Nordstrom - 10-K annual report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

OR

Commission file number 0-6074

Nordstrom, Inc.

1617 Sixth Avenue, Seattle, Washington 98101

Registrant’s telephone number, including area code: 206-628-2111

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES /X/     NO /   /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /   /

On March 18, 2002, 134,612,925 shares of common stock were outstanding, and the aggregate market value of those shares (based upon the closing price as reported by NYSE) held by non-affiliates was approximately $2.3 billion.

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Documents Incorporated by Reference:

Portions of Nordstrom, Inc. 2001 Annual Report to Shareholders

     (Parts I, II and IV)

Portions of Proxy Statement for 2002 Annual Meeting of Shareholders

     (Part III)

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PART I

Item 1. Business.

Nordstrom, Inc. (the “Company”) was incorporated in the State of Washington in 1946 as successor to a retail shoe business started in 1901. As of January 31, 2002, the Company operated 80 large specialty stores in Alaska, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Virginia and Washington, selling a wide selection of apparel, shoes and accessories for women, men and children.

The Company also operated 45 stores under the name “Nordstrom Rack” and one clearance store under the name “Last Chance.” The Nordstrom Rack stores purchase merchandise directly from manufacturers, as well as serving, in part, as outlets for clearance merchandise from the Company’s large specialty stores. The Nordstrom Rack stores are located in Arizona, California, Colorado, Georgia, Hawaii, Illinois, Maryland, Michigan, Minnesota, Nevada, New York, Oregon, Pennsylvania, Texas, Utah, Virginia and Washington.

The Company also operated 2 free-standing shoe stores under the name “Nordstrom” located in Hawaii and 4 Specialty Boutiques in California, New York and Texas under the name “Façonnable”. As a result of the acquisition of Façonnable, S.A. of Nice, France in October 2000, the Company also operated 24 Façonnable boutiques located primarily in Europe. Façonnable is a wholesaler and retailer of high quality men’s and women’s apparel and accessories.

In March 2002, the Company opened three large specialty stores in Durham, North Carolina; Los Angeles, California and Orem, Utah. A new Nordstrom Rack store is scheduled to open in Fresno, California in April 2002. In addition, the Company plans to open Full-line stores in Dulles, Virginia; Des Peres, Missouri; Coral Gables, Florida; Orlando, Florida and Las Vegas, Nevada as well as Nordstrom Rack stores in King of Prussia, Pennsylvania; Ontario, California and Long Beach, California during fiscal 2002.

The west coast and the east coast of the United States are the markets in which the Company has the largest presence. An economic downturn or other significant event within one of these markets may have a material effect on the Company’s operating results.

The Company purchases merchandise from many suppliers, no one of which accounted for more than 2% of 2001 net purchases. The Company believes that it is not dependent on any one supplier, and considers its relations with its suppliers to be satisfactory.

The Company has approximately 92 registered trademarks. The loss or abandonment of the Federally registered names “Nordstrom” or “Façonnable” would materially impact the business of the Company. The loss or abandonment of the Federally registered trademarks “Brass Plum”, “Caslon”, “Classiques Entier” and “Halogen” may impact the business of the Company, but not in a material manner. With the exception of the above mentioned Federally registered trademarks, the loss or abandonment of any particular trademark would have little, if any, impact on the business of the Company.

Due to the Company’s anniversary sale in July and holidays in December, sales are higher in the second and fourth quarters of the fiscal year than in the first and third quarters. During the fiscal year ended January 31, 2002, the Company regularly employed on a full or part-time basis an average of approximately 43,000 employees. Due to the seasonal nature of the Company’s business, employment increased to approximately 50,000 employees in July, 2001 and 45,000 in December, 2001.

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Item 1. Business (continued)

The Company’s business is highly competitive. Its stores compete with other national, regional and local retail establishments within its operating areas which carry similar lines of merchandise, including department stores, specialty stores, boutiques, and mail order and Internet businesses. The Company’s specific competitors vary from market to market. The Company believes the principal methods of competing in its industry include customer service, value, fashion, advertising, store location and depth of selection.

Certain other information required under Item 1 is contained within the following sections of the Company’s 2001 Annual Report to Shareholders, which sections are incorporated by reference herein from Exhibit 13.1 of this report:

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Executive Officers of the Registrant*

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Executive Officers of the Registrant* (continued)

Jammie Baugh was named Executive Vice President of Human Resources in February 2000. Prior thereto, she served as Executive Vice President and Northwest General Manager since May 1997, Executive Vice President and General Manager Southern California since 1991, and Vice President and General Manager Southern California since 1990.

Laurie M. Black was named Executive Vice President and President of Nordstrom Rack in December 2001. Prior thereto, she served as Vice President and Corporate Merchandise Manager for Specialized from May 2000 to December 2001, as Vice President and Northwest Divisional Merchandise Manager for Specialized and Accessories from April 1999 to April 2000, and as Vice President and Northwest/Southwest Divisional Merchandise Manager for Specialized from February 1997 to March 1999. Prior thereto Ms. Black held various merchandise management positions within the Company since 1988.

Mark S. Brashear was named Executive Vice President and President of Façonnable in December 2001. Prior thereto, he served as Executive Vice President and Southwest General Manager of the Full-line Store Group from February 2001 to December 2001, and as Division Vice President and Strategic Planning Manager of the Southwest Business Unit from April 1999 to February 2001. Mr. Brashear has been responsible for strategic planning since February 1998, when he was named Strategic Planning Manager for California and the Southwest. Prior thereto, Mr. Brashear held various store management positions with the Company.

Dale Cameron was named Executive Vice President and Corporate Merchandise Manager, Cosmetics, in February 1998. Prior thereto, she served as Vice President, and Corporate Merchandise Manager, Cosmetics and Gifts since March 1985.

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Executive Officers of the Registrant* (continued)

Robert E. Campbell was named Vice President of Strategy and Planning and Treasurer in May 1999. Prior thereto, he was involved with corporate strategy and planning and was responsible for the Company’s investor relations function since March 1998, and served as Manager of Financial Analysis since February 1997. Prior to joining Nordstrom Inc., Mr. Campbell served in a number of financial positions with restaurant and retail companies based on the West Coast.

Linda Toschi Finn was named Executive Vice President of Marketing in September 2000. She was promoted to Vice President and Marketing Director for the Full-line Stores Group in October 1999. Ms. Finn has been responsible for the development of the Company’s marketing strategies since February 1998 when she was named Vice President of Sales Promotion. Prior thereto, she held various management positions with the Company in the areas of corporate advertising and sales promotion.

Kevin T. Knight has been an Executive Vice President of Nordstrom, Inc. since September 2000, and also serves as Chairman and Chief Executive Officer of Nordstrom fsb, President of Nordstrom Credit, Inc., and, as of February 2000, President of Nordstrom Credit Group. Prior thereto, he served as Vice President of Nordstrom, Inc. and President of Nordstrom fsb (formerly Nordstrom National Credit Bank), President of Nordstrom Credit, Inc., and General Manager of the credit business unit since April 1998. Prior to joining Nordstrom, he was Senior Vice President of Retailer Financial Services, a unit of General Electric Capital Corporation, since 1995. Prior thereto, he held various positions with General Electric since 1977.

Michael G. Koppel was named Executive Vice President and Chief Financial Officer in May 2001. Prior thereto he served as Vice President, Corporate Controller and Principal Accounting Officer from August 1999 to May 2001. Prior to joining Nordstrom, Mr. Koppel served as Chief Operating Officer of CML Group, a specialty retail holding company. From 1997 through 1998, he was Chief Financial Officer of Lids Corporation, a mall based specialty retailer, and from 1984 through 1997 he held a number of financial positions with the May Department Stores, most recently as Vice President-Controller of its Filenes division.

Llynn (Len) A. Kuntz was named Executive Vice President and Washington/Alaska Regional Manager in November 2001. Prior thereto he served as Executive Vice President and Northwest General Manager of the Full-line Stores Group from February 2001 to November 2001,as Vice President and Director of the Full-line Stores Strategy Group from May 1999 to February 2001, as Vice President and East Coast Regional Manager from February 1998 to May 1999, and as General Manager of the Northeast Region from 1995 to February 1998.

Robert J. Middlemas was named Executive Vice President and Central States Regional Manager in November 2001. Prior thereto he served as Executive Vice President and Central States General Manager from November 1997 to November 2001, and as Vice President and Central States General Manager from 1993 to November 1997.

Blake W. Nordstrom was named President of the Company in August 2000. From February 2000 until his appointment as President, he served as Executive Vice President and President of Nordstrom Rack. Prior thereto, he served as Co-President responsible for credit, community relations, operations, shoes and Nordstrom Rack business units since June 1995 and as Vice President and General Manager Washington/Alaska since 1991.

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Executive Officers of the Registrant* (continued)

Bruce A. Nordstrom was named Chairman of the Board of Directors in August 2000. He has served as a Director of the Company since 1966, and served as Co-Chairman of the Board of Directors from 1971 until 1995. Mr. Nordstrom is the grandson of the Company founder and, with his cousins John N. Nordstrom and James F. Nordstrom and his former brother-in-law John A. McMillan, he assumed leadership of the Company from the second generation in 1968.

Erik B. Nordstrom was named Executive Vice President of Full-line Stores in August 2000. Prior thereto, he served as Executive Vice President and Northwest General Manager since February 2000, as Co-President responsible for Nordstrom Product Group since June 1995 and as Store/Regional Manager - Minnesota since 1992.

Peter E. Nordstrom was named Executive Vice President and President of Full-line Stores in September 2000. Prior thereto, he served as Executive Vice President and Director of Full-line Store Merchandise Strategy for children’s apparel, cosmetics, junior apparel, lingerie, hosiery, men’s apparel and women’s active wear since February 2000, as Co-President responsible for sales promotion, human resources, and diversity affairs since June 1995, and as Regional Manager of the Orange County area since 1991.

James R. O’Neal was named Executive Vice President and President of Nordstrom Product Group in December 2001. From August 2000 until December 2001 he served as Executive Vice President and General Manager of the East Coast. Prior thereto, he served as Executive Vice President and Southwest General Manager since November 1997, as Vice President — Northern California since February 1997, as General Manager Northern California from 1995 to 1997, and as City Regional Manager from 1993 to 1995.

R. Michael Richardson was named Vice President and Chief Information Officer in February 2001. Prior thereto, he served as Chief Information Officer since September 2000. From April 2000 to September 2000 Mr. Richardson was not employed by the Company. Prior to his departure from the Company, he served as Division Vice President of Enterprise Development and Architecture since October 1998, and as IT Development Manager of the Nordstrom Product Group since October 1997. Mr. Richardson has also served as IT Development Manager for various corporate departments since 1992.

K.C. (Karen) Shaffer was named Executive Vice President and Nordstrom Rack Northwest Regional Manager in December 2001. Prior thereto she served as Executive Vice President and Nordstrom Rack General Merchandise Manager from February 2001 to December 2001, as Division Vice President and Nordstrom Rack Northwest Regional Manager from April 1999 to February 2001, and as Nordstrom Rack Northwest Regional Manager from June 1998 to April 1999. Prior thereto, Ms. Shaffer held various management positions with the Company at the department, store and regional levels.

Joel T. Stinson was named Executive Vice President and Chief Administrative Officer in September 2000. Prior thereto, he served as Vice President of Operations since May 1995 and as Corporate Operations Manager since 1993.

Delena M. Sunday was named Executive Vice President of Diversity Affairs in September 2000. Ms. Sunday has been responsible for the Company’s diversity initiatives since 1996 when she was named Director of Diversity Affairs and then promoted to Vice President of Diversity Affairs in February 1998. Prior thereto, Ms. Sunday held various management positions with the Company at the department, store and regional levels.

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Executive Officers of the Registrant* (continued)

Geevy S.K. Thomas was named Executive Vice President and South Regional Manager in November 2001. Prior thereto he served as Executive Vice President and General Merchandise Manager of Full-line Stores from February 2001 to November 2001, as Executive Vice President of Full-line Stores and Director of Merchandising Strategy from February 2000 to February 2001, as Vice President and Director of Merchandising Strategy from May 1999 to February 2000, as Vice President and Regional Manager of Orange County and Los Angeles from February 1998 to May 1999, and as General Manager of Los Angeles from February 1997 to February 1998. Prior to February 1997 Mr. Thomas held various general, regional and store management positions with the Company.

The officers are appointed annually by the Board of Directors following each year’s Annual Meeting of Shareholders. Officers serve at the discretion of the Board of Directors.

*As of January 31, 2002.

Item 2. Properties.

     The following table summarizes the number of retail stores owned or operated by the Company and the percentage of total store area represented by each listed category at January 31, 2002:

The Company also operates 7 merchandise distribution centers located throughout the U.S. which are utilized by the Retail Stores segment, six of which are owned and one of which is leased. The Catalog/Internet segment utilizes one fulfillment center which is owned on leased land. The Company owns its principal offices in Seattle, Washington, and an office building in the Denver, Colorado metropolitan area that serves as the principal offices of Nordstrom fsb and Nordstrom Credit, Inc.

Certain other information required under this item is included in the following sections of the Company’s 2001 Annual Report to Shareholders, which sections are incorporated by reference herein from Exhibit 13.1 of this report:

Item 3. Legal Proceedings.

The information required under this item is included in the following section of the Company’s 2001 Annual Report to Shareholders, which section is incorporated by reference herein from Exhibit 13.1 of this report:

Item 4. Submission of Matters to a Vote of Security Holders.

     None

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PART II

The Company’s Common Stock, without par value, is traded on the New York Stock Exchange under the symbol “JWN.” The approximate number of holders of Common Stock as of March 18, 2002 was 76,000.

Certain other information required under this item with respect to stock prices and dividends is included in the following sections of the Company’s 2001 Annual Report to Shareholders, which sections are incorporated by reference herein from Exhibit 13.1 of this report:

Item 6. Selected Financial Data.

The information required under this item is included in the following sections of the Company’s 2001 Annual Report to Shareholders, which sections are incorporated by reference herein from Exhibit 13.1 of this report:

The information required under this item is included in the following section of the Company’s 2001 Annual Report to Shareholders, which section is incorporated by reference herein from Exhibit 13.1 of this report:

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed to market risk from changes in interest rates. In seeking to minimize risk, the Company manages exposure through its regular operating and financing activities. The Company does not use financial instruments for trading or other speculative purposes and is not party to any leveraged financial instruments.

The Company manages interest rate exposure through its mix of fixed and variable rate borrowings. Short-term borrowing and investing activities generally bear interest at variable rates, but because they have maturities of three months or less, the Company believes that the risk of material loss is low, and that the carrying amount approximates fair value.

In addition, the Company has outstanding at January 31, 2002 a variable rate construction loan obligation and $300 million of 8.95% fixed-rate debt converted to variable rate through the use of an interest rate swap. The Company is currently refinancing the construction loan obligation and expects the agreement to close in April 2002 with a fixed interest rate. The interest rate swap reduces interest payments on the Company’s highest fixed-rate debt by taking advantage of the current low interest rates. A shift in future interest rates could adversely affect the amount of interest paid through this swap agreement.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk (continued)

The majority of the Company’s revenue, expense and capital expenditures are transacted in United States dollars. However, the Company periodically enters into foreign currency purchase orders for apparel and shoes denominated in Euros. The Company uses forward contracts to hedge against fluctuations in foreign currency prices. The amounts of these contracts are immaterial. The use of derivatives is limited to only those financial instruments that have been authorized by the Company’s Chief Financial Officer and approved by the Finance Committee.

In addition, the functional currency of Façonnable, S.A. of Nice, France is the Euro. Assets and liabilities of Façonnable are translated into U.S. dollars at the exchange rate prevailing at the end of the period. Income and expenses are translated into U.S. dollars at the exchange rate prevailing on the respective dates of the transactions. The effects of changes in foreign currency exchange rates are included in other comprehensive earnings.

The table below presents information about our financial instruments that are sensitive to changes in interest rates, which consist of debt obligations and interest rate swaps for the year ended January 31, 2002. For debt obligations, the table presents principal amounts, at book value, by maturity date, and related weighted average interest rates, excluding construction loan obligations. For interest rate swaps, the table presents notional amounts and weighted average interest rates by expected (contractual) maturity dates. Notional amounts are used to calculate the contractual payments to be exchanged under the contracts.

Certain other information required under this item is included in the following sections of the Company’s 2001 Annual Report to Shareholders, which sections are incorporated by reference herein from Exhibit 13.1 of this report:

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Item 8. Financial Statements and Supplementary Data.

The information required under this item is included in the following sections of the Company’s 2001 Annual Report to Shareholders, which sections are incorporated by reference herein from Exhibit 13.1 of this report:

     None

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PART III

Item 10. Directors and Executive Officers of the Registrant.

The information required under this item with respect to the Company’s Directors and compliance with Section 16(a) of the Exchange Act is included in the following sections of the Company’s Proxy Statement for its 2002 Annual Meeting of Shareholders, which sections are incorporated by reference herein and will be filed within 120 days after the end of the Company’s fiscal year:

The information required under this item with respect to the Company’s Executive Officers is incorporated by reference from Part I, Item 1 of this report under “Executive Officers of the Registrant.”

Item 11. Executive Compensation.

The information required under this item is included in the following sections of the Company’s Proxy Statement for its 2002 Annual Meeting of Shareholders, which sections are incorporated by reference herein and will be filed within 120 days after the end of the Company’s fiscal year:

Item 12. Security Ownership of Certain Beneficial Owners and Management.

The information required under this item is included in the following section of the Company’s Proxy Statement for its 2002 Annual Meeting of Shareholders, which section is incorporated by reference herein and will be filed within 120 days after the end of the Company’s fiscal year:

Item 13. Certain Relationships and Related Transactions.

The information required under this item is included in the following sections of the Company’s Proxy Statement for its 2002 Annual Meeting of Shareholders, which sections are incorporated by reference herein and will be filed within 120 days after the end of the Company’s fiscal year:

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PART IV

(a)1. Financial Statements

The following consolidated financial information and statements of Nordstrom, Inc. and its subsidiaries and the Independent Auditors’ Report are incorporated by reference herein from Exhibit 13.1 of this report:

(a)2. Financial Statement Schedules

(a)3. Exhibits

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(a)3. Exhibits (continued)

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(a)3. Exhibits (continued)

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(a)3. Exhibits (continued)

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(a)3. Exhibits (continued)

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(a)3. Exhibits (continued)

(b)  Reports on Form 8-K

No reports on Form 8-K were filed during the last quarter of the period for which this report is filed.

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: April 18, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

Date: April 18, 2002

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Exhibit 23.1

INDEPENDENT AUDITORS’ CONSENT AND REPORT ON SCHEDULE

Shareholders and Board of Directors
Nordstrom, Inc.

We consent to the incorporation by reference in Registration Statement Nos. 33-18321, 333-63403, 333-40064, 333-40066 and 333-79791 on Form S-8 and in Registration Statement Nos. 333-69281 and 333-50028 on Form S-3 of Nordstrom, Inc. of our reports dated March 25, 2002 appearing in and incorporated by reference in this Annual Report on Form 10-K of Nordstrom, Inc. and subsidiaries for the year ended January 31, 2002.

We have audited the consolidated financial statements of Nordstrom, Inc. and subsidiaries as of January 31, 2002 and 2001, and for each of the three years in the period ended January 31, 2002, and have issued our report thereon dated March 25, 2002; such financial statements and report are included in your 2001 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of Nordstrom, Inc. and subsidiaries, listed in Item 14(a)2. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/Deloitte & Touche LLP
Seattle, Washington
April 18, 2002

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NORDSTROM, INC. AND SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

(Dollars in thousands)

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NORDSTROM INC. AND SUBSIDIARIES

Exhibit Index

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