COMPETITIVE CONDITIONS INVENTORY EMPLOYEES CAUTIONARY STATEMENT We operate in a highly competitive business environment. We compete with other national, regional, local and online retailers that may carry  similar lines of merchandise, including department stores, specialty stores, off-price stores, boutiques and Internet businesses. Our specific  competitors vary from market to market. We believe the keys to competing in our industry are providing great customer service and customer  experiences in stores and online, which includes compelling price and value, fashion newness, quality of products, selection, convenience,  technology, product fulfillment, personalization and appealing, relevant store environments in top locations. We plan our merchandise purchases and receipts to coincide with expected sales trends. For instance, our merchandise purchases and  receipts increase prior to our Anniversary Sale, which has historically extended over the last two weeks of July. We also purchase and  receive a larger amount of merchandise in the fall as we prepare for the holiday shopping season (from late November through December).  Beginning in 2012, we increased our investment in pack and hold inventory at Nordstrom Rack, which involves the strategic purchase of  merchandise from some of our full-line stores’ top brands in advance of the upcoming selling seasons to take advantage of favorable buying  opportunities. This inventory is typically held for six months on average and has contributed to the growth in our Nordstrom Rack business.  We pay for our merchandise purchases under the terms established with our vendors. In order to offer merchandise that our customers want, we purchase from a wide variety of high-quality suppliers, including domestic and  foreign businesses. We also have arrangements with agents and contract manufacturers to produce our private label merchandise. We  expect our suppliers to meet our “Nordstrom Partnership Guidelines,” which address our corporate social responsibility standards for matters  such as legal and regulatory compliance, labor, health and safety and the environment, and are available on our website at Nordstrom.com. During 2014, we employed approximately 67,000 employees on a full- or part-time basis. Due to the seasonal nature of our business,  employment increased to approximately 68,000 employees in July 2014 and 73,500 in December 2014. All of our employees are non-union.  We believe our relationship with our employees is good. Certain statements in this Annual Report on Form 10-K contain or may suggest “forward-looking” information (as defined in the Private  Securities Litigation Reform Act of 1995) that involve risks and uncertainties, including, but not limited to, anticipated financial outlook for the  fiscal year ending January 30, 2016, anticipated annual total and comparable sales rates, anticipated new store openings in existing, new  and international markets, anticipated Return on Invested Capital and trends in our operations. Such statements are based upon the current  beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. Actual future results may differ  materially from historical results or current expectations depending upon factors including, but not limited to: • successful execution of our customer strategy, including expansion into new markets, acquisitions, investments in our stores and  online, our ability to realize the anticipated benefits from growth initiatives, our ability to provide a seamless experience across all  channels, and the timely completion of construction associated with newly planned stores, relocations and remodels, all of which may  be impacted by the financial health of third parties, • our ability to manage the transformation of our business/financial model as we increase our investments in growth opportunities,  including our online business and our ability to manage related organizational changes,  • our ability to maintain relationships with our employees and to effectively attract, develop and retain our future leaders, • effective inventory management, disruptions in our supply chain and our ability to control costs, • the impact of any systems failures, cybersecurity and/or security breaches, including any security breach of our systems or those of a  third-party provider that results in the theft, transfer or unauthorized disclosure of customer, employee or company information or  compliance with information security and privacy laws and regulations in the event of such an incident, • successful execution of our information technology strategy, • our ability to effectively utilize data in strategic planning and decision making,  • efficient and proper allocation of our capital resources, • reviewing of options and structure for a financial partner in regards to a potential transaction related to our credit card receivables, • our ability to safeguard our reputation and maintain our vendor relationships, • the impact of economic and market conditions and the resultant impact on consumer spending patterns, • our ability to respond to the business environment, fashion trends and consumer preferences, including changing expectations of  service and experience in stores and online, • the effectiveness of planned advertising, marketing and promotional campaigns in the highly competitive retail industry, • weather conditions, natural disasters, health hazards, national security or other market disruptions, or the prospects of these events  and the resulting impact on consumer spending patterns, • our compliance with applicable banking-related laws and regulations impacting our ability to extend credit to our customers,  employment laws and regulations, certain international laws and regulations, other laws and regulations applicable to us, including  the outcome of claims and litigation and resolution of tax matters, and ethical standards, • impact of the current regulatory environment and financial system and health care reforms, Nordstrom, Inc. and subsidiaries 5