SEATTLE — Nordstrom Inc.’s board said Tuesday that company stock will split two-for-one, a sign of the 151-store retail chain’s robust business.
The announcement came during the annual shareholders meeting at the downtown flagship here and after Nordstrom last week reported that first-quarter income climbed 52 percent to $104.5 million, or 75 cents a diluted share, compared with 48 cents a year earlier. Same-store sales increased 6.2 percent for the first quarter, compared with a 14 percent gain in the year-ago period.
Nordstrom stock closed down 7 cents Tuesday at $59.74 in New York Stock Exchange trading, but near its 52-week high of $60.40. Common shares are set to split on June 30. It will be the seventh time for a split — the first since a two-for-one in 1998. The 104-year-old family-run business went public in 1971.
Peter Nordstrom, 43, president of full-line stores, said after the meeting the stock split could help propel expansion “only if the stock continues to go up.” For the time being, the action “sends a signal of confidence to our investors and employees that we think we’re headed in the right direction and we fully expect the stock to continue to grow. That’s only going to happen if we’re going to deliver results and we know that, but we are confident we can make progress.”
Nordstrom last year reported a 34.1 percent increase in earnings to $140 million on net sales of $7.1 billion, a record for the company. Same-store sales gained 8.5 percent for the year.
Executives said Nordstrom’s success can be largely pegged to a more intense focus on carrying the latest fashion trends, in addition to the store’s traditional emphasis on customer service. Blake Nordstrom, 44, company president, said this focus prompted the title of the company’s recent annual report “The Business of Fashion.”
The fashion-forward strategy also has been bolstered by the use of a customized supply chain computer system, in place for a couple of years at an initial cost of $180 million.
“Technology has helped,” Peter Nordstrom said. However “the bigger part of it is we have a focus and an agenda and a strategy. In 2004 we narrowed the scope of things we were trying to work on,” with fashion a higher priority. “You can’t focus on a dozen things and have them work well. I think we focused on too many things that were just doing OK. We have tried to narrow the field.”
He added, “If you had to boil it down to a mantra, it would be, ‘Give a customer a reason to buy something new.’ The universal truth is that whenever we’ve focused on newness it’s worked well for us. Whatever the fashion trend is going to be, we’re there.”
Nordstrom declined to give specifics on fashion trends that are bestsellers, except that premium denim and colorful and printed apparel for women and men are popular. The company said last year the strongest fashion categories, in order, were accessories, women’s shoes and women’s better apparel and women’s designer and men’s designer apparel.
The retailer said it plans to continue focusing growth on its full-line Nordstrom stores. Regarding its catalogues, Nordstrom this year plans to eliminate direct mail inventory that isn’t sold on its Web site or in stores, as another means to tighten its merchandise offerings. In addition, the company hopes to continue steering catalogue shoppers to purchase goods at the Nordstrom Web site. In 2004, the company said Internet sales grew 53 percent and catalogue sales declined 3 percent.
In March, the chain opened a Nordstrom at Phipps Plaza in Atlanta, and has openings later this year at The Shops at La Cantera in San Antonio; the Spectrum Center in Irvine, Calif., and North Park Center in Dallas. In its 2004 annual report, Nordstrom noted its success in quickly moving into vacant competitors’ stores, like a Lord & Taylor slot in popular Dadeland Mall in Miami, which took nine months to open instead of what could have been a couple of years.
“This rapid makeover proves we’re positioned to take advantage of similar opportunities that arise throughout the country,” Blake Nordstrom said in his shareholder message.