Nordstrom (JWN) Declares $4.85 Special Dividend; Approves $1B Buyback

Nordstrom (NYSE: JWN) declared a special dividend of $4.85 per share.

The dividend will be payable on October 27, 2015, to stockholders of record on October 12, 2015, with an ex-dividend date of October 7, 2015.

The annual yield on the dividend is 6.8 percent.

Nordstrom, Inc. (NYSE:JWN) today announced the closing of its credit card transaction with TD Bank U.S.A., N.A. (TD), including the sale of its credit card portfolio and the initiation of the long-term agreement under which TD is the exclusive U.S. issuer of Nordstrom-branded Visa and private label consumer credit cards. This transaction supports Nordstrom's strategy to enhance the customer experience while allowing for improvement in capital efficiency.

As previously announced on May 26, 2015, Nordstrom will continue to perform all customer-facing account servicing functions, maintaining the customer-focused integration between its credit and retail operations. The Company will also continue to fund and manage the Nordstrom Rewards loyalty program, Nordstrom debit cards and Nordstrom employee accounts. This transaction is designed to have virtually no service impact on Nordstrom cardholders, customers and employees.

"We look forward to our collaboration with TD, a premier financial institution that shares our customer focus. Our mutual commitment to having Nordstrom employees serve our customers directly is paramount to this partnership," said Blake Nordstrom, co-president, Nordstrom, Inc. "We are also pleased to be able to return capital directly to our shareholders using our balanced approach to capital allocation."

USE OF PROCEEDS

The Company sold its credit card portfolio to TD for $2.2 billion, representing the gross value of the outstanding receivables. In conjunction with the transaction, the Company prepaid $325 million of secured debt due October 2016 to provide the receivables free and clear.

The Company intends to deploy net proceeds of $1.8 billion, after $325 million in debt reduction and transaction costs between $35 million and $45 million, directly to shareholders through dividend and share repurchase. In connection with the closing, its board of directors authorized a special cash dividend and an additional $1 billion share repurchase program:

• The special cash dividend of $4.85 per share of outstanding common stock will be payable on October 27, 2015, to shareholders of record at the close of business on October 12, 2015. The Company expects the aggregate payment to be approximately $900 million.
• The authorized share repurchase program is up to $1 billion of the Company's outstanding common stock, through March 1, 2017. The actual number, price, manner and timing of future share repurchases, if any, will be subject to market and economic conditions and applicable Securities and Exchange Commission rules. This program is in addition to the Company's existing repurchase program that was approved by its board in September 2014. The existing repurchase program has $591 million outstanding as of September 30, 2015, and will expire on March 1, 2016.
• In connection with the special cash dividend and as required by the Company's equity incentive plans approved by the shareholders, anti-dilutive adjustments will be made to the Company's outstanding equity awards on the dividend record date to preserve their value following the special cash dividend.

Nordstrom will provide additional details on the overall financial impact of the transaction, including an update to its fiscal 2015 outlook, in its upcoming earnings release on November 12, 2015.

For a dividend history and other dividend-related data on Nordstrom (JWN) click here.

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