SEC-10K - Research Paper Example

It competes with the best fashion and luxury retailers-Saks Fifth Avenue, Bloomingdales and Lord & Taylor. Fiscal Year The company fiscal year comprises 52/53 weeks. The year ends on the Saturday closest to 31st January. The fiscal year 2012 ended on 2nd February 2013 which was a 53 week year. (Nordstrom 10-K filing report, 2013) Financial Statements The consolidated financial statements of the company include the statement of earnings which shows the revenues and expenses incurred as well as the profits made the company; balance sheet which shows the financial position of the company on a specific date; statement of shareholders’ equity which shows the changes in the equity of the company over the year; and statement of cash flows which shows the inflow and outflow of cash during the year.

(Nordstrom 10-K filing report, 2013) Sales Nordstrom Inc registered a strong sales growth of 9.6% on YOY basis in 2012. The company’s performance continued to impress the investors when the combined online and store sales per square foot reached $470 in 2012. However, the company saw its cost of goods sold increasing by 12.7% which reduced the company gross margins and signified inefficiencies in the system. The gross margin fell from 37.2% in 2011 to 26.8% in 2012. Nonetheless, the fall in margin was insignificant.

The absolute amount of gross profit increased 10.9% due to an increase in the overall sales of the company. (Nordstrom 10-K filing report, 2013) The strong sales growth was tied to the strong Loyalty Program which rewards the repeat customers as well as enhanced consumer service. The company saw an increase in almost in all categories including handbags, clothing and cosmetics. The second half of 2012 saw a significant improvement in sales owing to an increase in sales of women’s apparel. Overall, the women contributed towards 44% of the total sales of the company.

(Nordstrom 10-K filing report, 2013) Inventory Nordstrom values its inventory according to lower the cost or market value principle following the retail inventory method. According to this method, the inventory is valued using the pre-calculated cost to retail ratio and the value of ending inventory. In retail industry, reserves for obsolescence are also created based on the consumer demand, inventory trends as well as the changing environment (Nordstrom 10-K filing report, 2013) As leading fashion retail, Nordstrom lays a stress on inventory management to improve its margins; too much inventory increases costs and reduces the margins whereas too less inventory leads to shortages and dissatisfies customers and a negative effect on revenue.

Therefore, inventory management plays a pivotal role in the operations at Nordstrom Inc. (Nordstrom 10-K filing report, 2013) The Company has been investing in increased shelf space and racks in 2012 which has led to an increase in inventory by 18.5%. Further insights into the company show that the inventory turnover reduced from 5.56 to 5.37 in 2012 which signaled that the inventory remained on the shelves for 67 days in 2012 as compared to 65 days in 2011. Due to this reduced turnover, the company had more ending inventory per square foot in 2012 equivalent to $53.

8 as compared $46.4 in 2011. (Nordstrom 10-K filing report, 2013) Accounts Receivable The management of account receivable measures the efficiency of the company’s operations and management team. The days’ sales outstanding of the company declined to 65 days in 2012 from 70 days in 2011 despite an increase in the receivables