SEATTLE — Acknowledging the difficult economy and the company’s flagging sales after five years of strong performance, Nordstrom Inc. executives on Tuesday sought to reassure shareholders at the company’s annual meeting about how they are pushing forward.
“These are character-building times,” said Blake Nordstrom, president of the 159-store retailer, of the company’s change in fortunes and a situation seen throughout the industry. For the first quarter, Nordstrom’s same-store sales fell 6.5 percent. Last year, same-store sales increased 3.9 percent to a record high of $8.8 billion. This year, the company forecast sales to be flat to a 2 percent decline, according to its annual report.
But although many of its peers are trimming their expansion plans, opening new stores is still on the retailer’s agenda. “We are sensitive not to pull back,” Nordstrom told the audience of about 400 in Benaroya Hall, home of the Seattle Symphony and near the 107-year-old company’s flagship.
In the next five years, the company, which has 105 full-line stores, plans to add or relocate 31 full-line stores and remodel 29 others. Nineteen affected locations already have been announced, including stores set for next year in New Jersey’s Cherry Hill Mall; Northshore Mall in Peabody, Mass.; Kenwood Towne Centre in Cincinnati, and Summerlin Centre in Las Vegas.
Of the stores announced through 2012, none in Manhattan is on the list, although the company is still in the market for the right location in fashion retail’s U.S. heartland.
“There were some rumors last year that we were close…but we are not close at all,” said Nordstrom, explaining how the company isn’t just interested in a New York location as a “billboard” to advertise its brand. “We’d like to make money if we go there,” he said, while noting, “It’s the number-one market in the country we are not in right now.”
To further build business, Nordstrom also said the company is looking at ways to woo consumers identified as doggedly into fashion trends and who spend twice as much as other consumers, but who shop at several stores, including Nordstrom. “Our goal is to make Nordstrom her first choice,” he said.
One initiative, unveiled at the meeting, is a new “buy online, pick up in store” program, which is being tested in stores starting with select items in women’s apparel and shoes, men’s wear and cosmetics. The feature aims to add convenience for consumers, but also is another way to interact with them in the store, which is resulting in additional purchases when a shipment is picked up, said Erik Nordstrom, executive vice president and president of stores.
But in recognition of the trying economic times, the firm is starting its annual 40-percent-off spring sale a month early. Blake Nordstrom said the retailer is scrutinizing inventory levels, comparing being a fashion retailer to being a farmer who has to get rid of produce before it goes bad.
As for the economy, Nordstrom singled out soft sales in California — comprising 32 percent of the business — as a particular challenge in a state hard hit by higher gasoline prices and mortgage foreclosures. “We’ve been through this cycle before and we’ll get through it, but it’s been tough,” he said.
Afterward, Nordstrom said he couldn’t single out what might be the “catalyst” to reignite the U.S. consumer. “There is no question there are consumer confidence issues,” he said. Like other retailers, he said he hopes the $600 individual federal tax rebates that are being mailed out will stir consumers to buy fashion.
Women’s wear, accounting for one-third of Nordstrom’s sales, also has been challenging, except for the designer, contemporary and denim segments, Nordstrom told shareholders. “But as a whole, women’s is a little soft,” he said.
Loretta Soffe, executive vice president and general merchandise manager for women’s apparel, said she is looking to introduce more tailored clothing, like pant-and-jacket separates. “We need a little more oomph in the better zone,” Soffe said after the meeting. In addition to designer, contemporary and denim, other women’s apparel selling well includes jackets, knit tops and anything in bright colors.
As it does each year, the company singled out two vendors as “partners in excellence.” This year’s partners revealed at the meeting were Juicy Couture and designer Tory Burch.
On an environmental note, Blake Nordstrom also noted how shopping bag finishes are now more environmentally friendly and their handles are now cotton instead of plastic. For packing, soy-based soluble packing material is being used instead of Styrofoam.