CAUTIONARY STATEMENT
Certain statements in this Quarterly Report on Form 10-Q contain or may suggest "forward-looking" information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties, including, but not limited to, anticipated financial outlook for the fiscal year ending February 2, 2013, anticipated annual same-store sales rate, anticipated Return on Invested Capital and trends in our operations. Such statements are based upon the current beliefs and expectations of the company's management and are subject to significant risks and uncertainties. Actual future results may differ materially from historical results or current expectations depending upon factors including, but not limited to:
• the impact of economic and market conditions and the resultant impact on consumer spending patterns,

• our ability to respond to the business environment, fashion trends and consumer preferences, including changing expectations of service and experience in stores and online,

• effective inventory management,

• successful execution of our growth strategy, including possible expansion into new markets, technological investments and acquisitions, our ability to realize the anticipated benefits from such acquisitions, and the timely completion of construction associated with newly planned stores, relocations and remodels, all of which may be impacted by the financial health of third parties,

• our ability to manage the change in our business/financial model as we increase our investment in e-commerce and our online business,

• our ability to maintain relationships with our employees and to effectively attract, develop and retain our future leaders,

• successful execution of our multi-channel strategy,

• our compliance with applicable banking and related laws and regulations impacting our ability to extend credit to our customers,

• impact of the current regulatory environment and financial system and health care reforms,

• the impact of any systems failures, cybersecurity and/or security breaches, including any security breaches that result in the theft, transfer or unauthorized disclosure of customer, employee or company information or our compliance with information security and privacy laws and regulations in the event of such an incident,

• our compliance with employment laws and regulations and other laws and regulations applicable to us, including the outcome of claims and litigation and resolution of tax matters,

• compliance with debt covenants and availability and cost of credit,

• our ability to safeguard our brand and reputation,

• successful execution of our information technology strategy,

• our ability to maintain our relationships with vendors,

• trends in personal bankruptcies and bad debt write-offs,

• changes in interest rates,

• efficient and proper allocation of our capital resources,

• weather conditions, natural disasters, health hazards or other market disruptions, or the prospects of these events and the impact on consumer spending patterns,

• disruptions in our supply chain,

• the geographic locations of our stores,

• the effectiveness of planned advertising, marketing and promotional campaigns,

• our ability to control costs and

• the timing and amounts of share repurchases by the company, if any, or any share issuances by the company, including issuances associated with option exercises or other matters.

These and other factors, including those factors described in Part I, "Item 1A. Risk Factors" in our 2011 Annual Report on Form 10-K, could affect our financial results and cause actual results to differ materially from any forward-looking information we may provide. We undertake no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.

OVERVIEW
Our first quarter results reflected continued strength across all channels, with ten consecutive quarters of total company same-store sales increases and double-digit increases in total sales. This is a result of consistent execution in our core business and our healthy financial position which gives us the flexibility to aggressively pursue growth opportunities, particularly in e-commerce. As customers' expectations of service evolve, expanded selection, speed and convenience are becoming even more important. We are accelerating our efforts to enhance the customer experience from our established foundation of multi-channel capabilities and increase our relevance with existing and new customers.

In e-commerce, we have many ongoing initiatives, including increased selection of merchandise, personalization, website enhancements and additional functionality of our mobile apps. Combined with increasing our speed of delivery and free standard shipping and returns, we are seeing the benefits reflected in the continuing strong sales growth in our Direct channel, with a 44.2% increase in the first quarter, our fastest growing channel. Last year at this time we acquired HauteLook, a leader in the online private sale marketplace. In April of this year, we announced our partnership with Bonobos, a fast-moving online retailer that has been successful in connecting and gaining relevance with a contemporary customer. With this partnership, we can learn through an up-close view of their web-driven brand while gaining access to an energetic clothing line to add to our men's assortment.

We also continue to grow through new stores, remodels and other initiatives. During the quarter, we opened one Nordstrom full-line store and four Nordstrom Rack stores, and relocated one Nordstrom Rack store. Our recent store openings also offer examples of our evolution in responding to how our customers want to shop. Although we introduced mobile devices in our stores last year, at our new Salt Lake City full-line store we provided three times the number of mobile point-of-sale devices as cash registers to help make shopping faster and more convenient. We continue to add functionality and build in new features to these devices to make them even more helpful to our customers. At our relocated downtown Seattle Nordstrom Rack store, we also increased the number of mobile point-of-sale devices, resulting in a significantly quicker check-out, which translates into a better service experience.

As we accelerate our growth in e-commerce, supported by the increased level of investments we are making in this channel, our operating model is evolving. Our overall goals to achieve high single-digit total sales growth and mid-teens Return on Invested Capital ("ROIC") are unchanged, as these measures correlate strongly with shareholder return. We believe our investments will increase our ROIC through high growth in sales dollars and earnings before interest and income taxes ("EBIT"), as opposed to EBIT margin, with an incrementally productive capital base. Even with these additional investments, in 2012 we expect to produce the highest level of EBIT results in our history, driven by strong sales.

Fashion Rewards plays an important part in building customer loyalty. Our Fashion Rewards members shop more frequently and spend more with us on average than non-members. During the quarter, we saw a favorable response from our customers to the enhancements we made to our Fashion Rewards program, with new Fashion Rewards accounts increasing by almost 50% from the first quarter of last year. Our new program gives customers more control over how and when they can earn rewards and extends more benefits to our cardholders. We also saw customer payment rates continue to improve in the first quarter, resulting in decreased delinquency and write-off trends, while our credit and debit card volumes increased.

Our first quarter performance is on track with our long-term growth plans. We remain focused on providing a superior customer experience both in-store and online and see many opportunities to drive growth across all channels.
RESULTS OF OPERATIONS
Our reportable segments are Retail and Credit. Our Retail segment includes our Nordstrom branded full-line stores and website, our Nordstrom Rack stores, and our other retail channels including HauteLook, our Jeffrey stores and our treasure&bond store. For purposes of discussion and analysis of our results of operations, we combine our Retail segment results with revenues and expenses in the "Corporate/Other" column of our segment reporting footnote (collectively, the "Retail Business"). We analyze our results of operations through earnings before interest and income taxes for our Retail Business and earnings before income taxes for Credit, while interest expense and income taxes are discussed on a total company basis.

Retail Business
Summary
The following table summarizes the results of our Retail Business for the
quarter ended April 28, 2012, compared with the quarter ended April 30, 2011:
                                                         Quarter Ended
                                     April 28, 2012                        April 30, 2011
                               Amount         % of net sales         Amount         % of net sales
Net sales                  $       2,535            100.0 %      $       2,229            100.0 %
Cost of sales and related
buying and occupancy costs        (1,561 )          (61.6 %)            (1,371 )          (61.5 %)
Gross profit                         974             38.4 %                858             38.5 %
Selling, general and
administrative expenses             (721 )          (28.4 %)              (611 )          (27.4 %)
Earnings before interest
and income taxes           $         253             10.0 %      $         247             11.1 %


Retail Business Net Sales
                                                 Quarter Ended
                                       April 28, 2012     April 30, 2011
Net sales by channel:
Nordstrom full-line stores            $       1,716      $       1,599
Direct                                          242                168
Nordstrom                                     1,958              1,767
Nordstrom Rack                                  557                466
Other retail1                                    61                 26
Total Retail segment                          2,576              2,259
Corporate/Other                                 (41 )              (30 )
Total net sales                       $       2,535      $       2,229

Net sales increase                             13.7 %             12.0 %

Same-store sales increase by channel:
Nordstrom full-line stores                      5.6 %              6.9 %
Direct                                         44.2 %             16.6 %
Nordstrom                                       9.3 %              7.8 %
Nordstrom Rack                                  6.8 %              1.2 %
Total                                           8.5 %              6.5 %

Sales per square foot                 $         102      $          93
4-wall sales per square foot2         $          92      $          86

1Other retail includes our HauteLook online private sale subsidiary, our Jeffrey stores and our treasure&bond store.
24-wall sales per square foot is calculated as Nordstrom full-line and Nordstrom Rack sales divided by Nordstrom full-line and Nordstrom Rack weighted-average square footage. Weighted-average square footage includes a percentage of period-end square footage for new stores equal to the percentage of the period during which they were open.
Net sales increased 13.7% for the quarter ended April 28, 2012, compared with the same period in 2011. Overall same-store sales increased 8.5%, with increases of 9.3% at Nordstrom and 6.8% at Nordstrom Rack. During the quarter ended April 28, 2012, we opened one Nordstrom full-line store, four Nordstrom Rack stores and relocated one Nordstrom Rack store.

Nordstrom net sales for the first quarter of 2012 were $1,958, an increase of 10.8% compared with the same period in 2011, with same-store sales up 9.3%. Both the average selling price and the number of items sold increased for the quarter ended April 28, 2012, compared with the same period last year. Category highlights for the quarter ended April 28, 2012 included Handbags, Women's Shoes and Men's Shoes. Full-line same-store sales increased 5.6% compared with the same period in 2011. The South and Midwest were the top-performing geographic regions. The Direct channel continued to show strong sales growth with an increase of 44.2% in the first quarter of 2012, compared with the same period in the prior year. This increase significantly outpaced our overall performance and is reflective of the multiple initiatives under way in e-commerce. Nordstrom Rack net sales increased $91, or 19.6%, for the quarter ended April 28, 2012, compared with the same period in 2011, while same-store sales increased 6.8%. Both the number of items sold and the average selling price of Nordstrom Rack merchandise increased for the quarter ended April 28, 2012, compared with the same period last year.

Retail Business Gross Profit
                                            Quarter Ended
                                  April 28, 2012     April 30, 2011
Gross profit                     $         974      $         858
Gross profit rate                         38.4 %             38.5 %
Ending inventory per square foot $       55.09      $       47.50
Inventory turnover rate1                  5.37               5.44

1Inventory turnover rate is calculated as the trailing 12-months cost of sales and related buying and occupancy costs (for all segments) divided by the trailing 4-quarter average inventory.
Retail gross profit increased $116 for the quarter ended April 28, 2012, compared with the same period in 2011, due to higher sales and margin, partially offset by an increase in occupancy costs for stores opened during 2012 and 2011. Our retail gross profit rate decreased 10 basis points for the quarter ended April 28, 2012, compared with the same period in 2011, primarily due to a reduction in shipping revenue as a result of launching free shipping and free returns for online purchases in the third quarter of 2011.
Our regular-priced selling increased while our inventory turnover rate decreased to 5.37 times for the quarter ended April 28, 2012, from 5.44 times for the same period in the prior year. We ended the quarter with a 16.0% increase in ending inventory per square foot on a 10.1% increase in sales per square foot, compared with the first quarter of 2011. The increase in ending inventory per square foot relative to the increase in sales per square foot is primarily due to our accelerated online and in-store growth.
Retail Business Selling, General and Administrative Expenses

                                                            Quarter Ended
                                                  April 28, 2012     April 30, 2011
Selling, general and administrative expenses     $         721      $         611
Selling, general and administrative expense rate          28.4 %             27.4 %

Our Retail selling, general and administrative expenses ("Retail SG&A") increased $110, or 18.0%, for the quarter ended April 28, 2012, compared with the same period in 2011. The increase was primarily due to a continuation of various initiatives, which began in the second half of 2011, to improve the customer experience across all channels and specifically to grow our e-commerce business. These include planned increases in technology and marketing spending, as well as fulfillment expenses. The increase also reflected higher sales volume and the opening of 18 stores since the first quarter of 2011. As a result, our Retail SG&A rate increased 103 basis points for the quarter ended April 28, 2012, compared with the same period in the prior year.

Credit Segment
Summary
The table below provides a detailed view of the operational results of our Credit segment, consistent with the segment disclosure provided in the Notes to Condensed Consolidated Financial Statements. In order to better reflect the economic contribution of our credit and debit card program, intercompany merchant fees are also included in the table below. Intercompany merchant fees represent the estimated intercompany income of our Credit segment from the usage of our cards in the Retail segment. To encourage the use of Nordstrom cards in our stores, the Credit segment does not charge the Retail segment an intercompany interchange merchant fee. On a consolidated basis, we avoid costs that would be incurred if our customers used third-party cards.
Interest expense is assigned to the Credit segment in proportion to the amount of estimated capital needed to fund our credit card receivables, which assumes a mix of 80% debt and 20% equity. The average credit card receivable investment metric included in the following table represents our best estimate of the amount of capital for our Credit segment that is financed by equity. Based on our research, debt as a percentage of credit card receivables for other credit card companies ranges from 70% to 90%. We believe that debt equal to 80% of our credit card receivables is appropriate given our overall capital structure goals.

                                         Quarter Ended                           Quarter Ended
                                        April 28, 2012                          April 30, 2011
                                                  Annualized %                            Annualized %
                                                of average credit                       of average credit
                                 Amount         card receivables         Amount         card receivables
Credit card revenues         $          94              18.9 %       $          94              19.0 %
Interest expense                        (6 )            (1.3 %)                 (4 )            (0.6 %)
Net credit card income                  88              17.6 %                  90              18.4 %
Cost of sales and related
buying and occupancy costs -
loyalty program                        (23 )            (4.5 %)                (14 )            (3.0 %)
Selling, general and
administrative expenses                (44 )            (8.9 %)                (55 )           (11.1 %)
Total expense                          (67 )           (13.4 %)                (69 )           (14.1 %)
Credit segment earnings
before income taxes, as
presented in segment
disclosure                              21               4.2 %                  21               4.3 %
Intercompany merchant fees              17               3.6 %                  14               2.8 %
Credit segment contribution,
before income taxes          $          38               7.7 %       $          35               7.1 %

Credit and debit card
volume:
Outside                      $       1,015                           $         982
Inside                                 892                                     705
Total volume                 $       1,907                           $       1,687

Average credit card
receivables                  $       1,985                           $       1,990
Average credit card
receivable investment1       $         397                           $         398
Annualized Credit segment
contribution2                         24.0 %                                  21.7 %

1Assumes 80% of accounts receivable is funded with debt.
2Net of tax, calculated as a percentage of our average credit card receivable investment.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
(Continued) (Dollar and share amounts in millions except per share and per
square foot amounts)

 Credit Card Revenues
                                       Quarter Ended
                             April 28, 2012     April 30, 2011
Finance charge revenue      $      62          $             64
Interchange - third party          20                        19
Late fees and other revenue        12                        11
Total credit card revenues  $      94          $             94

Credit card revenues include finance charges, interchange fees, late fees and other revenue. Finance charges represent interest earned on unpaid balances while late fees are assessed when cardholders pay less than their minimum balance by the payment due date. Interchange fees are earned from the use of Nordstrom VISA credit cards at merchants outside of Nordstrom.
Credit card revenues were flat in the first quarter of 2012, compared with the same period in the prior year. Finance charge revenue decreased due to continued improvements in customer payment rates which more than offset the increase in total volume. Interchange fees were higher from increased use of our Nordstrom VISA credit cards at third parties.
Credit Segment Interest Expense
Interest expense increased to $6 for the quarter ended April 28, 2012, from $4 for the quarter ended April 30, 2011, due to higher average interest rates applicable to the Credit segment.
Credit Segment Cost of Sales and Related Buying and Occupancy Costs Cost of sales and related buying and occupancy costs, which includes the estimated cost of Nordstrom Notes and complimentary alterations credits that will be issued and redeemed under our Fashion Rewards program, increased $9 for the quarter ended April 28, 2012, compared with the same period in the prior year. The increase was due to enhancements made to our Fashion Rewards program and a 13.0% increase in volume on Nordstrom credit and debit cards. We provide these benefits to our cardholders as participation in the Fashion Rewards program generates enhanced customer loyalty and incremental sales in our stores. Credit Segment Selling, General and Administrative Expenses Selling, general and administrative expenses for our Credit segment ("Credit SG&A") are summarized in the following table:

                                                                         Quarter Ended
                                                              April 28, 2012         April 30, 2011
Operational and marketing expenses                        $            31          $              30
Bad debt provision                                                     13                         25
Total Credit selling, general and administrative expenses $            44          $              55

Total Credit SG&A expenses decreased $11 for the quarter ended April 28, 2012, compared with the quarter ended April 30, 2011, due to lower bad debt expense which reflects continued improvement in our portfolio delinquencies and write-off results.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
(Continued) (Dollar and share amounts in millions except per share and per
square foot amounts)

Allowance for Credit Losses and Credit Trends
As a result of the improvements in our delinquency and write-off results, we
reduced our allowance for credit losses by $10 during the quarter ended
April 28, 2012. The following table summarizes activity in the allowance for
credit losses:
                                                                    Quarter Ended
                                                        April 28, 2012        April 30, 2011
Allowance at beginning of period                      $            115      $           145
Bad debt provision                                                  13                   25
Write-offs                                                         (30 )                (40 )
Recoveries                                                           7                    5
Allowance at end of period                            $            105      $           135

Annualized net write-offs as a percentage of average
credit card receivables                                            4.7 %                7.0 %
30+ days delinquent as a percentage of ending credit
card receivables                                                   2.3 %                3.3 %
Allowance as a percentage of ending credit card
receivables                                                        5.2 %                6.7 %


Total Company Results
Interest Expense, Net
Interest expense, net for the quarter ended April 28, 2012 was $40, compared
with $31 for the quarter ended April 30, 2011, due to higher debt balances.
Income Tax Expense
                               Quarter Ended
                    April 28, 2012      April 30, 2011
Income tax expense $        91         $         96
Effective tax rate        38.0 %               40.0 %

The effective tax rate for the quarter ended April 28, 2012, decreased compared with the same period in 2011. The higher rate in the first quarter of 2011 reflects the accrual of tax and interest to settle a state tax liability and the impact of non-taxable acquisition-related expenses.

Fiscal 2012 Outlook
Our expectations for fiscal 2012 are as follows:
Same-store sales                                4 to 6% increase
Credit card revenues                            $0 to $10 increase
Gross profit rate1                              5 to 35 basis point decrease
Selling, general and administrative expenses:
  Retail                                        $275 to $340 increase
  Credit                                        $0 to $10 increase
Interest expense, net                           $25 to $30 increase
Effective tax rate                              39.0%
Earnings per diluted share                      $3.30 to $3.45
Diluted shares outstanding                      212.6

. . .