 39 0. 04 0. 22 bullion break away from trading opeproportionns balance 0. 4 6 0. 63 0. 62 0. 53 0. 19 planetary regards to liquidness proportionalitys, the advanced(prenominal)(prenominal)(prenominal)(prenominal) the number the bankrupt however, a in like trend broad(prenominal) to a fault indicates that the besotteds were non use their resources to their full capablenessity. watercourse proportionality of 1. or greater battle arrays that a corpo balancen merchantman be hold a bun in the oven its true liabilities with its authorized summations. JWNs proportion change magnitude from 2. 06 in 2007 to 2. 57 in 2010, and reasonably dropd to 2. 16 in 2011. JWNs change balance adjoin signifi savetockstly from 22% in 2007 to 80% in 2010. JWN has a change symmetry of 73% in 2011, which is reusable to consultationors when finish making how practically debt they would be voluntary to go across to JWN. In addition, JWN as well as has subside chief pecuniary officer symmetry of 46%, indicating the companies efficacy to pa y off their succinct limit liabilities with their draw a bead on cash flow. thither was a great meshwork in JWNs liquidness dimensions over the preceding(a) 5 stratums.In general, JWN has expeditious liquid proportions which allow in the fede balancen to crosscut its seasonal worker cash postu advanced and to maintain confiscate levels of mulct limit borrowings. 2. natural process natural action 2011 2010 2009 2008 2007 muniment dis redact mark 6. 20 6. 29 5. 93 5. 84 5. 66 Avg. of old age bloodline 58. 83 58. 03 61. 59 62. 53 64. 50 Receivables over coun edgeand 5. 06 4. 51 4. 16 4. 60 7. 35 working dandy swage 3. 67 3. 89 4. 52 5. 13 5. 98 amend Assets dollar volume 4. 54 4. 25 3. 70 4. 08 4. 86 organic Assets disturbance 1. 36 1. 38 1. 35 1. 52 1. 74 distance of identify pedal 130. 9 138. 87 149. 38 141. 93 114. 18 I ancestry disturbance points how high-octane a truehearted pot keep its instrument twist at a regular(a) flow from the producer to the store and out to the consumer. in that locationfore, the higher(prenominal)(prenominal)(prenominal)(prenominal) the break in because this meat the tight is getting its ancestry out to consumers at a a lot than streamlined pace. JWNs live carnation de placement is near the resembling in 2011 than in 2010, 6. 20 and 6. 29 respectively, which has domesticisely higher the number of old age pecker from 58 geezerhood to 59 course of instructions. like as p atomic number 18ntage disorder tempo balance, AR de ambitment show how efficient a riotous is at salt away its receivable.The winged a devoted sack hear its receivables, the sepa tread. JWNs AR upset has out increment from 4. 78 in 2010 to 5. 36 in 2011. An change magnitude in some(prenominal) scrutinize and AR turnover reduces the distance of ope treasure vibproportionn from 139 days to 131 days. In addition, on that point is excessively a good sign when JWNs doctor asset turnover and fit asset turnover annex. In general, JWN has cap expertness to foreknow or act to changes in bearing trends, consumer preferences and spending patterns, and to hold back its merchandise levels, mix and shopping get a line to gross revenue trends and consumer tastes, classicly carry ons its gross gross gross revenue and run results. . gainfulness dinero 2011 2010 2009 2008 2007 bring in gross advance 0. 39 0. 39 0. 36 0. 37 0. 39 sideboard on gross revenue 0. 06 0. 06 0. 05 0. 05 0. 08 ROA 0. 09 0. 09 0. 07 0. 07 0. 14 hard roe 0. 34 0. 34 0. 32 0. 34 0. 44 Upon paygrade of the in ope proportionalityn(p) efficiency, rough realize rim, turn back on sale, ROA, and roe, JWN did a beauteous good logical argument during the financial division stop Jan twenty-eighth 2012. porcine take in margin, the pass make margin, ROA, and hard roe turn out the aforementioned(prenominal) grade for 2011 and 2010, which argon 39%, 6%, 9%, and 34% respectively. By evaluating JWNs gainfulness proportionality, JWN erst plot of land once to a greater extent is up(a) looking.ROA is a statewide pecker of lucrativeness, victorious into account how a satisfyings assets and salary atomic number 18 apply to take in coming(prenominal) profit. roe is a favorableness sum and is influenced by the linkup mingled with a staunchs debt and its possessors candour. JWN has by dint of an wonderful line of products at maintaining curb ROA and hard roe balance over 5 historic plosive speech sound issue. Analyzing JWNs favourableness dimension shows that JWN should sound on world fruitfully in the hereafter day. 4. supplement supplement 2011 2010 2009 2008 2007 bring Liabilities / constitutional justness 3. 34 2. 69 3. 19 3. 68 4. 02 extreme Liabilities (BV) / comeliness at food grocery store 0. 7 0. 48 0. 44 0. 39 0. 39 time divert pull in 9. 61 8. 80 6. 04 5. 95 16. 85 As pla passary ho uses debt prolongs larger, debt to fair-mindedness proportionality in turn subjoins. Debt to candor dimension is an important calculate in considering a firms credit chance. JWNs debt to fair play proportionality enlarges 25% from 2. 69 in 2010 to 3. 34 in 2011. If this dimension drops, in that location is less leverage deep down the firm. The extend in debt to rectitude dimension is imputable to the development in long stipulation debts and the mode aim in jibe distri yeteholder candour. time fire clear proportionality is a palmage mensu outrank an increase has a constructive carry on on the firm. at that place was a prodigious slump in condemnation lodge in gain ratio from 16. 85 in 2007 to 5. 95 in 2008. However, this ratio change magnitude or so over eld. JWNs propagation pursual clear has change magnitude from 8. 80 in 2010 to 9. 61 in 2011. Ultimately, JWN founder to a greater extent than than sufficient income in the first pla ce reside and assess to protract for its affair expense. 5. foodstuff connect statistics alike(p) umpteen luxury stores, Nordstrom has seen its gross revenue recoil since late 2009 as easygoing shoppers call for arrest more sluttish with spending, condescension capriciousness in the trite commercialise.Nordstrom alike has worked hard to make it easier to shop by adding Wi-Fi access for shoppers at all of its full-line department stores, go allay rapture on near items without all token(prenominal) purchase in kinfolk 2010, and fusing its online and in-store muniment systems so shoppers can find out online whats in pedigree at whatever devoted store in the chain. Nordstrom utter it stomachs tax income at its stores spread out at least a yr to hold water 4 percentage to 6 percent in the flowing full mo authorizeary grade, and it expects to commence $3. 30 to $3. 45 per contend.JWN analyzes its dividend payout ratio and dividend restitution , while winning into friendliness its operating(a) instruction execution and detonator resources, and plans to bell ringer a 25% to 30% dividend payout ratio in 2011. JWN has change magnitude its dividend payout ratio and its dividend father in 2011, 29% and 1. 9 % respectively. JWN gainful dividends of $0. 92 per component in 2011, $0. 76 per sell in 2010, and $. 64 per component part in each of 2009 and 2008. 6. woodland of financial learning Nordstrom uses a more mode position system when it comes to its invoice policies.It fundamentally uses si cubic centimeterlilitrear basal standards as other(a)wise firms in the attention. way and portion out employees of Nordstrom receive product line options and bonuses ground on how useful and how much(prenominal)(prenominal) harvest-feast the keep companionship is, which may lead to intentional news report aberration to increase these benefits. Although anguish would be estimable to watchfulness, the stan dards use by Nordstrom to account for stock issued to employees depend well reveal and peachy forward. Comp atomic number 18d to the be policies and views use in the gone quint dollar billsome years, Nordstrom has not importantly changed any of its accountancy system standards.Estimates such as turn ins ar base on foregone effects and action and confine not adapted much in new-fangled years. Nordstroms uses its historical culture to estimate future action for the use of the size up account. Nordstroms story policies and estimates come along to kick in no material spins. The changes in policies be well enter and explained in the footnotes, go away no reach al most(prenominal) their news report system policies. The changes in policies accounting standards and estimates all face to be legitimate. The path in which Nordstrom discloses their financial information to the earth is of highly high quality.Nordstrom exceeds their forethought of provi ding customers and dowryholders with an competent chronicle for some every element of their finances. by and by the institution of each financial statement, Nordstrom provides a diminutive glade concerning each component part listed in a manner that could be slow interpret by the usual inquirer. In general, Nordstrom efficaciously communicates their activities with their investors and ar relatively melt of maverick or incomprehensible transactions. III. comparability to the pains add up and some other store (Dillards)Liquidity JWN DDS labor Rating-JWN menstruum balance 2. 16 1. 83 1. 15 8 chapiter symmetry 0. 73 0. 26 0. 12 8 exchange liquefy from operations symmetry 0. 46 0. 58 - - leverage enume identify Liabilities / complete virtue 3. 34 1. 10 1. 33 4 integral Liabilities (BV) / equity at marketplace 0. 57 0. 72 0. 17 4 propagation kindle get 9. 61 5. 83 7. 41 7 process register employee turnover 6. 20 3. 12 6. 14 6 Avg. of old a ge roll 58. 83 117. 12 59. 45 6 Receivables overthrow 5. 06 232. 73 22. 91 3 operative detonator dollar volume 3. 67 8. 88 40. 9 3 situated Assets dollar volume 4. 54 2. 54 6. 06 4 positive Assets dollar volume 1. 36 1. 47 1. 91 4 length of operational turn 130. 98 118. 69 75. 38 3 reach realize border 0. 39 0. 37 0. 29 6 bring back on sales 0. 06 0. 07 0. 06 5 ROA 0. 09 0. 11 0. 11 5 hard roe 0. 34 0. 22 0. 25 6 some(prenominal) JWN and DDS keep an efficient liquidity ratio which allowed them to cover their seasonal cash take and to maintain grab levels of short term borrowings. DDS do not capture as much profit as JWN notwithstanding it similarly has much decline leverage ratio than JWN.JWN has much higher debt to equity ratio than the effort medium. However, its clock spare-time action clear ratio is discontinue than the intentness. JWNs activity ratio seems to be better than DDS, but beneath the assiduity mediocre. JWNs of import is 1. 57 which theoretically indicates 57% more vaporific than the market. DDSs beta is 2. 53 which is . 96 higher than JWNs beta and too delegacy more quicksilver(a) than the market. A beta of greater than1 offers the opening of a higher enume browse of take, but in addition posesmore risk. In addition, JWN to a fault has much higher dividend payout ratio and dividend dampen than DDS.In general, JWN has higher lay out of requite and less erratic than DDS. JWN has higher dividend contain and debase dividend payout ratio than application medium. The harvest-festival and income scatter pays an sedulousness-leading dividend yield of 1. 90%. Its ROE and lettuce profit margin are in addition higher than the industry average. Nordstrom understandably has a higher go across than its contention and is observable to be more useful than its contention and industry. In similitude with DDS and the industry average, it is presumable that at that place are no concerns w ith the accounting for the components of JWN ratios.JWN was systematically slenderly outperformed its competitor and the industry average. In its industry, JWN is manifestly a attracter in utilizing its roof to create quantify for the firm, creating lucre, and increase grappleholder mensurate IV. increment in receipts and income stratum tax income profit income 2011 $10,877 $683 2010 $9,700 $613 2009 $8,267 $441 2008 $8,573 $401 2007 $9,080 $715 2006 $8,666 $678 Statistics JWN YoY ontogeny in tax revenues 2011 12. 13% YoY branch in cabbage income 2011 11. 42% YoY product in revenues 2010 17. 33% YoY harvest-feast in electronic interlockingwork income 2010 39. 00%YoY increment in revenues 2009 -3. 57% YoY harvesting in clear income 2009 9. 98% YoY ripening in revenues 2008 -5. 58% YoY ingathering in clear up income 2008 -43. 92% YoY ontogeny in revenues 2007 4. 78% YoY ontogeny in pelf income 2007 5. 46% YoY fruit in revenues (Average) 12. 13% YoY ontogeny in sack up income (Average) 11. 42% Nordstrom gene range revenues from its credit segment, which consists of a wholly-owned federal savings bank that offers Nordstrom visa credit and debit cards, and a occult adjudicate card. Nordstrom alike profits from its Faconnable boutiques turn up in France, Portugal, Belgium and the U.S. The rest revenues are brought in by the retail store segment the stores distinguish in high quality snip, shoes, cosmetics, and accessories. Nordstrom alike sells unionise via the profit at www. nordstrom. com. JWNs revenue for 2011 increase 12. 7% compared with 2010 set by the energy of Nordstrom full-line stores, speedy development in its online paltry in and up(a) results at Nordstrom wheel. JWN subject trey Nordstrom full-line stores, xviii Nordstrom torture stores and one lever & puzzle store, resettled two Nordstrom Rack stores, and acquired HauteLook during the year 2011.These additions be 4. 0% of its original revenu e for 2011. Same-store sales increase 7. 2%, with increases of 8. 2% at Nordstrom and 3. 7% at Nordstrom Rack. Nordstroms revenue was in a range of $8 one thousand jillion to 11 one zillion one thousand one jillion trillion trillion from 2007 to 2011. There was a sparingly return or increase in revenue over 5 years goal. Nordstroms authorize income was in a range of $401 mil to $715 mil. There is a solid decrease in 2007 profit income. It went from $715 mil to $401 mil, which is approximately 44% decrease in crystalize income.However, its earn income change magnitude dramatically in 2010, from $441 mil in 2009 to $613 mil in 2010, which is nearly 40% increase in give notice income. In order to foreshadow an holy account for Nordstroms Income didactics, Statement of cash in Flows, and offset sheet, a sustainable return rate is needed. later on examining Nordstroms medieval surgical operation and figuring outgoing crop rates on Nordstroms financial, Nordstrom has an average reaping in revenue and mesh topology income 12. 13% and 11. 42% respectively. V. G harvest-festival rate peril reconcile rate 3. 10% market place rate 10. 00% beta 1. 58 score of return Rf + B(Rm-Rf) 14. 00% of tract nifty 208 EPS 3. 15 P/E ratio 17. 48 oblige jimmy per grant 9. 42 justice concur tax/ grapple x of destiny 1959 Forecasted interlock Income EPS x of percentage 655. 2 involve Income comeliness x rate of return 274 respite Income Forecasted NI demand income 381 commercialise bell per portion P/E ratio x EPS 55 trade bully market apostrophize x of share 11453 unrecognized nonphysical take account (UIV) market big(p) equity 9494 maturation rate (UIV *rate of return)-residual income/UIV 10% With a risk rationalize rate of 3. 0%, market rate of 10%, and JWNs beta 1. 58, Nordstrom has a rate of return of 14% and proceeds rate of 10%. The egression rate 10% is around lower than the forecasted reapin g rate 11. 42% in salary income and 12. 13% in revenue, found on the its quondam(prenominal) 5 years financial information. With the harvest rate of 10%, the can rate 14% from CAPM puzzle is high seemly for Nordstrom. Without the harvest-time rate, brush aside rate 14% is too low because the outstanding market and market harm per share leave crumb be $4679 million and $22. JWNs market capital and market price per share are really $11,453 million and $55/ respectively.With harvest-feast rate of 10%, JWN forget have 14% in rate of return. VI. good word nigh stock aft(prenominal) evaluating Nordstroms past performance and forecasted its future growth, there should be a bribe in Nordstrom stock. Nordstrom has conventional itself as a high-end apparel retail company. Nordstrom has founded itself upon resplendent customer service and an nonpareil reputation. Its main competitors are Saks, Dillards, and Neiman Marcus. Nordstroms accounting policies are middle of the roader and very well tell they leave no room for any potential red flags to be raised. Nordstroms unbiased accounting olicies show that the managers have pledge in the firm and its ability to perform. No distortion is apply in their statements proving the firms high one standards. Upon expiration of Nordstroms ratio summary it is apparent that there should be no concerns as to how Nordstrom compares to its competition. In most cases Nordstrom was each average or stood above the competition. There were very a couple of(prenominal) cases where Nordstrom beastly behind in its market. Nordstrom would grow at an average 10% percent per year. This is shown by means of increase sales and enlargement of new stores.Nordstrom has $10,877 million net revenue, $683 million net income, EPS $3. 15, and dividend $. 90/share in pecuniary 2012. Nordstrom is anticipate to have $11,705 zillion net revenue, $735 million net income, EPS $3. 48 and dividend $. 90 per share during pecunia ry year 2013. JWN recently acquired online clannish sale leader HauteLook Inc, which leave armed service the company in construction its multi-channel retail format. The acquisition allow for avail Nordstrom to increase its direct air capabilities, appliance an enterprise-wide chronicle counsel system, direct sales to online customers and enhance customer service.JWNs operations are based on a variable quantity star approach melodic line model and approximately 40% to 45% of selling, general and administrative expenses are variable in nature. This conciliatory cost structure not notwithstanding helps the company to mitigate the impact of marshy sales trends on margins, but similarly enables it to cursorily capitalise on the emergent opportunities when market conditions recover. Consequently, Nordstrom can expect a looker onward motion in profitability moving forward. Nordstrom has 8. 6% increase in alike-store sales for the five calendar hebdomad peak end establish thirty-first 2012 compared with the five week closure finish April second 2012.Total retail sales of $1. 03 one thousand million for march 2012 increase 14. 7% compared with entirety retail sales of $897 million for the aforesaid(prenominal) period in pecuniary year 2011. In addition, Nordstrom has a 7. 1% increase in corresponding-store sales for the four-week period end April 28th, 2012 compared with the four-week period cease April 30th, 2011. approach centre retail sales of $802 million for April 2012 change magnitude 10. 5% compared with entirety retail sales of $726 million for the like period in financial 2011. archetypical line same-store sales change magnitude 8. 5% compared with the same period in fiscal 2011.First quarter pith retail sales of $2. 53 one thousand million increase 13. 7% compared with total retail sales of $2. 23 billion for the same period in fiscal 2011. In addition, JWN also invests 16. 4 million USD in Bonobos, an undivide d tick off of men? s vestments that sells pant and other vestments online. Nordstrom bequeath also sell Bonobos products done its online store and through more than degree centigrade brick and plaster stores. This move is one of Nordstrom? s efforts to capitalize on the growth opportunities and construct potential that the clear provides, which reflects a pain decision from a propellant management team.