R. J. Jones - Manager, Investor Relations Michael Koppel - CFO, EVP Blake Nordstrom - President Peter Nordstrom - President of Merchandising

Jennifer Black – Jennifer Black and Associates Bob Buchanan – A. G. Edwards Bob Drbul – Lehman Brothers Stacy Turnof – Merrill Lynch Dana Cohen – Banc of America Christine Augustine – Bear Stearns Deborah Weinswig - Citigroup Adrianne Shapiro – Goldman Sachs Dorothy Lakner – CIBC World Markets Michelle Tan - UBS Dan Geiman – McAdams Wright Regan Operator: Welcome to the Nordstrom second quarter 2006 earnings release conference call. (Operator Instructions) I will now introduce Mr. R. J. Jones, Manager of Investor Relations for Nordstrom. You may begin. R. J. Jones: Thanks, Melissa. Good afternoon, everyone, and thank you for joining us on the call today. On the line with me this afternoon are Blake Nordstrom, President of Nordstrom, Inc., Pete Nordstrom, President of Merchandising, and Mike Koppel, Executive Vice President and Chief Financial Officer. This afternoon, Mike will lead off with a review of our second quarter results, Blake will make a few additional remarks, and then we’ll open it up for questions. Please note that any forward-looking statements we make in our comments this afternoon should be considered in conjunction with the cautionary statements contained in our SEC filings. Now, I’ll turn the call over to Mike.

Thanks R. J., and good afternoon, everyone. We are pleased to report another quarter of continued progress and operating performance. For the second quarter earnings per share increased 26% to $0.67 versus $0.53 last year and ahead of expectations. Our pre-tax margin rose to 12.9%, 140 basis points higher than last year. Top line results outpaced our low single-digit same store sales plan, which in term drove incremental leverage on the fixed expense line of the P&L. Net income for the quarter increased 20% to $178.8 million compared to $148.9 million last year. Unlike most retailers, our second quarter sales are an important contributor to our annual results and match roughly 90% to 95% of our fourth quarter sales volume. Like other retailers, we experience clearance activity in June with our women’s and kids and men’s half-yearly sales. In July, our anniversary sale is our biggest event of the year, offering new fall season merchandise before the season begins. Our highest sales volume days of the year occur during these events. We are pleased to share that each of our events delivered positive same store sales increases. In addition, regular price business continued to demonstrate strong trends during the quarter, both inside and outside the sale event period. Total sales grew 7.8% to $2.3 billion, and same store sales increased 5.7%. In the full line stores, the strongest regional performance was in the northwest and key merchandise categories performing ahead of plan were men’s apparel, cosmetics, accessories and intimate apparel. Our rack division extended its streak of double-digit same store sales increases to 24 months. Gross profit margin increased 26 basis points for the quarter over the last year. Merchandise margin was above plan, and beat last year’s results. Strong regular price selling during the quarter across major categories offset pockets of overplanned clearance markdowns, which were primarily in women’s apparel. Sales leverage on buying and occupancy expense also created rate expansion. The rate improvement over second quarter last year was partially offset by this year’s inclusion of $2.6 million in stock option expense, which had a 12 basis point impact on our gross profit margin. As for SG&A, we gained 64 basis points of rate improvement versus the prior year. Variable expenses track in line with sales growth. Rate improvement was primarily driven by leverage on above-plan sales against our on-plan fixed costs. This year’s SG&A also included $4.2 million in stock option expense, which had an 18 basis point impact on the SG&A rate. The other income line of the P&L increased $15.9 million for the quarter, which was ahead of our expectations. Approximately $10.3 million of the increase came from credit card trust income as a result of growth in our co-branded VISA card program. In addition, a one-time gain of $5.6 million was recorded in other income from the VISA/MasterCard settlement. Net interest expense of $12.8 million was $1.9 million higher than last year, primarily due to an increase in our average interest rates combined with lower interest income. We repurchased 9.7 million shares of stock during the quarter, for a total of $350 million. The resulting reduction in weighted-average shares outstanding had a $0.01 impact on our diluted earnings per share this quarter. Inventory levels were on plan for the quarter. Total inventory per square foot was flat versus last year. In addition, the work in transitioning our women’s apparel strategy resulted in better-than-plan inventory levels and improved aging versus last year at the end of the quarter. Total debt at quarter end was $933 million and total capital was $2.8 billion, resulting in a debt to total cap ratio of 33.6% compared to 31.5% at this time last year. The increase in the ratio versus the prior year was driven primarily by share repurchases, which reduced our shareholders’ equity. The current figure remains within our 25% to 40% target range. As we have previously discussed, our current dividend policy aims to maintain a payout ratio of 18% to 20% and a yield that is approximately 1%. Our quarterly dividend of $0.105 is unchanged from last quarter and currently meets these target ranges. Our return on invested capital on a rolling 12 month basis was 18.5% compared to 14.7% at this point last year. We continue to maintain a positive spread between our return on capital and our cost of capital. In considering our options for optimizing our sources and uses of capital, we remain in a position of flexibility. You may recall, at the end of the first quarter we discussed that our $300 million private label securitization will be maturing in October of this year, and our $200 million VISA securitization matures in April of 2007. Overall, our goal is to combine these borrowings into one on-balance sheet program in the first quarter of 2007. This will provide us with greater financing flexibility and consistent reporting of our asset-based borrowing programs. We would like to take a moment to review our financing activities that took place during the second quarter. We invested $150 million in a pre-funding account for the upcoming debt payoff. Also we used our variable note facility to obtain $300 million of cash. The balance sheet and cash flow impacts of these activities are reflected in our financial statements and will be further explained in our upcoming 10-Q. The overall impact to our second quarter P&L is essentially neutral. We will continue to provide updates on our progress. Our updated earnings outlook for the year is $2.31 to $2.39 per share, up from $2.24 to $2.32 per share. Despite the $0.06 per share impact of stock option expense on this year’s results, we expect our EPS to increase 17% to 21% year-over-year. Our low single-digit same store sales plan is unchanged for the remaining two quarters of the year, which in turn yields a mid single-digit estimate for the full year. We continue to expect expansion in gross profit margin of 10 to 20 basis points and SG&A expense rate improvement of 50 to 60 basis points versus last year. Other income for the year is anticipated to increase $30 to $35 million. Income from the VISA trust will decline due to our reduced holdings in asset-backed securities. Interest expense is assumed to improve $1 to $3 million versus the previous range of $7 to $9. We expect to receive lower interest income from our short-term investments as we allocate more of our available cash to share repurchases. For the third quarter we are planning a low single-digit same store sales increase and expect earnings per share in the range of $0.40 to $0.45 versus $0.39 last year. Due to a shift in some operating expenses, we are expecting relatively lower earnings in the third quarter and higher in the fourth quarter. This does not impact our plan for the year. Now, I’ll turn the call over to Blake for some additional remarks.

Before opening it up for questions, I’d like to make a few comments about recent progress and discuss the areas we continue to focus on. Second quarter’s results were encouraging to us. We ended the quarter with our inventories in line and, as Mike mentioned, we completed an important part of the year for the company. Overall, our team took meaningful steps toward achieving our goals of increasing same store sales and improving operating efficiency. We continue to experience positive momentum as we seek new ways to improve our offering and serve our customers better. Our top priority remains to gain market share by earning a greater portion of our customers’ spend on apparel, footwear, cosmetics and accessories. In addition, we are steadily building new customer relationships in our stores and through our website. Supporting our strategy is our ongoing commitment to continuously enhance the experience that each customer has with us. Every day and with every customer, we have an opportunity to extend ourselves in a manner that creates a reason for the customer to shop with us. Our ability to continually evolve by offering the customer new, exciting products, coupled with exemplary personalized service, is what allows our salespeople to shine with their customers. This offering of compelling fashion merchandise and superior service remain the two tenets that will always determine our success. One trend we continue to see is that many of our customers today shop with us for the first time through our website, and then later migrate to our stores. Our direct channel has become a source of substantial growth potential. The direct team, supported by Jamie Nordstrom, is committed to building a $1 billion business within four to six years. Though we can’t help but get energized by that, it’s important to keep a long-term perspective. Success will be measured over the course of years for our multi-channel offering. At this time, we are engaged in a three-year process to install an entirely new technology platform which will bring our direct and full-line store inventory systems together, and help us create a more seamless shopping experience for our customers. This backend system will allow inventory visibility across our channels and enable new service capabilities, all focused on the customer experience. Results from our anniversary sale reflect an exciting development in our integration effort. In our full-line stores, we had a 2.1% comparable store increase for the sale. When combined with the web site results, we had a 4.1% increase. We are optimistic about the future as our Internet sales growth rate exceeds the industry average. This tells us our customers want access to Nordstrom anytime, anywhere. When you provide a consistent experience across channels, customers shop more often and spend more. Our women’s business continues to evolve and there’s excitement about its upside of potential. The women’s team is making progress in addressing our customer’s style, price, fit and occasion needs. Customers responded positively to the improved offering during the anniversary sale, especially in career wear. We are beginning to see some traction from our cohesive approach in women’s apparel. As we move into the fall season, we have a lot of work ahead of us and we remain focused on offering the most relevant selection of merchandise to our customers. As the retail landscape continues to transform, we are positioned to benefit. The number of attractive opportunities keeps growing, and we look forward to sharing any developments as they unfold. Upcoming on October 6, we will be relocating our Topanga store in Woodland Hills, California. We have high expectations for this 200,000 square foot site in the same mall where we’ve had a presence since 1981. The new store will contain the very best we have to offer across all merchandise categories. With that, we’d like to answer any questions you may have. Operator: Thank you. (Operator Instructions) Jennifer Black with Jennifer Black and Associates. You may ask your question. Jennifer Black – Jennifer Black and Associates: Good afternoon and congratulations on a great quarter.

Thank you, Jennifer.

Thanks, Jennifer. Jennifer Black – Jennifer Black and Associates: I have a couple of questions. First question is, anniversary sale catalog – some people didn’t get it, some credit card holders, and they wondered if you’d heard that and are you sending it to all of your credit card holders? Also, just your monthly catalog, I wondered if you’re still sending that out?

Jennifer, this is Pete. If there were any oversights in mailing out the catalogs to credit card customers, that was oversight. Purely that. We intend to send those things out to as many people as we can. Sometimes we make mistakes. But I don’t of any big lots of people that were missed, but if you have anything up line I’d sure like to know about it, okay? We can look into it.

In terms of the monthly catalog, we’ve been doing that as part of the evolution of integration of our direct business with our full-line stores and we’re continuing to evolve that and I think it will, you know, whether it’s one per month, that’ll probably evolve as we go forward and finding the best way to be able to show new merchandise and have that be a catalyst for people who shop both online and in the stores. Jennifer Black – Jennifer Black and Associates: But you are still sending one a month?

Yes, we are. Jennifer Black – Jennifer Black and Associates: Okay, and then my second question has to do with a recent – it seems like the employees are really aggressively going after customers to switch to the Nordstrom VISA and is that because of the travel option and it’s a fee-based card?

Jennifer, this is Mike. That goes back to our desire to want to continue to give the customer more reasons to shop with us and that card does offer more options to create a better experience. We also find that the more that we can connect with the customer on those various features, the more they end up spending. So that’s our thought behind that. Jennifer Black – Jennifer Black and Associates: Okay, and then lastly, it seems as though I’ve noticed just recently that the merchandise has improved in the Missy area. It seems like Eileen Fisher is really updated, that brand is updated and you’ve got newer brands like Courtney Washington and I know that’s an area you’ve been really focused on improving. Do you have any further comments about that?

Thanks. This is Pete again. We are really probably in the early stages of being able to get our women’s business back on course. I think what’s been encouraging for us is while we’re clearly not all the way there, we’ve got signs of improvement in a lot of categories across women’s and part that you mentioned, part of that’s still not – we’re encouraged and we think it gives us a real positive direction going forward. Jennifer Black – Jennifer Black and Associates: All right. Well, good luck. Thank you.

Thanks, Jennifer.

Thank you. Our next question comes from Bob Buchanan with A. G. Edwards. Please go ahead. Bob Buchanan – A. G. Edwards: Yes. Good afternoon, and congratulations.

Thanks, Bob. Bob Buchanan – A. G. Edwards: Thirteen quarters in a row of improvement on the turns, so I congratulate you on that. Just want to ask you, first of all, on your Denver opening in Cherry Creek. What is the timing on that?

The current schedule is for next fall, Bob. Fall of ’07. Bob Buchanan – A. G. Edwards: Okay. Okay. I see, and with regard to women’s, you’ve talked about some of the progress you’ve made there. I’m assuming, or hoping, the concept turned from negative to at least less negative if not positive. The anniversary sale overall in the stores, up 2.1%, was a little bit disappointing to me so I’m just trying to reconcile the improvement in women’s that you saw during the anniversary sale with what overall were some numbers that were, I guess, okay in my opinion.

Yeah, when you talk about women’s, it’s a broad spectrum and so we never quite have all those balls up in the air at the same time. So there were some areas that really improved, namely our Narrative and Studio areas had good success on the sale. Where we’ve had some challenge over the last quarter or two is in BP, women’s juniors, and that is – you know it, that’s a big part of our business, particularly during the anniversary sale. So when that isn’t particularly healthy in an event like that, it drags the total down. Bob Buchanan – A. G. Edwards: I got you.

That’s where we have the most opportunity right now. Bob Buchanan – A. G. Edwards: And the POV, is that progressing like you’d like it to, Pete?

Yes. We’ve made nice improvement there. We are on a positive track. Bob Buchanan – A. G. Edwards: Sounds good. Then, last question, Heavenly Bed, I saw that was part of the anniversary sale. How is Heavenly Bed doing for you?

It’s done really well. There’s a difference this year compared to last year, though, in how we were able to bring it up which I don’t think I really need to get into now. There’s a lot of detail about that. But that’s – if you just look at the units we were able to sell, it’s still a very important part of that department and very robust. Bob Buchanan – A. G. Edwards: Okay, and just finally, on Heavenly Bed and the whole domestics area, real key there is having the entire assortment in stock. How did you do? How have you been doing in terms of having the entire assortment for a bedroom in stock?

We’re doing better but that department continues to be in a bit of transition. You know, we cut a lot of things in that and the bed and bedding part of it has been some of the most positive parts of what we’ve tried over the last few years. So I think what you’ll see is our continued improvement in more depth and breadth of the selection of really what’s available for the bedroom and I think, you know, the catalyst for that has been the bed, but to your point, we need other things to go with it to really maximize the potential, and we’re getting there. Bob Buchanan – A. G. Edwards: Okay. Thanks so much.

Thank you, Bob.

Thank you. Our next question comes from Bob Drbul with Lehman Brothers. Please go ahead. Bob Drbul – Lehman Brothers: Hi. Good afternoon.

Good afternoon, Bob. Bob Drbul – Lehman Brothers: Two questions, I guess. The first one is, could you comment a little bit – elaborate a little bit on the accessory category and the performance in the handbag business and your thought process going into the fall period. Then the second question is, just wondered if you could just talk a little bit if you have any comments on the strength of your consumer and if you’re seeing any concerns whatsoever around the thought process behind your consumer at this point in time?

Okay, this is Pete. I’ll try that. With the handbag business, it’s been strong as you know for awhile and it continues to be strong. We’ve made some pretty significant investments there with inventory that really is only helping us keep up with the sales trends that we’ve had. I think the trend continues to be, for us, that we’re selling luxury extremely well and whenever we’ve been able to upgrade our offering with luxury vendors, we’ve done well. So we see that continuing. There’s no reason that should slow down for the fall. It’s a very strong part of the business, and continues to be. In terms of the consumer, I think in terms of the target consumer we’re going after they’re a little less impacted by some of the macro issues that may be happening in the economy but it’s hard for us to get all wrapped up in some of those things we don’t have much control over. I think what we do have control over is we’ve got a much better group one exactly who it is we’re trying to appeal to. We actually know these people a lot more intimately than we used to, with our personal book, and we’re able to reach out to them. So I think we have a lot of confidence that if we can continue to bring newness and fashion to the customer that they’re going to respond to it and that’s been consistent for us for a couple years now. Bob Drbul – Lehman Brothers: Great. Thank you.

Thank you. Our next question comes from Stacy Turnof with Merrill Lynch. Please go ahead. Stacy Turnof – Merrill Lynch: Good evening, everyone. Going on Bob’s question, talking about where the luxury spending is coming from, have you looked to see how the customer who is a member of your awards program is spending versus sort of your aspirational customer to see if there are any trends across income levels?

Stacy, this is Mike. I don’t think I could comment specifically that we’ve seen any trends versus the two segments that you discussed. But that being said, our loyalty program continues to grow in strength and what we do see in the aggregate is that the customer is using it actively and we are getting uplift on the redemption of those notes. So it’s been very positive for us. Stacy Turnof – Merrill Lynch: Okay. My second question is, as we walk through the store this fall is there anything that you could point out that we should notice that’s different in women’s apparel?

This is Pete. The changes are fairly subtle. Where we’ve had a lot of success over the last couple of years, I’m sure like other retailers, is we’ve done well with the more modern, contemporary segments, and particularly as it relates to casual clothes and premium, and while that continues to be strong, what we’ve found is that it’s an opportunity for us to do a better job with wear to work clothes and we really – the first time in the last couple of years, were able to improve that offering starting with anniversary sale and we had good success there. So I think what we’ll see going forward is the ability to do a better job of appealing to that career customer. Stacy Turnof – Merrill Lynch: Great. Thanks so much.

Thanks, Stacy.

Thank you. Our next question comes from Dana Cohen with Banc of America. Please go ahead. Dana Cohen – Banc of America: Hi, guys. A couple questions. Just, coming back on the women’s issue, I just want to make sure I’m clear. It sounds like parts of women’s are getting better but juniors is not, so net net is it gaining momentum?

It’s Pete. Definitely. It’s definitely gaining momentum, and really across – the only area that we’re not gaining momentum is in juniors. Dana Cohen – Banc of America: But is that enough to drag the whole thing back?

No. Dana Cohen – Banc of America: Okay. So net net it is gaining momentum.

This is – gaining momentum. But juniors is, as you know, is a big part of our business so we’re not content with where we are right there and we need to get that thing moving in the right direction if we want to achieve our goals totally in women’s. Dana Cohen – Banc of America: At the anniversary sale, and that’s commentary with respect to the anniversary sale, correct?

I’m sorry? Dana Cohen – Banc of America: Is that commentary particularly related to the anniversary sale or is that, you know, general, towards the end of Q2?

It’s a bigger issue than just anniversary. It’s been going on a little bit longer than that. Dana Cohen – Banc of America: Okay.

The business with anniversary – what I would add to that is, you know, we beat our sales plans there and we managed our inventories well so, while it’s nice to have the sales results for that month, maybe more than anything else, being able to come out of that time period with your inventories in line is a great indicator of what’s possible for us in the fall and winter season because we’re just – we’re in a very healthy spot in terms of our inventory position. It’s encouraging. It really should bode well for our markdown and margin performance. Dana Cohen – Banc of America: Okay, and then on these systems initiatives could you just go into a little more detail about sort of when they’re going to be implemented and the benefits from them.

Hi, Dana. This is Mike. In terms of where we are with some new systems, this fall we will be implementing new merchandise planning tools that we’ll be rolling out in a variety of different phases over the next couple of years. The benefits from those are going to be around hopefully better sell-throughs and possibly incremental improvement in margins. That will play out over a multi-year period. It’s tough to say exactly when and how much it’s going to be. In terms of direct, we’re currently about to embark on Phase 3 of getting all of our direct inventory on the same platform as full line, which will then give us the transparency across all the channels to see all our SKUs and then over time that will help us with our control and our ability to cross-sell between the channels. That will be rolling out over the next year and a half and ultimately all the technology changes in direct should be complete some time early ’09. Dana Cohen – Banc of America: Okay, so the merchandise planning system is fall of this year, though?

Yes. Dana Cohen – Banc of America: Okay, great. Thanks so much.

Thanks, Dana.

Thank you. Our next question comes from Christine Augustine with Bear Stearns. Please go ahead. Christine Augustine – Bear Stearns: Thank you. Could you give us any more detail on anniversary sale? You mentioned that the comp was 2.1% but including the web site it was a 4.1% comp? So I was kind of curious about if you saw any variation in terms of the categories that were sold online versus in the stores.

I’ll take that. This is Pete. Not really. What we’ve learned over the last 18 months or so is that the best items in the store are the best items online. So if you were just to look at the top sellers, they would be very similar looking.

Just to add to that, part of what we’ve been working on over the last year is to get our offering on direct more consistent with full line and so because of that there was a lot more, I guess you could use the word synergy, in terms of the offering between the two channels. Christine Augustine – Bear Stearns: Just to clarify, you have already done a restatement of comps so that they do include direct, correct?

Yes they do, Christine. Christine Augustine – Bear Stearns: Yeah, okay. The other two questions I had were on California and what the trends are looking like in that region, and then the final was if you could give us any color with regard to number of transactions versus the size of the transaction in the second quarter?

This is Pete. In terms of California, you know, it’s such a big part of our business I think anytime you can see us with a total result that’s positive, you have to assume that California’s part of that. It’s just too big for it not to be. So we’ve had success there over the years and we continue to have very strong – in particularly, look at the anniversary sale and the amount of business that’s done in that region compared to most others. It’s pretty staggering. Christine Augustine – Bear Stearns: I probably didn’t ask the question right. I’m really trying to get at the trend there, if it’s directionally up or down?

The trend to the regional performance? Christine Augustine – Bear Stearns: Yeah.

It’s up. Christine Augustine – Bear Stearns: Okay. Then how about just transaction and number of transactions versus size of transaction. Is it mostly the size of the transaction that’s driving the comp?

Yeah.

It is. Christine Augustine – Bear Stearns: Within that are you seeing anything – is there anything happening with average unit retail going up or down?

You know, the only thing that we’ve seen in particular is because of some of the softness in Brass Plum which is a very high unit, low retail business. We’ve seen a little bit of drop in units. But as far as the other businesses, it’s been pretty consistent year-over-year. Christine Augustine – Bear Stearns: Which would be more on average unit retail?

Pardon me? Christine Augustine – Bear Stearns: So that would mean more coming from the average unit retail?

Well, the average unit price has gone up somewhat because we’ve done a better job of meeting the demand of the luxury product. That brings it up, and we’ve had success at higher price points, really across the board in every merchandise category. Also we do a lot less – well, not a lot less, but we’re doing progressively less business on sale than we used to do. The markdown part of our business is really not driving the sales nearly as much as the newness and the flow, and even when we go through a half-yearly sale where the thrust of that is about clearance, what tends to drive the business is when we can get the flow of the new product in as a result of opening up inventory dollars from this other stuff going out, so I think that bodes well for our average price point. Christine Augustine – Bear Stearns: Great. Thank you very much.

Thanks, Christine.

Thank you. Our next question comes from Deborah Weinswig with Citigroup. Please go ahead. Deborah Weinswig - Citigroup: Good afternoon. In terms of – Mike, you talked about if we thought kind of more in depth on what happened with the gross margin that there was kind of overplanned clearance markdowns, could you provide some additional color on that?

Well, I think what we said is that the markdowns in some areas of women’s apparel were a little higher than plan. The rest of the company was better than plan and so we were able to come out of the quarter, our merchandise margins were better than last year’s, but within that we had a few pockets where it was higher, and those are the – a couple areas in women’s apparel. Deborah Weinswig - Citigroup: So the areas that outperformed that more than compensate for women’s or was there a net negative impact?

Yes. Deborah Weinswig - Citigroup: Okay.

No, it more than compensated. Deborah Weinswig - Citigroup: Okay, and then in terms of the penetration of your proprietary credit card, can you update us on that and what are you seeing in terms of performance not only from the consumers but also in terms of write-offs, etc.?

Well, you know, we actually, coming out of this quarter, saw some improvement in our market share in our proprietary credit card and we got a lot of that from the anniversary sale period because of the quality of borrower on loyalty program and our ability to promote the card more. So we’ve finally seen some progress in terms of improving our market share there. In terms of write-offs and the quality of the portfolio, our write-offs continue to improve, our agings are flat if not slightly better than they were last year and within that portfolio we haven’t seen any signs or any pre-indicators that there’s any weakness. Deborah Weinswig - Citigroup: So, bottom line would you say that your market share is better than you would have expected?

Our market share coming out of the quarter was a little better than what we would have expected. That’s fair. Deborah Weinswig - Citigroup: Okay. Great. Thanks again, and congratulations.

Thanks, Deborah.

Thank you. Our next question comes from Adrianne Shapiro with Goldman Sachs. Please go ahead. Adrianne Shapiro – Goldman Sachs: Thank you. Could you talk about – again, following up on the women’s turnaround effort because we understand that the problem areas have been more on the bridge in better parts of that business and I’m just wondering, as Macy’s goes through this big re-branding push in the back half, how do you think that might impact the turnaround efforts?

This is Pete. Actually we’ve had in the last handful of months pretty good improvement in the bridge price points, particularly – that’s kind of a theme that’s been happening with us for awhile. That’s been part – some of the parts of the business. Where we’re the most challenged in women’s I think right now is in the juniors. So I don’t think it’s fair to say that bridges are better. In terms of better, you know, the Narrative Department, for example, would be in the better category and they had a very strong anniversary sale, so I don’t know. It’s probably not quite as simple as being able to segment it that way. It’s a little more specific to each department. Adrianne Shapiro – Goldman Sachs: Okay, so maybe if you’d just talk about what’s –

In terms of Macy’s, you know what? We’re really just trying to stay focused on what we do and there’s always opportunity being created out there somehow. Obviously, we pay attention to what they have going on but our primary focus is on our customers and what we’re doing. Adrianne Shapiro – Goldman Sachs: Okay, but would you say that some of the areas that you’re focusing on, there might be a little bit more overlap with Federated as a customer base versus, you know, sort of your more higher-end luxury customer that is obviously still quite strong?

Well, we’ve always overlapped with Federated and we’ve always overlapped with Neiman’s and there’s a percentage of it that happens on both ends. So I don’t think it’s really any different than it’s ever been. That’s the truth. Adrianne Shapiro – Goldman Sachs: Okay, and then Mike, maybe just talk about, you know, if we’re looking from the back half at those single-digit comps for both the third and the fourth quarter, just maybe clarify what is shifting to make it seem more of a backend loaded year?

Well first, the low single-digit is consistent with, you know, our internal plan which is how we have shared our outlook with you in the past. In terms of the shifting, primarily in the third quarter it’s some extensions related to some new store activity as well as some cost related to some IT projects. On a relative basis, the year’s the same but we thought that we needed to call out those shifts because of the impact it had on earnings. Adrianne Shapiro – Goldman Sachs: Okay, and then just on the – this past quarter, I understand there’s some variable cost implications in the quarter but I’m just wondering, given the comp looked so much better than your low single-digit plan, would you have expected a little bit more SG&A leverage than you got or was this pretty much as you would have expected?

No, I think our SG&A leverage, if you take into account the fact that we had stock option expense as well, we had some pretty good leverage this quarter. Our fixed expenses were basically on plan and the only increase in dollars was variable. So I think as a company we performed very well. Adrianne Shapiro – Goldman Sachs: Great. Thank you.

You’re welcome.

Thank you. Our next question comes from Dorothy Lakner with CIBC World Markets. Dorothy Lakner – CIBC World Markets: Thanks and good afternoon, everyone. I had a question about the accessories area and some of the areas where you’ve been bringing in some of these better, luxury brands. Are you done rolling this out across the stores where you want to put that product and are there still brands that you want that you don’t have yet? Then secondly, on the Brass Plum business, is there any sense that with denim in several places in the store right now, could that be taking some traffic or business away from the junior’s area? Thanks.

It’s Pete. With the accessory part of the business, we’re not done. We’ve got a long way to go and I think – you know what? We can just see it by the customer’s demand for the product. We – if we’re able to bring in the things, the coveted brands they like, they sell. Again, price doesn’t really seem to be a barrier as much as the desirability and the fashion of it. So we’re going to continue to grow that part of our business and yes, there are lines that we either don’t get or don’t get as much of and that’s just an ongoing pursuit for us and I think it always will be. I think that’s just the nature of the game in this business. Dorothy Lakner – CIBC World Markets: Right. But you definitely want more of it?

Well, sure. Yeah. Particularly when it’s performing like that. Dorothy Lakner – CIBC World Markets: Great.

With Brass Plum and the denim question, that’s probably a pretty fair assumption. What makes BP different from the other departments is based on fit and style and price, and that really speaks more to the junior customer. But if the junior customer’s willing to spend a lot more money on a pair of premium denim jeans which, in many cases, they have been over the last couple of years, then obviously that would impact BP’s denim sales a little bit. But that’s really not the reason we’ve had challenges in BP. They’re more our doing. It’s our ability to be able to get the items right, both in terms of timing, fabrications, colorations. There’s a fair amount of issues. But it isn’t quite as simple or specific about denim. That’s really not the challenge we’re having. Dorothy Lakner – CIBC World Markets: Okay. But you’re addressing those other areas though?

You bet. Dorothy Lakner – CIBC World Markets: Okay. Great. Thank you.

Thanks, Dorothy.

Thank you. Our next question comes from Michelle Tan with UBS. Please go ahead. Michelle Tan - UBS: Congratulations.

Thanks, Michelle. Michelle Tan - UBS: Just a couple of questions. First, looking at the women’s apparel business, it seems to have picked up across the industry and I’m wondering if you’ve seen anything in the way of trade-off for other categories? I know footwear at some hasn’t been that strong, maybe because of lower price points this season.

This is Pete. We really haven’t seen trade-offs that way. But then again, I think we’re still in the early stages of the women’s business and, you know, it’s not like it’s so robust that it’s kind of at the expense of anything else. So that would not be accurate to say for us. I think that, you know, if we can get that customer in the store our challenge is more how to be able to sell them all the different categories, not assuming if they’re going to spend on just one trend they wouldn’t on another. That typically hasn’t been how it goes for us. It has more to do with the beach category has something to offer that woman so she can buy the entire outfit in our store. Michelle Tan - UBS: Great. Then also one last question. Looking at – you mentioned anniversary sale if you include the online portion was up 4.1%. Now that you’ve realigned the online to be more similar to what the merchandise is being carried in the stores, did you see more customers purchasing online this year than you have in the past at anniversary?

Yes, I mean – Michelle Tan - UBS: Ratio change?

Yes.

Yes. Michelle Tan - UBS: So if we – I mean, can you give us some sense of what the anniversary would have looked like last year if you included online?

Well, one thing that’s important to know. I don’t think – it’s not at the expense of what we’re doing in the full line stores. I mean, really, it’s incremental what we’re able to gain here and I think the statement that was made earlier on by either Blake or Mike was that we’ve found that a lot of customers end up getting their introduction to Nordstrom through the direct channel. That has been helpful in developing customers for our full line store business. So again, the whole appeal that it does create synergy and at this point, one is not at the expense of the other. They’re much more complementary. Michelle Tan - UBS: Okay, great. Thanks, guys.

Thanks, Michelle. R. J. Jones: We have time for one more question.

Thank you. Our last question comes from Dan Geiman with McAdams Wright Ragen. Please go ahead. Dan Geiman – McAdams Wright Regan: Good afternoon. Could you update us on the real estate search at this point and also where things stand in Manhattan? Also, with regards to women’s apparel, how does women’s apparel factor into your comps guidance for the rest of the year? Are you accounting for improvements over prior quarters in that area?

This is Pete. I’ll answer the women’s apparel part of that. Yes, we’re counting on it improving over last year. That is part of our plan for fall.

Then, Dan, this is Mike. In terms of the real estate, you know, I think we’ve been pretty clear as of late to state that the pipeline for opportunities has never been better for us and we’re very active in evaluating everything that’s out there and, you know, as we get more clarity as to exactly, you know, what kind of opportunities are going to play out for us, we’ll let everybody know. But we’re very, very – we’re putting a lot of resources into looking at that. Then in terms of Manhattan, again, it’s a very desirable location. It’s the No. 1 market that we’re not in that we’d love to be in and we’re still evaluating opportunities there. As of yet, we haven’t been able to come – get close on opportunities that make sense for us financially and ones that have presented themselves. So we’ll keep you up-to-date on that. Dan Geiman – McAdams Wright Regan: Thank you.

Thanks, Dan. R. J. Jones: Thank you for participating in our conference call this afternoon. If you have additional questions or need further information, please contact me at 206 303 3007. Replay number for this call is 800 348 3536. That number again is 800 348 3536. There is no pass code required and the replay will be available on the Investor Relations section of our web site for 30 days. Thank you for your interest in Nordstrom.

Thank you. That concludes today’s conference. You may disconnect at this time.