Rob Campbell – Treasurer and Vice President of Investor Relations Blake W. Nordstrom – President and Director Michael G. Koppel – Chief Financial Officer Peter E. Nordstrom – Executive Vice President and President of Merchandising Erik B. Nordstrom – Executive Vice President, President of Stores

Deborah Weinswig - Citigroup Jennifer Black - Jennifer Black & Associates Charles Grom - J.P. Morgan Lorraine Hutchinson - BAS-ML Bob Drbul - Barclays Capital Christine Chen - Needham & Company, LLC Neely Tamminga - Piper Jaffray Barry Sosnick - Gilford Securities Lance Vitanza - Knighthead Erika Maschmeyer - Robert W. Baird & Company Adrianne Shapira - Goldman Sachs Ken Stumpfhauser - Sterne Agee Meredith Contente - Broadpoint Capital Richard Jaffe - Stifel Nicolaus & Company, Inc. David Glick - Buckingham Research Group

Hello and welcome to the Nordstrom second quarter 2009 conference call. (Operator Instructions) I will now introduce Rob Campbell, Treasurer and Vice President of Investor Relations for Nordstrom. You may begin, sir.

Good afternoon, everyone, and thank you for joining us. Today's earnings call will last approximately 45 minutes and will include about 30 minutes for your questions. As a reminder, all forward-looking statements on this call are subject to risks and uncertainties that could cause the company's actual results to differ materially from the expectations and assumptions discussed due to a variety of factors that affect the company, including the risks specified in the company's most recently filed Form 10-Q and 10-K. Participating in today's call are Blake Nordstrom, President of Nordstrom, Inc., and Mike Koppel, Executive Vice President and Chief Financial Officer, who will discuss the company's second quarter performance and business outlook. Joining us for the Q&A are Pete Nordstrom, President of Merchandising, and Erik Nordstrom, President of Stores. Now I will turn the call over to Blake. Blake W. Nordstrom: Thank you, Rob. I want to take this opportunity to review a couple of subjects with you today, and then I'll turn the call over to Mike so he may go into greater detail on some of the specific numbers with our business pertaining to the second quarter. We're pleased to see an improvement with the trend in our business over the last couple of months. July was noteworthy because we had more positive reaction to our anniversary sale, contributing to the second quarter sales results of negative 6.2%. On a comp store sales basis we were down 9.8%. As an executive team, August marks our nine-year anniversary. Our strategy has remained focus on the customer and has evolved we believe appropriately to the demand and feedback from our customers. Our passion and commitment to the customer remain unchanged and hopefully is being heightened. In that time period our team has made great strides on the disciplines of managing the business. Our numbers are reflective of concerted efforts to manage the expenses appropriately while strong inventory controls are being adhered to. Our inventories today are clean and in line, positioning us well for the second half of the year. Though July represented some improvement, our plans remain unchanged for the balance of the year. We really don't see outside of this unique sale event a change with the customer. Our grounded plans do allow us to be able to respond timely and effectively if an upturn were to occur. We're executing with the resources we have in a better manner; clearly, it's about having the right merchandise. Our mix is balanced with fashion, quality and sharp price points. These tenets are particularly important in this economic environment. Now I'd like to go a little bit more in depth with our anniversary sale. The anniversary sale is a unique event for us and we think unique within the industry. For many years now this event is all about bringing in the best merchandise in a time period that is generally relatively soft within retail, the July time. The sale is unique in that branded quality merchandise is brought in and lowered from a retail price that represents a terrific value. The results of the event were really encouraging. Every region and every merchandise division improved upon their trend. We stepped out and made a bet this year on trends and sharper price points, along with more depth in some cases, and it was well received by the customer. We offered a quality mix of merchandise with strong brand names that communicated enhanced value to our customers. We offered additional brands that aren't typically part of the anniversary sale. We utilized our Direct division to support the pre-select event for our best customers within our credit card portfolio. We enhanced our online marketing, shifting dollars from print to online. And our total inventory was weighted more toward anniversary this year than last year. One of the elements that made anniversary more successful this year was our ongoing focus on multi-channel. Clearly the customer has been telling us for some time that they want to shop with us on their terms and they view our company as one company, not separate silos or business units. These multi-channel efforts really came together for this event and dramatically helped our service and subsequently our volume. People throughout the company really embraced the tools that we've been working on with multi-channel, allowing us to leverage our inventory through the stores and the Direct division, as I mentioned earlier the pre-select event prior to the start of the sale. Much of these orders were filled through our Cedar Rapids Direct fulfillment center, allowing us to start the sale on July 17th in a good in-stock position within the stores. Our multi-channel prospects to us look very bright because the people now are really embracing these tools, and we think the balance of this year we'll see continued progress and we're encouraged for 2010 as well as the prospects for the 2010 anniversary sale as we utilize these tools to better service the customer - again, on their terms. Another area of the business that I'd like to give you a little insight today has to do with our Rack division. The Rack is a key element to our total business and has been helpful in helping us clear the goods from our full-line stores in a timely and efficient manner. We really set out a number of years ago as a team to tackle a number of initiatives, starting with the need to have the appropriate information to run the business properly. That foundation was built around perpetual inventory. We then really tried to heighten what was happening in our full-line stores and improve our service and product offering. That to us represented the highest value opportunity. We then have been for some time now building the infrastructure and the capability with Nordstrom Direct to allow us to be an effective multi-channel retailer. And about two to three years ago we felt it was appropriate to add more resources and focus on the Rack division. You're probably seeing that now with some of the store announcements and growth that we've made public. Recently we just announced a new Rack location coming up in Manhattan in Union Square. We felt this was a terrific opportunity for the Rack and the ability to do more business. We've had a number of full-line stores for just shy of 20 years in the Northeast, and it was important to add another Rack in that area. And there's no better place than Manhattan. Our best customers really shop in all channels, including the Rack. We feel we could extend our reach to more customers through the Rack without compromising our full-line business and customer experience. We're opening 13 Racks in 2009 and we have announced 12 new stores in 2010, with a couple more that we're finishing up on letters of intent. There is really a relatively short lead time and a high degree of flexibility in opening these stores, so we can adjust accordingly as the customer gives us feedback. With this difficult retail landscape we've been able to take advantage of some key locations with closures from other retailers like Linens 'N Things and Circuit City. Some of these locations and store sizes are really aligned for our Rack needs. So, in closing, we're not economists and we really don't see any change with our customer at this point. And we believe we're planned accordingly, with grounded plans on expense and inventory and all the key metrics of our business to give us the necessary flexibility and upside to respond accordingly when that demand hopefully improves. It gives us a lot of encouragement to see the health and vitality of our inventory at this point to be able to have that flow and freshness that the customer is so desirous of. Now I'd like to turn the call over to Mike. Michael G. Koppel: Thanks, Blake, and good afternoon, everyone. Throughout the first half of the year business trends have been more consistent and aligned with our internal plans. As a result, we have not experienced the level of volatility we encountered during 2008 and have been able to leverage our business plans. In the second quarter we were encouraged by the top line performance during our anniversary sale and we demonstrated solid execution in managing our inventory and expenses. Together, these factors helped us beat our earnings plan for the second quarter. That said, we remain cautious about the general economic environment and will continue to plan our business based on current trends, confident that we can adjust as business conditions warrant. Second quarter earnings per diluted share were $0.48 and earnings before interest and taxes or EBIT totaled $206 million. This is a decrease of 26% in EPS and a decrease of 23% in EBIT compared to the same period in 2008. Total retail sales declined to $2.1 billion, down 6.2%, and same-store sales declined 9.8%. Top performing multi-channel merchandise categories were dresses, kids shoes and apparel, and fashion jewelry. The top performing regions for our full-line stores were the South and Mid-Atlantic. Full-line same-store sales decreased 12.3% in the quarter, an improvement over the 16.5% decline experienced in the first quarter. Nordstrom Rack continued its sales growth with a same-store sales increase of 0.8% and sales in our Direct segment also increased 3.5% in the quarter. The second quarter rivals the fourth quarter in terms of sales volume, with three of our five annual events held during the quarter. July typically represents the second-highest sales month of the year, reflecting the impact of the anniversary sale. During this event we offer new merchandise at reduced prices. As you heard previously from Blake, we believe that during the event we offered a quality mix of merchandise with strong brand names that communicated better value to our customers. This helped us achieve anniversary event same-store sales for our full-line stores of negative 6.6%, well above our current trends. Consistent with the first quarter of 2009, ending inventory in the second quarter was aligned with sales trends. Inventory per square foot was down 12% for the quarter compared to the same period in 2008, while sales per square foot was down 11%. Although our gross profit rate decreased 106 basis points for the quarter, merchandise margins were flat to last year, with the decline mostly attributable to the impact of fixed buying and occupancy expenses as a percentage of reduced sales. Retail SG&A decreased $14 million compared to last year. Adjusting for new store expenses, retail SG&A decreased $29 million. During the second quarter we increased our accruals for performance-related expenses as a result of above plan year-to-date performance. This increase, combined with the decrease in year-over-year sales, resulted in retail SG&A as a percent of sales increasing 88 basis points over last year. Second quarter credit card revenue increased $15 million over the same period last year. While the credit card business remains challenging, we have seen some stabilization in our trends. For the quarter, our Credit segment loss as a percentage of credit card revenues was smaller than the first quarter. At the end of the first quarter we had increased our bad debt reserve by $23 million, anticipating a continued increase in write-offs. At the time, our delinquencies, which are a leading indicator of write-offs, were increasing at a rate higher than what we had planned. In the second quarter we have seen this trend level out. Our delinquency rate in the second quarter was 3.7%, slightly improved versus the first quarter rate and consistent with our internal plans. Write-off dollars increased $25 million year-over-year to a rate of 9.4% of receivables, which also was consistent with our plans. Although trends in the latter half of the year remain uncertain, based on what we see today we believe we are adequately reserved for bad debt expense. Now I'd like to provide an update on our progress regarding our financial position and liquidity. During the second quarter we completed a $400 million five-year unsecured debt transaction. We had considered taking action on the debt transaction late last year, but with market conditions extremely unfavorable and knowing we had flexibility, we chose to wait. Our patience paid off as we completed the debt offering at a rate of 6.75%, over 400 basis points better than what we likely would have obtained had we acted in 2008. In addition, we plan to finalize the renewal of our $650 million senior unsecured credit facility by the end of this week. We are gratified to have all 13 bank partners that participated in our previous revolver re-committed to our new three-year credit facility as well as commitments from five new lenders. We believe these transactions, combined with an already solid balance sheet, give us adequate liquidity and flexibility over the next several years. We finished the quarter with an adjusted debt-to-EBITDA ratio of 3 times. While higher than our 2 to 2.5 times long-term target, it was in line with our expectations, better than the industry average, and well within the range to maintain our investment-grade rating. Despite a decline in our top line, we've made strides in increasing our cash flow. Through improved earnings, working capital initiatives, and lower capital expenditures, we ended the second quarter with year-to-date free cash flow of $314 million and expect free cash flow to exceed $200 million for 2009. Overall, our second quarter performance exceeded our plan. Given continuing general economic uncertainty and the second half year-over-year improvement already included in our plan, we do not feel that it is appropriate to change our view for the remainder of the year; however, we do want to revise our annual guidance to reflect the better-than-expected second quarter results. Based on this, we are updating our annual earnings per share guidance from a range of $1.25 to $1.50 to a range of $1.50 to $1.65. With that, I'd like to turn the call back to Rob Campbell.

Thank you, Mike. Before taking the first question, in response to suggestions from several of you after last quarter's call, we want to request that each person limit himself or herself to one question and, if necessary, one follow up in order to give as many persons as possible an opportunity to ask a question. If you have additional questions, we'll ask that you return to the queue. With that, [Denise], we'll take the first question.

Thank you. (Operator Instructions) Your first question comes from Deborah Weinswig - Citigroup. Deborah Weinswig - Citigroup: You gave a lot of detail with regard to the anniversary sale. Could you also talk about how the half-yearly sales performed and what have you learned from those separate events that - without sharing any secrets - but what might change in terms of how you would have operated for the back half of the year based on your success in those three events? Peter E. Nordstrom: In terms of the half-yearly sale, that's kind of a tough one. We've had several years where we do a little bit less kind of each year of the half-yearly sale and that's mostly the result of being much more in control of our inventories and taking markdowns in a more timely fashion. While that may hurt our short-term half-yearly result, it clearly plays out to the benefit of the results for the end of the year just because our markdowns are so much more timely. We're not holding onto them. So I guess what we would say about the half-yearly is it's going pretty much as planned and predicted based on what our inventory levels are like. Actually, it's just a clearance sale for the most part. With anniversary, the thing that really played out there were things that we've always known. And Blake and Mike really touched on it, but the common themes for this strong event by department were we had great brands represented, new trends and hot items. I know it sounds kind of obvious, but that's really where it's happening. And that's been going on for quite some time; obviously, value is important, but I think it would be misleading to say that price alone is driving results. It's part of the mix, but we had some of our best results on some of the most expensive stuff we had on sale just because it was special and it was new. So how that affects us going forward, I think we've learned a lot about emerging categories and trends and items that we can really pour the gas on here for the fall and do some sales with. And given the fact that we had better-than-planned sales allows us to emerge from this time period, as Blake mentioned, with very clean inventory and very current inventory. So we're in a great position. Deborah Weinswig - Citigroup: And then my follow up question: I think on the Rack historically as a company you saw kind of one Rack for two full-line stores. What drove the change in thinking and, with regard to Rack, is there any kind of ratio these days or is it just kind of where the real estate makes sense that's where we should think about your square footage growth going forward? Blake W. Nordstrom: If you go back many, many years ago, we had even much more rigorous kind of unwritten guidelines, if you will, to that notion of a ratio with the Racks. And over time we've learned from the feedback from our customer the right balance, and we still think there's some opportunities. And so we don't have a set full-line stores to Rack or volume or square footage. We did go through a time period and I tried to mention it in my outline where we purposely held Rack growth back in relation to full-line stores as we were putting more emphasis and resources in full-line stores. The business case across the board really the last couple of years lends itself for the Rack to get caught up a little bit, if you will. The next question will be after that is how much more headroom is there with it. And as I, again, touched on, we think with the 12, 18, 24-month lead time we can continue to get feedback from our customers about what's the right balance and go from there. But we're very encouraged by the ability to have more Racks and we think that complements our full-line stores not detract from them.

Your next question comes from Jennifer Black - Jennifer Black & Associates. Jennifer Black - Jennifer Black & Associates: My first question - and then I have a follow up - I wondered if you could give more color on the Women's departments like Studio, Narrative, POV, Indie, t.b.d., Collectors and BSE? Peter E. Nordstrom: That's a lot of departments. I don't know if I'm going to get into those specifically. I guess what I can say about Women's in general is that as a category it's performing much better and actually relatively to the rest of our departments it's above average. So we've seen improvement in our trends in Women's and that is very encouraging for us and I hope for you as well, knowing what a large percentage of our business that is. Like I said before, there's some common themes about what may have worked, but I don't think I can draw or bucket the departments by saying Contemporary was better than Better or Bridge or Designer. We actually had success in pretty much every category that you could look at and most of it just had to do with how we executed, and the people that planned best and executed best had the best sales. I would say on the whole we're really encouraged about Women's, the direction we're going and the success we think we can have going forward. And again, it's across the whole spectrum of where we participate. Jennifer Black - Jennifer Black & Associates: And then my follow up is: Are you increasing the number of special events you are having between now and the end of the year, and is there anything special to call out for holiday? Erik B. Nordstrom: No, our promotional calendar is roughly the same that it was last year. We have our half-yearly sale coming up for women and kids in November. Men's will be after Christmas. We do have several enhanced rewards events or points around our credit card. Those continue to be very effective vehicles for us to connect with our best customers. We'll have some events on a smaller scale. I think it's fair to say that the customer needs a reason to come to the store and buy. Anniversary is certainly a very compelling reason, but there's smaller reasons, too. It can be as simple as their favorite salesperson giving them a call and saying, "We have new merchandise." A theme here in the call is newness continues to be really vital to our business. And we're in an inventory position to where we can have a really tremendous flow of new merchandise here in the fall, so that gives our people a reason to call their customers. We will have some special events, store to store, that again will give salespeople a reason to connect with their customers. But as far as big sale events, it'll mirror what we did last year.

Your next question comes from Charles Grom - J.P. Morgan. Charles Grom - J.P. Morgan: Mike, just a question for you. So far it looks like in '09 your credit card SG&A expense is up $62 million, I think, if my math is right, but your guidance for the year is $35 to $45 million. I'm just wondering if you're expecting to reverse some of the accruals that you've booked or if you could just sort of triangulate that for us. Michael G. Koppel: Sure. Well, Charles, yes, it is basically the impact that we expect bad debt to rise less in the back half of the year than it did last year. So we're going to be getting some benefit in our expense growth because last year in the third and fourth quarter we started to see the acceleration of the charge-off trends. Charles Grom - J.P. Morgan: So we should model that credit line to be down year-over-year then to get to - to plug it out to $35 to $45 million? Michael G. Koppel: In the back half, yes. Charles Grom - J.P. Morgan: And then my other question would be could you just remind us the difference on sales productivity and four-wall profitability between the Rack and the full-line now that you're stepping up the Rack growth? Michael G. Koppel: Well, you know, we haven't specifically disclosed that, but historically both models have been fairly similar, although in this environment we've seen the Rack four-wall contribution slightly better than full-line.

Your next question comes from Lorraine Hutchinson - BAS-ML. Lorraine Hutchinson - BAS-ML: I was hoping that you'd discuss the gross margin dynamics that you're expecting in the second half. It seems that with inventory in better shape at Nordstrom and throughout the industry we should start to see some benefits on the gross margin line, and I was just curious if there are any offsets or how you're modeling that for the back half? Michael G. Koppel: Yes, in the back half of the year our assumptions include improvement in merchandise margins primarily for one reason, which you called out - that the inventory levels are in better shape and hopefully we won't experience the same kind of rapid deterioration like we had last fall, where inventories got over us and we had very, very high markdown levels. In addition, competitors I think got very aggressive with markdowns. Those two things really impacted us last year. We're not seeing that to the same degree this year, so we do expect merchandise margins to improve in the back half. But I just want to point out, the way we report, our gross profit includes both merchandise margins and buying and occupancy, so there is some offset to those margins because of the deleveraging of buying and occupancy.

Your next question comes from Bob Drbul - Barclays Capital. Bob Drbul - Barclays Capital: Can you give us the increase in the bonus accrual in your assumptions now. Michael G. Koppel: We haven't specifically laid that out, but just to give you some context it did have an impact on the quarter primarily because in the first quarter, while we did see some improvement, at that time I don't think we had the same level of probability that we were going to be paying out higher incentives in 2009. After second quarter performance, which continued over plan, we had to make what I would basically call a catch-up where we booked roughly two-quarters' worth of accruals in one quarter. So that did have an impact on the quarter. And we would expect the remainder of the year to be smoother. Bob Drbul - Barclays Capital: And, Mike, another numbers question on this: Is the total bad debt for the year 215 to 225? Is that the right way to think about it? Michael G. Koppel: I think that's generally in the range.

Your next question comes from Christine Chen - Needham & Company, LLC. Christine Chen - Needham & Company, LLC: I was wondering if you could share with us how you're feeling about premium denim as a category? Peter E. Nordstrom: It's held up pretty well. I think where vendors have been able to deliver newness it's worked. It seems like we keep saying the same thing, but the brands have been able to evolve and keep it fresh and new; it works and the customers have an appetite for it. So actually, if you look at premium denim as a category, it's a strong category for us. Christine Chen - Needham & Company, LLC: And is price point an issue? What's the sweet spot that you're seeing? Peter E. Nordstrom: Well, price point is an issue and there's kind of a sweet spot for every department and classification there. But, again, it's difficult to draw a direct line between low price equals successful selling. It has a lot more to do with newness and trends. So, to be more specific, the trend of being much closer to the leg, the way our leggings are selling really well, but that would translate to skinny jeans, that's working well. Boyfriend styles are working well. So as long as they've been able to evolve and give the customer a reason to buy something new, they can still command a fairly high price.

Your next question comes from Neely Tamminga - Piper Jaffray. Neely Tamminga - Piper Jaffray: Just two follow ups here, first on gross margin. Mike, I hear what you're saying about fewer markdowns, less promotional activity, but just kind of what's the role of IMU broadly in the back half of this year and how much of improvement, if any, are you modeling? And then maybe if you could speak a little bit on the deleverage on the buying and occupancy or on the occupancy side specifically. What sort of comp would you need for that to not be so much of a drag, maybe go even? And then just for Pete or for Blake, some of the improvement in Women's obviously can be fashion related, easier compares, but is it worth maybe taking time just to highlight some of the process changes that have been in place since you guys have made the org change, you know, putting all Women's under Loretta? I'm just wondering if there's a connection as well related to that. Michael G. Koppel: The first part, on the gross margin, is we're actually planning IMU to be down. As we work through this different period with the customer, our role has been to try to present the best opening values for the customer and to continue to create the best value. And so our game plan for the back half of the year is IMUs will be down slightly, okay? There's not expansion there. The second part of the question on the B&O, we can usually keep that pretty flat and get some leverage at a low negative single comp to flat, somewhere in that range. And then the second part? Peter E. Nordstrom: In terms of Women's and what's changed there, I had to think about that for a second because that's been awhile. I think part of that is we're hitting our stride pretty well. We haven't had any kind of structural changes in Women's in some time now and the people that we have in the jobs have got experience and that certainly counts for a lot. I think Loretta deserves a lot of credit for really creating focus and discipline around the planning part of it. I think we just got much better at planning the business upfront so that we're not in this reactive mode. I think all our merchants have taped the benefit of making sure that we have that kind of focus and discipline and so it's really become more institutionalized, I should say. And so we don't have to beat the drum as wildly about some of the more process, blocking and tackling parts of the job, and they're really left to focus more on trends and key items and how to take advantage of that. So it's a good group and the improvement has definitely given them confidence, and I think that's going to bode well for us in the future.

Your next question comes from Barry Sosnick - Gilford Securities. Barry Sosnick - Gilford Securities: I'm looking at the gross margin return on investment. It seems to have held up pretty well even working with [inaudible] numbers, the fixed component in there, the turns offsetting part of the gross margin decline. I was curious how much of this is due to shifts within multi-channels? Michael G. Koppel: Multi-channel, while it's been a great contributor to our overall offering, the relative inventory levels on that side of the business are significantly smaller than what comes out of full-line. And so the GMROI, you know, our ability to keep the GMROIs relatively stable, I think, has been reflected in the discussions around inventory levels relative to sales growth. While we've had some pressure on margin and we've started seeing that pressure on margin moderate, we've been holding turns pretty flat and I think this quarter turns were flat to slightly up. And so I think that's been the story. And as long as you can keep that discipline on the inventory not only does it help you with your productivity and return on investment, but it keeps your open to buy forward fresh and your ability to bring in new goods, which should sustain the turns.

Your next question comes from Lance Vitanza - Knighthead. Lance Vitanza - Knighthead: On the retail SG&A side it looks like there was a fairly sizeable difference between the dollar savings Q1 versus Q2. I was wondering if there was anything in particular behind that and going forward should we expect a similar divergence in H2 or do you think it'll be a little bit more even throughout the back half. Michael G. Koppel: That's primarily due to what I mentioned earlier and that's the fact that we increased our incentive accruals in the second quarter and that covered a two-quarter period. And so that's why you saw a little bit of an aberration in the second quarter. That will be smoothed out in the back half of the year and so we should get back to a little bit more normalized trend.

Your next question comes from Erika Maschmeyer - Robert W. Baird & Company. Erika Maschmeyer - Robert W. Baird & Company: Could you talk about your merchandising adjustments that you've made and efforts to lower your average price point? Where did you end up at the end of Q2 and where do you see that going in the second half? Peter E. Nordstrom: We were down about 10% through quarter two and that excluded cosmetics, which has been pretty flat in terms of its retail pricing. It's not that we had an explicit number we were trying to hit. I think it was more the spirit of it was trying to work with our vendors to find the best possible price upfront. And I've got to give a lot of credit to the vendor community. They've been very willing partners in helping us deliver great value for customers. And so I guess we should anticipate that that would continue through the back half of the year, that we'd continue to have lower-than-average prices from the year before. It's not because we've got a different merchandising or target customer philosophy; it's just working within the brands and categories we participate in and doing it as sharp as we can upfront. Erika Maschmeyer - Robert W. Baird & Company: And then could you clarify a little bit, how much of that is emphasizing different items versus actually offering lower price points for similar items? Peter E. Nordstrom: I'm not sure I understand the question. Erika Maschmeyer - Robert W. Baird & Company: Are you shifting the merchandise so that there are more products at lower price points or are you working with vendors to lower prices on like items? Peter E. Nordstrom: Well, I think it's a little of both. The scope and breadth of what we do really hasn't changed, but it's probably fair to say that the balance has shifted a little bit there within that breadth that we have offered. We've not jettisoned brands that we've [break in audio]. That has not happened. It's mostly been working within the vendor framework that we have in each individual department to deliver the best possible value on the brands the customers expect and the quality that customers expect from Nordstrom.

Your next question comes from Adrianne Shapira - Goldman Sachs. Adrianne Shapira - Goldman Sachs: Just a question on the regions. You'd called out the South and Mid-Atlantic as the strongest regions. Maybe give us an update on California, what you're seeing there, any sort of stabilization in trend? Erik B. Nordstrom: California continues to be stable, as it has all this year. But it is below our average and consistently so. So it remains tough, but it also remains the area where we have our most productive stores on a sales per square foot basis, so they're healthy stores for us. But the trend versus last year continues to be below average. Adrianne Shapira - Goldman Sachs: On a sequential basis have you see any sort of tightening of those declines? Erik B. Nordstrom: It's pretty constant. It hasn't gotten worse, but there's really not a sign of it getting better relative to other parts of the country.

Your next question comes from Ken Stumpfhauser - Sterne Agee. Ken Stumpfhauser - Sterne Agee: Just on the retail SG&A, how much of the decline was actually from fixed cost cuts versus lower sales volumes? Michael G. Koppel: The reductions in SG&A have been roughly half related to our volume performance and half that's been fixed overhead reductions. Ken Stumpfhauser - Sterne Agee: And then just as a follow up if you guys could perhaps talk about general footwear trends and what you anticipate to see in the footwear department in the back half? Peter E. Nordstrom: We had some success in footwear. I think Mike called specifically kids shoes, which was really sensational last month; it had a great performance. But I would say in the women's shoe area probably what's been most encouraging is that we've had a great early read on boots. We had a good anniversary as a result of our making a bet on boots being a hot item for customers and that has been validated and I think it's giving us a lot of confidence on how we're going to place our bets going forward. And that's a great thing, because that's typically a little bit higher average price point and it's a great fashion item, so we're going to be selling a lot of boots.

Your next question comes from Meredith Contente - Broadpoint Capital. Meredith Contente - Broadpoint Capital: I just wanted to know, given that leverage is a little bit higher than your target, do you have any plans for short-term debt coming due in 2010? Michael G. Koppel: We do have $350 million in asset-backed notes that are due in April, and right now frankly we are considering our options there. We indicated earlier that our cash flow performance has been measurably better than our plan and that back in May, because of the attractiveness of the markets, we were able to take down more long-term debt than our original plan. So as of right now we're looking at potential options as to whether or not we refinance those notes. But I think we'll have a much clearer view toward the end of the holiday season.

Your next question comes from Richard Jaffe - Stifel Nicolaus & Company, Inc. Richard Jaffe - Stifel Nicolaus & Company, Inc.: You guys have commented on how you've been really close with your vendors to work out both innovative product and really focus on the right trend, right product for the July sale and also to work with them in terms of price. I'm just wondering how active was their role in terms of helping you get to these lower prices, these lower retails or these sale prices, and how much of that can you count on for the second half or do you think the same kind of relationship we saw in July for the anniversary sale will continue and be as prevalent in the fourth quarter? Peter E. Nordstrom: Yes, I think so. We're all equally motivated because we're all dealing with the same set of challenges, whether you're in the wholesale side of business or the retail side of the business. So we have no trouble getting alignment on what the objectives are, and I think everyone can see where we've had success. We keep saying it, but one of the great things about the anniversary sale is that we get a pretty early read on things that gives us something really positive that we can focus on going forward. Every vendor I've talked to certainly likes talking about the positive stuff we can invest more in rather than how we can reel it in. So we have really no problems finding good collaboration. Richard Jaffe - Stifel Nicolaus & Company, Inc.: It sounds like you've got the visibility on the trends or key products, key items, key categories for the holiday season. Does that sound fair? Peter E. Nordstrom: I don't have a perfect crystal ball, but I think as much as we can we have a good feeling about the emerging themes and trends and what's going to be hot for us, and that's what we're focused on. Richard Jaffe - Stifel Nicolaus & Company, Inc.: What have you guys internally planned for the quarter? It sounds like it was about $0.20 less than you achieved, that is to say, the upside you guided us to is $0.20 greater. Is that an accurate number of something close to that? Michael G. Koppel: That's roughly in the range of where we are relative to plan.

Your final question comes from David Glick - Buckingham Research Group. David Glick - Buckingham Research Group: As value is clearly more important I was wondering if that changes your thinking about the opportunity to grow your private or exclusive brands? Are you thinking about that category as an area that you would grow disproportionately as you think about planning for 2010 and beyond? Peter E. Nordstrom: Yes, I think our private label brands can play a very important role for us in terms of delivering value. It's really kind of in the wheelhouse of how our deal's been set up and where we've had success in the past, so I think that that group is feeling very energized about some of the opportunities going forward. Particularly since we have opened to buy, they think that there's a lot of great value that they can deliver. But I think it's important to note that we don't have a top down plan as a percentage of the business. It still is an organic process where our percentage of our own label product is going to be driven by the desireability of the products that are designed and created by our team there and the way that customers are responding to it. Through last month and the anniversary sale in particular, there were many bright spots in our own label division. That I think bodes well for that. So, yes, the answer would be I'm guessing that it will be an increased percentage of our overall business as we look forward in the foreseeable future. We do also have a new leader in what we call our NPG division - Nordstrom Product Division. He's been with us now for 60 days, I believe, and he's a terrific guy and he's bringing a lot of objective thoughts and ideas about how we can improve. It's just been really a positive thing in the way that he's been able to bring new energy and focus into that business. David Glick - Buckingham Research Group: In terms of your full-line comp trends, clearly they've improved as the first half has progressed. They were down, I think if I remember correctly, down 13 in June, and then July was much better but that was dominated by the anniversary sale. Can you give us a flavor of kind of what the trends were in July outside of the anniversary sale? Did they continue to improve relative to June? Erik B. Nordstrom: July was driven by the anniversary sale. The anniversary sale was markedly better than our selling period outside of that for July. A lot of July, because we start about 10 days before the event with our pre-select for our best customers, the anniversary sale takes up pretty much the whole month. Even when we are not booking the sales yet, we're still engaged in sale activity. So we made more of a bet with our inventory this July of placing a bigger percentage of the buy in anniversary goods versus regular price against last year. It's what we were planning on and I think it played out well for us; demand was certainly there and we had the ammunition to make the most of it.

So that concludes our Q&A. This is Rob. Thank you for joining us today for our second quarter earnings call. As a reminder, a replay of this call will be available for 90 days on the Investor Relations section of Nordstrom.com under Webcasts. Thank you for your interest in Nordstrom.

This does conclude today's conference call. Thank you for participating and you may now disconnect.