Rob Campbell – Treasurer & VP, IR Blake Nordstrom – President Mike Koppel – EVP & CFO Pete Nordstrom – EVP & President, Merchandising

Michelle Clark – Morgan Stanley Wayne Hood – BMO Capital Lorraine Hutchinson – Bank of America Jennifer Black – Jennifer Black & Associates Deborah Weinswig – Citigroup Barbara Wyckoff – Jesup & Lamont Neely Tamminga – Piper Jaffray Charles Grom – JP Morgan Edward Yruma – KeyBanc Dana Telsey – Telsey Advisory Group Bob Drbul – Barclays Maggie Gilliam – Gilliam & Company Adrianne Shapira – Goldman Sachs Liz Dunn – Thomas Weisel Partners Richard Jaffe – Stifel Nicolaus

Hello and welcome to the Nordstrom 2009 fourth quarter and full-year conference call. At the request of Nordstrom, today’s conference call is being recorded. All lines have been on a listen-only mode until the question-and-answer session. (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 fourth quarter and fiscal year 2009 performance and outlook for 2010. Joining us for the Q&A are Pete Nordstrom, President of Merchandising, and Erik Nordstrom, President of Stores. And now I'll turn the call over to Blake.

: Overall, we’re very encouraged by our business and how we have adapted to the changing environment. We believe our business is in a much stronger position now than it was going into the downturn that began roughly two years ago. It’s gratifying to see such strong fourth quarter results and to end the year with improved earnings. But it was our focus on the customer that led us to major improvements in our business. It’s because of our service commitment that we are better positioned financially, competitively, and most important, with our customers. Our multichannel improvement is one example. Customers felt see a difference between a Nordstrom store and Nordstrom.com. To them it’s just Nordstrom and they want service experience that lived up to their expectations, no matter how they shop. In fall of last year, we launched a new inventory platform that dramatically improved our ability to help more customers. We now have the ability to truly share inventory between all our full line stores and Nordstrom.com. We can fulfill online orders from any Nordstrom store anywhere. As always, the key is how all of this benefits the customer. We are better able to satisfy our customers demand no matter how they choose to shop. Customers have access to more of our merchandise online, ultimately, we are saying, yes, more often to more customers. This new capability meant we were able to take our inventory efficiency to a whole new level. We increased sell-through rates. Inventory turns improved dramatically and are now on par with our highest levels ever. In addition to our multichannel efforts, a significant contributor to our success has been the performance of our merchants resulting in an improved offering. We stayed balance which gave us the flexibility to evolve with our customers. As sales improved we had opened a buy which enabled our merchants to react quickly to the feedback from our customers about our item. We moved up receipts, a steady flow of fresh merchandise gave customers more reasons to visit us in our stores and online. Customers continued responding to the newness in our stores which further drove sales. As a result, our merchandise is now as fresh, compelling and current as it’s ever been. Another key factor was our discipline in managing expenses, while continuing to invest in our future. We were thoughtful about expenses, questioning the things that didn’t clearly help us take care of customers while not compromising areas that enhance the customer experience. We also recognize the importance of opening more stores in top retail markets across the country. We opened three new Nordstrom full line stores, relocated another and opened 13 new Nordstrom Racks in 2010; we will continue opening more full line in Rack stores while also getting back to a more regular schedule remodeling existing stores. As we look ahead we believe that though trends have improved, customers remain cautious. We believe our biggest opportunity is improving execution at point-of-sale and feel we’re well positioned to gain market share. We have learned a great deal from this difficult environment. We think the adversity has made us better. We are more efficient and operating more profitably than before. We are finding new ways to better leverage our multi-channel capabilities. We are seeing more regular priced selling as customers continue responding to our newness, value and quality. Our margins are solid and we strengthened free cash flow. Most important, we continue to do everything in our power to elevate our focus on the customer. Our challenge is to keep building on the momentum. Our number one goal firmly remains improving customer service. We think we have an opportunity through our merchandise assortment, service, and new tools, to gain more of our customers trust and business. Ultimately, we hope this will enable us to meet or exceed the goals we have laid out for 2010. Now I will turn the call over to Mike. : Overall, we’re very encouraged by our business and how we have adapted to the changing environment. We believe our business is in a much stronger position now than it was going into the downturn that began roughly two years ago. It’s gratifying to see such strong fourth quarter results and to end the year with improved earnings. But it was our focus on the customer that led us to major improvements in our business. It’s because of our service commitment that we are better positioned financially, competitively, and most important, with our customers. Our multichannel improvement is one example. Customers felt see a difference between a Nordstrom store and Nordstrom.com. To them it’s just Nordstrom and they want service experience that lived up to their expectations, no matter how they shop. In fall of last year, we launched a new inventory platform that dramatically improved our ability to help more customers. We now have the ability to truly share inventory between all our full line stores and Nordstrom.com. We can fulfill online orders from any Nordstrom store anywhere. As always, the key is how all of this benefits the customer. We are better able to satisfy our customers demand no matter how they choose to shop. Customers have access to more of our merchandise online, ultimately, we are saying, yes, more often to more customers. This new capability meant we were able to take our inventory efficiency to a whole new level. We increased sell-through rates. Inventory turns improved dramatically and are now on par with our highest levels ever. In addition to our multichannel efforts, a significant contributor to our success has been the performance of our merchants resulting in an improved offering. We stayed balance which gave us the flexibility to evolve with our customers. As sales improved we had opened a buy which enabled our merchants to react quickly to the feedback from our customers about our item. We moved up receipts, a steady flow of fresh merchandise gave customers more reasons to visit us in our stores and online. Customers continued responding to the newness in our stores which further drove sales. As a result, our merchandise is now as fresh, compelling and current as it’s ever been. Another key factor was our discipline in managing expenses, while continuing to invest in our future. We were thoughtful about expenses, questioning the things that didn’t clearly help us take care of customers while not compromising areas that enhance the customer experience. We also recognize the importance of opening more stores in top retail markets across the country. We opened three new Nordstrom full line stores, relocated another and opened 13 new Nordstrom Racks in 2010; we will continue opening more full line in Rack stores while also getting back to a more regular schedule remodeling existing stores. As we look ahead we believe that though trends have improved, customers remain cautious. We believe our biggest opportunity is improving execution at point-of-sale and feel we’re well positioned to gain market share. We have learned a great deal from this difficult environment. We think the adversity has made us better. We are more efficient and operating more profitably than before. We are finding new ways to better leverage our multi-channel capabilities. We are seeing more regular priced selling as customers continue responding to our newness, value and quality. Our margins are solid and we strengthened free cash flow. Most important, we continue to do everything in our power to elevate our focus on the customer. Our challenge is to keep building on the momentum. Our number one goal firmly remains improving customer service. We think we have an opportunity through our merchandise assortment, service, and new tools, to gain more of our customers trust and business. Ultimately, we hope this will enable us to meet or exceed the goals we have laid out for 2010. Now I will turn the call over to Mike. : Overall, we’re very encouraged by our business and how we have adapted to the changing environment. We believe our business is in a much stronger position now than it was going into the downturn that began roughly two years ago. It’s gratifying to see such strong fourth quarter results and to end the year with improved earnings. But it was our focus on the customer that led us to major improvements in our business. It’s because of our service commitment that we are better positioned financially, competitively, and most important, with our customers. Our multichannel improvement is one example. Customers felt see a difference between a Nordstrom store and Nordstrom.com. To them it’s just Nordstrom and they want service experience that lived up to their expectations, no matter how they shop. In fall of last year, we launched a new inventory platform that dramatically improved our ability to help more customers. We now have the ability to truly share inventory between all our full line stores and Nordstrom.com. We can fulfill online orders from any Nordstrom store anywhere. As always, the key is how all of this benefits the customer. We are better able to satisfy our customers demand no matter how they choose to shop. Customers have access to more of our merchandise online, ultimately, we are saying, yes, more often to more customers. This new capability meant we were able to take our inventory efficiency to a whole new level. We increased sell-through rates. Inventory turns improved dramatically and are now on par with our highest levels ever. In addition to our multichannel efforts, a significant contributor to our success has been the performance of our merchants resulting in an improved offering. We stayed balance which gave us the flexibility to evolve with our customers. As sales improved we had opened a buy which enabled our merchants to react quickly to the feedback from our customers about our item. We moved up receipts, a steady flow of fresh merchandise gave customers more reasons to visit us in our stores and online. Customers continued responding to the newness in our stores which further drove sales. As a result, our merchandise is now as fresh, compelling and current as it’s ever been. Another key factor was our discipline in managing expenses, while continuing to invest in our future. We were thoughtful about expenses, questioning the things that didn’t clearly help us take care of customers while not compromising areas that enhance the customer experience. We also recognize the importance of opening more stores in top retail markets across the country. We opened three new Nordstrom full line stores, relocated another and opened 13 new Nordstrom Racks in 2010; we will continue opening more full line in Rack stores while also getting back to a more regular schedule remodeling existing stores. As we look ahead we believe that though trends have improved, customers remain cautious. We believe our biggest opportunity is improving execution at point-of-sale and feel we’re well positioned to gain market share. We have learned a great deal from this difficult environment. We think the adversity has made us better. We are more efficient and operating more profitably than before. We are finding new ways to better leverage our multi-channel capabilities. We are seeing more regular priced selling as customers continue responding to our newness, value and quality. Our margins are solid and we strengthened free cash flow. Most important, we continue to do everything in our power to elevate our focus on the customer. Our challenge is to keep building on the momentum. Our number one goal firmly remains improving customer service. We think we have an opportunity through our merchandise assortment, service, and new tools, to gain more of our customers trust and business. Ultimately, we hope this will enable us to meet or exceed the goals we have laid out for 2010. Now I will turn the call over to Mike.

Thanks, Blake, and good afternoon, everyone. As Blake commented, we are encouraged by our performance during the fourth quarter and for all of 2009. We entered the year with uncertainty, given the volatility of the retail environment in 2008 and are exiting 2009 with greater confidence in our ability to manage our business effectively in challenging times. Throughout the year, the Company demonstrated discipline in its management of inventory and expense, complimenting the continued focus on our customer. The buying organization maintained inventory levels that were well aligned with sales volume allowing for constant flow of new merchandizing to our stores and the flexibility to increase receipts as business improved. This resulted in improving same-store sales in every quarter, positive same-store sales in every month of the fourth quarter and an increase in market share. Despite an annual decline in same-store sale, the Company achieved higher net earnings than in 2008 and a highest inventory turnover in recent history. For the full year, 2009 earnings per share were $2.01, an increase of 9.8% from $1.83 last year. Earnings before interest and taxes or EBIT were $834 million. This represented a 7% increase compared with last year’s EBIT of $779 million. While the earnings growth gets us back on track it was roughly 130 million below our average EBIT over the last five years, clearly there is opportunity for further increases. Total net sales decreased 0.2%, including a 4.2% same-store sales decrease. Fourth quarter earnings per diluted share were $0.77 compared with $0.31 last year. EBIT for the fourth quarter of 2009 was 310 million, an increase of 154 million or 99% compared with last year’s EBIT of 156 million. Total retail sales in the fourth quarter increased to 2.54 billion, up 10.3% and same-store sales increased 6.9% compared with the same period in 2008. Most of our merchandise categories generated positive same-store sales results during the quarter. Highlights for multichannel sales which include full line stores and Nordstrom Direct combined were women’s better apparel, women’s shoes and jewelry. The Midwest, South and Northwest regions were the top performing geographic areas for full line stores on a year-over-year basis. Combined, multichannel same-store sales increased 7.1%. Finally, Nordstrom Rack continued its sales growth for the fourth consecutive quarter with the same-store sales increased of 4.6%. Fourth quarter gross profit as a percent in net sales increased approximately 530 basis points, recovering most of the 560 basis points decline we experienced in the fourth quarter of 2008. Merchandise margin was by far the largest driver of this improvement. Although the increase in sales allowed for some leverage in buying and occupancy costs, despite higher performance related expense. Mark downs were reduced considerably from last year’s fourth quarter, which was a highly promotional period with weak consumer demand. We ended the quarter with sales per square foot up 6.7% and inventory per square foot down 4.1%. Retail SG&A increased 56 million compared with last year’s fourth quarter. Adjusting for new store expenses, retail SG&A increased 43 million. During the quarter, our fixed expenses decreased 18 million year-over-year, but our performance related costs and variable expenses increased due to the improved sales and earnings results. Last quarter, we discussed the concept of EBIT flow through, which measures our ability to produce earnings on incremental sales. Based on recent history, we have achieved average flow through of between 25% to 35%. This quarter, our flow through was well above this range due to the significant reductions in mark downs this year. Although we benefited from this situation in 2009, this elevated level of flow through is not sustainable and we would expect to return to a 25% to 35% level as the operating environment stabilizes over time. Now on to our credit business, as we stated in the past, our credit business is strategically important to us because of its focus on building customer loyalty. Our cardholders visit our stores quite as often and spend 20% more each visit While this benefit is not captured in the credit P&L, it lists the performance of our company, while helping to establish and deepen the connection with our customers. That being said, we continue to experience challenges in the consumer credit business. Fourth quarter credit card revenue increased 16 million over the same period last year. Our delinquency rate in the fourth quarter was 5.3%, which is higher than our third quarter rate of 4.9%. Write-off dollars in the fourth quarter increased 22 million year-over-year to a rate of 10.5% of average receivables, which was higher than our third quarter rate. During the fourth quarter, we increased our reserve for bad debt by 20 million, up to 190 million A key driver is the continued weakness in California relative to other geographic regions. Coupled with uncertainty about the overall economic environment and its impact on credit performance, we believe that the increase to the reserve is appropriate. With respect to our overall financial position, today, it is significantly stronger than during the last economic downturn. During 2009, we continue to see improvement in the cash generated from our business, ending the year with a cash balance of 795 million. Through improving earnings, working capital initiatives and lower capital expenditure, we generated free cash flow of 579 million in 2009. We finished the quarter with an adjusted debt-to-EBITDA ratio of 2.5 times. While at the upper end of our 2 times to 2.5 times target, it was better than our expectations, lower than the 2.8 times from third quarter and well within the range to maintain our investment grade rating. We believe that we could return to the lower end of our target adjusted debt-to-EBITDA range within the next 12 months. Next, I will discuss our outlook for fiscal year 2010. As in the past, our approach to providing annual guidance is consistent with how we plan the business. In 2009, we demonstrated our ability to plan the business at a level that reduces our downside risk and then execute with the flexibility to adjust quickly if trends change. Clearly, there is momentum from our fourth quarter performance that can carry over into 2010, but we recognize that the second half of the year could be tougher as they overlap with the improving trends from the latter half of 2009. Additionally, there is lingering caution with customers given the overall state of the economy. For 2010, we are planning a same-store sales increase of 2% to 4% with the first half of the year 300 basis points higher than the second half. This plan delivers earnings per share in the range of $2.35 to $2.55 for the full year. We expect our 2010 gross profit rate to be 20 basis points to 60 basis points higher than the 2009 rate. Gross profit rates are planned for greater improvement in the first half of the year compared to 2009, as relatively weaker sales trends in the first and second quarters of last year, increased mark down pressure. Retail SG&A expenses are anticipated to be 125 million to 175 million higher than 2009 with a decrease in the retail SG&A rate of 10 basis points to 20 basis points. Over the last two years we have taken steps to flex our operating model to adjust the changing sales levels. For example, although our sales per square foot in 2009 declined to a level equal to what we achieved in 2004, we effectively manage our expenses per square foot below 2004 levels. This flexibility in managing our business and the ability to adjust quickly to changes in trend has put us in a healthy position heading into 2010. Credit card revenue is expected to increase by 35 million to 45 million, as our accounts receivable are expected to show moderate growth. Our credit SG&A is expected to decrease by 10 million to 25 million due to lower bad debt expense. There is a strong correlation between write offs and unemployment rates. We currently have an average unemployment rate projection of approximately 10.5% for all of 2010. Interest expense is anticipated to be lower by 15 million to 25 million, due to lower debt levels, reduced interest rates, and lower borrowing facility fees. It is likely that we will retire the 315 million securitization debt with available cash when it matures in April 2010. We expect 2010 capital expenditures of approximately 325 million to 375 million. This is approximately 100 million higher than 2009 due to a number of remodels and Rack openings. In 2010, we expect to open three full line stores and approximately 16 Racks. Roughly 70% of all capital expenditures will be spent on new stores, remodels and relocations, while the remaining capital expenditures are for technology, maintenance and general purposes. Depreciation and amortization will be approximately 275 million for the full year. In 2010, we anticipate generating approximately 300 million in free cash flow. We will use our cash primarily to reinvest in the business and to maintain an appropriate capital structure. In closing, we begin 2010 with greater flexibility than a year ago. We are solid financially which allows us to invest in the business. Our business model is more efficient, we are coming off the year of improving performance, and we are striving to improve execution and grow our market share. We continue to take what we believe is a realistic approach to planning our business, one that promotes editing and prioritizing in terms of capital, inventory and expense, but allows us to realize significant upside increases over plan materialize. With that, I will now turn the call back to Rob.

Thank you, Mike. Before taking the first question 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 will ask that you return to the queue. With that, we will now take the first question.

Thank you. (Operator instructions) Our first question today is from Michelle Clark from Morgan Stanley. Michelle Clark – Morgan Stanley: Yes, thank you, and good afternoon. First question is on the credit piece, can you just give a sense of what your outlook in terms of delinquency rates and charge-offs are for 2010, is the first question? And then secondly, in the prepared remarks, you spoke about the business running more efficiently than it has, heading into the downturn, can you give a sense as how to think about the longer-term operating margin goal of the Company over the next few years? Thank you.

Okay, Michelle, thanks for your question, this is Mike. First, on the credit piece, clearly, we saw after some moderating performance in the middle of the year with delinquencies and write-off, we saw some acceleration in the fourth quarter in both delinquencies and write-offs. In particular, we’re seeing continued high write-off rates and over 50% of our write-off dollars coming from California. So taking that all into account, we are looking at our performance next year from a write off standpoint to be somewhat consistent with where it is this year, which is the reason why we ended the year with a higher reserve. We don’t see any significant improvement nor have we planned any going through into next year. And continue to remain cautious until we see some material movement in our delinquency rates. In terms of the efficiency of the model, you may recall that, if you look at our pretax margins as they exist right now, coming out of 2009, on an equal sales per square foot basis, which we were similar around '03 and '04, our pretax margin rate is better than it was back then. So, our ability to generate earnings as a percent of every sales dollar is greater than it was five years or six years ago. So, we believe going forward there’s an opportunity for us to achieve some of those big margins, but it is going to be reliant on our ability to sustain several periods of, I would say, a mid single digit comp. Thank you.

Thank you. Our next question is from Wayne Hood from BMO Capital. Wayne Hood – BMO Capital: Yes, I just had two questions actually. How are you building up the AUR around the 2% to 4% growth in comps for the year? And then can you discuss initiatives or potential improvement that you can see in the mid men’s business, which I think Blake or Pete was about 15% of the business and have been underperforming a little bit, and (inaudible) just help '010 and '011? Thank you.

Wayne, this is Mike. I will take the first half. As far as the AUR, we have seen an increase in transactions, but we haven’t baked in any increase in the AUR as we go through next year. So, it’s going mostly be from increases in transactions.

This is Pete. In terms of the men’s business, last year, in total was pretty difficult as it stacks up relative to the other divisions, but I would say, in the last few months of the year, the trend improved pretty dramatically and gust the point, at least from your comparing it to the year, it’s right in line with the other divisions. So, I think the momentum has started to shift back to the positive in men’s and we would anticipate that we have some, some ground to make up there and we should be doing better in men’s. Wayne Hood – BMO Capital: Is there anything behind that you can point to and what do you expect it to do in '10?

Ultimately for us, it's just understanding our customers better and where we’ve had success across the board of merchandising is where we’ve gotten much more line with the customers, desires around classification, fit and style. So, I would say for men’s, in particular, a lot of our work is around really trying to understand the occasions and what he’s wearing, for example, work, and work isn’t just suit, it’s other things clearly. And so, I think, we can do a much better job of being responsive to what our male customers are willing to buy today. Wayne Hood – BMO Capital: Okay, thank you.

Thanks, Wayne

Thank you. Our next question is from Lorraine Hutchinson from Bank of America. Lorraine Hutchinson – Bank of America: Thank you, good afternoon. Just to follow-up on some of the credit question, just curious what are you looking for, what metrics are you using to determine when you will start releasing some of those reserves down the line? And then also your revenue guidance increase is that just simply from higher accounts receivable at the same rate that you’re charging now or are there other any rate creases incorporated in that?

Sure. Lorain, this is Mike. In terms of the metrics, it’s pretty straightforward. The most obvious ones that we look at weekly are the delinquency metrics of which we are able to parse out by age bucket. So we keep a very close eye on those, in addition, we look at current period write-off trends. And then the last thing in terms of forward-looking, we look at what expectations are around unemployment as we set up our reserves. I think the most important thing is we have to start to see our current period delinquency trends start to roll into the later periods, which is going to suggest that those bad debt levels are going to start to reduce and to-date we haven’t seen that happen yet. And then the second thing in terms of the revenue, those revenue numbers do not preclude any increase in APR; it’s purely based on growth in the receivable balance. Thanks. Lorraine Hutchinson – Bank of America: Thank you.

Thank you. Our next question is from Jennifer Black from Jennifer Black & Associates. Jennifer Black – Jennifer Black & Associates: Good afternoon. And you’ve made great progress. Rob Thank you.

Thanks, Jennifer. Jennifer Black – Jennifer Black & Associates: I have two questions. I understand you’re doing some testing with special events online, for example, secret sales are given time period in the day. I wondered what kind of response you’re seeing from the advanced heavy and have you received any additional information from these customers that can be applied to your full line stores as well? And then, my other question is, do you foresee the Rack going online, and if so, when, and what are your international plans for online? Thank you.

Hi Jennifer, this is Blake. I will take a stab at those. Those events or those tests that you refer to have to do with the private sales subject that has been tested with some of our competitors, and in that particular channel with a number of players that just solely focus on how the private sale membership approach. And since we have that functionality and we were seen some response from our customers around us that they like that, we thought we’d try and I would say, in those first couple of early tests that we were pleased with the favorable response, and so we are going to going forward continued to expand upon that do a few more tests and enhance our learnings. Because the key to this is we want to be there where the customer wants us to be in terms of how we serve her. And if that means a private sale, for those loyal customers, and again, we have that ability to do that and we think as well as anyone, so we’re working on that. The second, you talked about the Racks, and its ability to be online and that’s coming, it’s harder for our bottle, because with that clearance, there’s lots of broken runs, and so that whole ability to have that merchandise clearly picture than and relate on the site and had to be able to fulfill that, has been an opportunity for us. But we are working on that. And we think that represents an opportunity both for the company, for the Rack and our multichannel efforts. So, we’re going to enhance our web site, that is August, and the rack functionality part of this should be coming after that. It’ something we’re working on. Then lastly, you talked about international business and I think you know that in November, we started an effort with a third-party provider that we’re able to online, much more efficiently and accurately service the customer on a global basis. It’s a small start, but there’s some terrific learnings about customers that have been desirous of this and we hope to down the road give you a little more insight on it, it’s very early because it just started in November, but we’re very encouraged. Jennifer Black – Jennifer Black & Associates: Thank you very much, good luck.

Thanks, Jennifer.

Thank you. Our next question is from Deborah Weinswig from Citigroup. Deborah Weinswig – Citigroup: Good evening. Your one of the first recharge increase the volume messaging on our selling floor, can you talk about your messaging for 2010, because it doesn’t sound like we should expect it to take AUR back up, if I’m correct?

This is Pete. Our marketing message has really been a lot around style and breadth of price point and offer. So, where we have had successes we’ve been able to say, here is really the hottest styles and classifications and here’s the breadth that we have to offer. So, I think one thing that’s working in our advantage is that, that breadth is naturally in our selection anyway. So, we just found a way to play on that by focusing on the style trends. Deborah Weinswig – Citigroup: Okay. And then, obviously, your recent comp results especially since October then is impressive, can you discuss the results of your recent personal shopper program and maybe the impact that’s had on your top line results?

The personal shopper program? Deborah Weinswig – Citigroup: Yes.

As you know we always got this heightened focus around doing a better job at the point-of-sale, and if you think about what personal shopper is, it is the foremost example of personalized service and high touch service. So, what we try to do aside from a lot of acquisition of customers is around retention, and trying to get our best sales people connected with our best customers, really not much more complicated than that. But, we’ve been pretty focused on that and that’s worked out well. So, I think, hopefully, our chance to be able to gain market share and succeed has a lot to do with the way that we can execute the service philosophy, one-on-one with the customer and personal touch or personal shopper and all that has been part of it. Deborah Weinswig – Citigroup: Great, best of luck in 2010.

Thank you, Deborah.

Thank you. Our next question is from Barbara Wyckoff from Jesup & Lamont. Barbara Wyckoff – Jesup & Lamont: Hi, everyone. Good job managing through last year.

Thanks, Barbara. Barbara Wyckoff – Jesup & Lamont: I guess the question is if you could do over for third quarter and fourth quarter where would you do over?

Barbara, this is Blake. We’re looking at ourselves here a little bit with that question. You’re in town not too longer we talked about the second of the year and the year in total. And I think, certainly, our results exceeded our expectations and our plans. And we couldn’t be more pleased with our team’s ability to enhance some of our disciplines, the focus on the customer and we think our results are reflective of those efforts for, a pretty broad time period, because we’ve been in this tough economy now, 18 months to 24 months. And so, we look at the third quarter and fourth quarter, I think, what we’re most pleased with, is that our team responded quickly and maintained some enhanced disciplines with expenses, but particularly, with inventory management. We were much more fluid and able to flow in new goods and the customer was particularly receptive to that freshness and that fashion. And so I think our challenge going forward is how do we at business improve, maintain that flexibility. Barbara Wyckoff – Jesup & Lamont: Okay, thank you.

Thank you. Our next question is from Neely Tamminga from Piper Jaffray. Neely Tamminga – Piper Jaffray: Great, good afternoon. I’m going to add my congratulations as well.

Thank you, Neely. Neely Tamminga – Piper Jaffray: So, recent press you guys about changes to the buying organization, it doesn’t seem like it’s very widespread if it’s true, in terms of changes on the buying structure, but just wondering moving a little bit less late from regional, little bit more to centralized, could you just maybe comment on that recent press and maybe what the, if it’s true then what the offset, change, improvement, how that some of your bigger purchase strategy?

Sure. This is Pete. This is something that we’ve been embarking on for about ten years and we’ve been really transparent about it all the way along, saying that our goal is not centralization or decentralization. It’s just how can we best leverage information to create a great shopping experience for our customers. Because we’ve made a lot of investments in our inventory management systems and just information systems, in general, and consumer insight, we’re just in a much better place to be able to be much more efficient about how we buy merchandise. So we’ve had a natural evolution with our structure is related to that and I think what you’re commenting on is, in some regards of the last depth of the bunch of move that have already been made, big chunk of the Company is pretty darn centralized anyway, so, it’s really not a story, just a continued evolution of what started about ten years ago.

Neely, this is Mike. I just want to add one other thing on to that is keep in mind, the effort that the merchant teams have made over all these years, we’re investing about 5 billion a year in inventory, and this is just another way for us to get more productivity there. And it’s all about; it’s all about the top-line and improving the customer experience and the inventory productivity in the Company. Neely Tamminga – Piper Jaffray: Thanks, guys, good luck.

Okay.

Thanks.

Thank you. Our next question comes from Charles Grom from JP Morgan. Charles Grom – JP Morgan: Thanks, good afternoon. Just on the comp guidance, just looking back, if my math is correct, it looks like the internet business added about or drove almost half the comp in the fourth quarter or about 3.5%. So, I understand that the element of conservatism but if you can maybe just walk us through how you guys are building up to the 2.4% comp, not from an AUR perspective, but from a full line Rack and then what do you expect from the internet here in the full year? Thanks.

Charles, this is Mike. Just one point of clarity. It’s 2% to 4%, 4% being the higher end of our sales guidance range. We haven’t really broken out how we built our business, but suffice it to say, I think our earlier comments to that the way we’re sharing our expectations for 2010, and the way we’ve planned the business and consistent with the relative past, our ability to leverage that plan, and to create additional earnings off of what we believe is an appropriate plan, inventory and expense structure is clearly just how we’re approaching it. You should expect that if we outperform that, you should expect to see that 25% to 35% leverage on to the bottom-line. Just to close that we’re not going to share any specific guidance by business, but suffice it to say that we believe it’s an appropriate plan that will allow us to further leverage our results for next year. Charles Grom – JP Morgan: Okay. And then one more if I could, Mike, just on the second quarter or in the fourth quarter, GPM performance, can you break down how much of that was cost of goods sold versus occupancy, you said the majority was for merchandising efforts and mark downs. Can you give us sort of an expect?

Sure. On the gross profit, I think of the 530 basis point improvement, it was roughly 470 basis points to 480 basis points that came from margin, the balance was the leverage on the buying and occupancy. Charles Grom – JP Morgan: Okay. Is there different hurdle rates within SG&A versus the buying and occupancy within COGS or are they similar?

Different hurdle rates, Charles - Charles Grom – JP Morgan: In terms of fixed cost hurdle rates.

The buying and occupancy tends to be almost 100% primarily fixed was the SG&A, roughly, 40% of the SG&A is variable, if that answers your question. Charles Grom – JP Morgan: Pretty much does. Thanks a lot.

Okay, thanks.

Thank you. Our next question is from Edward Yruma from KeyBanc. Edward Yruma – KeyBanc: Hi, thanks very much for taking my question. As it relates to gross margin guidance for the year, I know that you still have a relatively easy comparison of first half of the year, but obviously gets much tougher as the year progresses. Does your guidance imply that gross margins actually contract in the back half of the year or how should we think about that that came from improvement? Thank you.

Ed, this is Mike. The gross profit guidance doesn’t imply that it contracts in the back half, but it does imply that we’re getting more improvement in the front half. Edward Yruma – KeyBanc: Got it, thank you.

Okay, Ed.

Thank you. Our next question is from Dana Telsey from Telsey Advisory Group. Dana Telsey – Telsey Advisory Group: Good afternoon, everyone. Can you talk a little bit about how you are thinking of inventory planning as we progress through the year, given the progress you’ve made in '09, how do you see the increases building as you go throughout the year? Thank you.

Hey, Dana, this is Pete. One thing that’s interesting for us going forward is that it’s like we’re in complete new territory, given the fact we got this functionality around one view of inventory, so, any historical measurement we may have had around turn, is probably a bit understated in terms of what’s about for the business. As you have seen we’ve been able to turn business faster, it’s been a good thing for the business on the whole. Ultimately, we want to align sales and inventory growth a little bit more. We’ve had a bit of a delta there because our business, our sales improved quite a bit. They’re in the fourth quarter. I think that there’re some inventory that we can add, but I don’t think that we’ve got to bring it so some level based on our history. I think you should expect that we would have faster turns as we go forward just because that’s what we’re capable of doing now. Dana Telsey – Telsey Advisory Group: Thank you.

Thanks, Dana

Thank you. Our next question is from Bob Drbul from Barclays. Bob Drbul – Barclays: Hi, good afternoon.

Hi, Bob. Bob Drbul – Barclays: Hi, guys. The one question that I have is around the sales for the fourth quarter, could you give us about what the footwear comp was and what was the average price point relative to the basket and how much of that was the boot season that really benefited it on the high price side?

This is Pete. I’m not really going to give that detail. I think it is fair to say that our shoe performance is relatively good last year, as you stack up all our divisions, it’s been consistently strong and it’s actually been strong across all price points too, which is super encouraging. The boot business was good. That played a factor and if you look at it that way would have range average price points some, but our shoe business is strong, but we still think there’s market share that we could gain there. Bob Drbul – Barclays: Okay. And then if I could just follow-up on a different topic real quickly, when you look at the 2010 incentive comp plan, is it going be based again on year-over-year EPS and a combination in the stock price, how should we think about that when we look at the guidance that you just gave?

Bob, this is Mike. Our incentive, in general, is based on pretax earnings, it’s not on EPS and it’s certainly going to be based on what we believe is an appropriate growth for the company, that’s going to create measurable shareholder value. In 2009, clearly, our expectations were lower, because we came off a very difficult year in '08. We were fortunate enough to actually generate earnings increases on sales declines. But as far as 2010 is concerned, we are clearly coming off of a different base with higher momentum and we expect to have better performance from the Company. Bob Drbul – Barclays: And Mike, is it on growth in dollars, is it on growth percentages or dollar amount, in terms of the way that you will be reviewed.

We have earnings dollar targets that clearly are based on what we believe are the appropriate percentage rate growth of earnings. And then those get cascaded through the organization at a sales and margin level and those are the biggest drivers within the Company.

Thank you. Our next question is from Maggie Gilliam from Gilliam & Company Maggie Gilliam – Gilliam & Company: Yes, one of the things that getting a little bit level with your common platform for direct stores is what actually is in that sale. How are you distinguishing orders placed in the store and orders placed on the internet and picked up at the store?

Maggie, this is Blake. We’re blurring in those lines and we’re reporting now multichannel sales, which is full line churn direct together and we’ve mentioned now on a couple calls, here in the past, that going forward, to just be cautious a little bit and not just looking in a silo, and you look at the numbers, when they’re broken out, because we’re most concerned about the outcome and the customer and less interested in which area of our business gets the credit per se. And you and I have talked about how that customer really wants to shop on her terms, seven days a week, 24 hours, and whether that’s top knowledge or fashion or working to buy it, or working to return it. And we’ve made some great progress along those lines, but it’s going to continue to evolve, which when you just look at an individual number won’t have the real impact or clarity for us, so, we have to be sensitive to how we incent and how we measure this. But we think if we can keep it grounded in the customer it really serves us well. Maggie Gilliam – Gilliam & Company: I can understood how it’s got to be internally, but why even break it down when you report externally anymore?

Well, there’s – Maggie Gilliam – Gilliam & Company: There’s no standard, if somebody could come out standards for this.

Mike is asking to respond. I guess I wanted to chime in, too. We were just talking about that and this last couple of quarters are starting break it out, both separately and individually and probably moving towards that. So we want to be sensitive that we are communicating clearly, to all of you, and our shareholders about the key drivers of our business. But the best way to monitor and measure our business is from a multichannel.

Maggie Gilliam – Gilliam & Company: Okay

Thanks.

Thank you. Our next question is from Adrianne Shapira from Goldman Sachs. Adrianne Shapira – Goldman Sachs: Thanks. I had two questions. First, Mike, as it related to the gross margin projection, the 20 basis points to 60 basis points, can you shed some light in terms of how much you expect the improvements to come from merchandise margins versus the buying and occupancy leverage? And then my second question related to, you expect to end the year with about 300 million of free cash flow, given the sense of what your plans are for that?

Sure Adrian. First, in terms of next year’s gross profit, the majority of the gross profit expansion will come from gross margin. We’re going to get some leverage from buying occupancy, but keep in mind, we’ve got some additional square footage that opened the back half of this year and will open next year. So that will put a little strain on our ability to leverage that. And then, I’m sorry, the second part of your question was? Adrianne Shapira – Goldman Sachs: Free cash flow, 300 million?

Sorry, yes, thank you. The free cash flow. We’re fortunate right now to find ourselves in a position where our business is generating some, some pretty good cash flow and I think, what’s appropriate for us right now as a team is to understand what’s the appropriate capital structure is for our business in the long-term, not just next year, but next year and beyond. Now, that being said, we’re going to continue to do what we’ve always done is that is reinvest back in the business, at rate that continue to deliver, value increases for the shareholder. And to the extent that we can return excess capital to the shareholder we will, but we need to continue to evaluate that. Thank you.

Thank you. Our next question is from Liz Dunn from Thomas Weisel Partners. Liz Dunn – Thomas Weisel Partners: Hi, good afternoon, let me add my congratulations. I guess I just wanted to understand your comp guidance a little bit better. So, when you say, it’ll moderate in the second half, shouldn’t it also moderate on more difficult comparisons just in the second quarter, so first quarter being the best and then sequentially get a little bit lower from there? And then does your guidance today suggest that you’re running in line with, if we take the two to four and add 300 basis points, is that where you are currently running or is there anything else we should understand about February when looking at your guidance? Thanks.

Sure. Liz, our comments regarding the sales were really generalize to first half back half, and so, you are right, if there’s a little bit more clarity by quarter based on what you’ve said, I think that’s reasonable. In terms of what we said, it has nothing do with how we’re seeing in February or anything like that. It purely has to do with how we envision the year, and how we plan the year out from an inventory and expense standpoint. Liz Dunn – Thomas Weisel Partners: Okay. So no comments on February sale?

No comments on February. Liz Dunn – Thomas Weisel Partners: Okay, thanks.

Good try, though.

Thank you. Our final question today is from Richard Jaffe from Stifel Nicolaus. Richard Jaffe – Stifel Nicolaus: Thanks very much. Just a quick thought about your marketing efforts, your promotional cadence, obviously, your best marketing is restored by your sales people, but wondering, as the mix shifted and the value becomes more evident to the consumer, is there an opportunity to take that out in print, more catalogs or even television? And then, internally, the promotional cadence, the ability to shout sale or value throughout the season?

This is Pete. I guess I would address that by saying that we’re getting back to a more normal rhythm and cadence around the percentage of our regular priced business and off-priced business. It was skewed there pretty heavily for about 12 months or so. We’re going through those difficult times, but as we got in the fourth quarter, our regular price business as a percentage of total, is right back in there with historical levels. So, there would be no reason for us to call out more clearance. Frankly, we don’t have more clearance. We’ve kept our inventories clean and we don’t have a big story to tell around service. It’s a natural part of the business and it will be just back to our natural rhythms that as you grow into expect from us. I think when it comes to marketing what we want to be able to do is continue to talk about great style, great fashion, newness, and how it is successful across the breadth of price points that we uniquely serve in our store. Richard Jaffe – Stifel Nicolaus: And the marketing effort, just to call out and gain some market share in the department process.

This is Blake, Richard. I think in terms of the channels, you mentioned TV or print or what have you, we’re definitely evolving, along with that kind of traditional or more regular percentage costs to our business of how we reach the customer because again, we’re focused on the customer and they’re using other mediums and other channels. And so, the internet, for instance, is a very strong acquisition tool and the tool for us to communicate effectively with our customers, so over time, that will grow, but that things evolving and changing and we’re not weird at any one aspect of marketing.

So thanks, everyone, thanks for joining us today, on our fourth quarter of 2009 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 webcast. Thanks for your interest in Nordstrom.

Thank you. This does conclude today’s conference. Thank you for participating. You may now disconnect.