After a strong performance in 2012, Nordstrom Inc. is prepared to spend big to ramp up Rack, enter Canada with both full-line and Rack outlets, accelerate its direct business and mobile operations and build a Manhattan flagship.
Over the next five years, the Seattle-based upscale chain will practically double its capital expenditures to $3.7 billion, compared to the $1.9 billion spent over the last five years.
This year, between $750 million and $790 million for capex has been allocated, principally due to Rack and full-line store growth, the Manhattan store development, and increasing e-commerce fulfillment capacity, versus the $455 million spent in 2012.
Nordstrom intends to double the Rack count to 230 units over the next four years, with 24 openings seen this year and more than 30 seen in
Though bullish on Rack and bringing brick and mortar to Manhattan and Canada, “Our fastest-growing channel is direct. We see substantial outsized growth to continue,” Blake Nordstrom, president of Nordstrom Inc., said during a conference call Thursday.
That was just after the retailer unveiled a 20 percent increase in fourth quarter earnings to $284 million from $236 million a year earlier, and a 26 percent increase in earnings per diluted share of $1.40 for the quarter ended Feb. 2 compared to $1.11 for the same quarter last year.
Sales in the quarter were $3.6 billion, a 13.5 percent gain from sales of $3.2 billion in the year-ago period. Same-store sales increased 6.3 percent.
Top-performing categories last quarter were men’s apparel, cosmetics, kids’ apparel, and surprisingly, women’s apparel, which had been soft for several seasons. “We started to see improvement in women’s apparel,” Nordstrom said, adding that Top Shop last year was launched in 14 stores. Nordstrom has also been remerchandising its Savvy areas for the past two months, and completed the process about a week ago. Top Shop is connected to Savvy, and some brands, such as Joie and Marc by Marc Jacobs, were relocated to other parts of the women’s floor.
“It’s a dramatic change in the merchandise offering. The goal is to help attract customers we didn’t have an offering for before,” by keeping it fashion forward, making prices generally more accessible and adding offerings, Nordstrom said.
“We anticipate continued improvement in the women’s business in 2013 and expansion of Top Shop in stores,” Nordstrom said. Nordstrom also enhanced its Fashion Rewards program recently to simplify and juice up the benefits, which also helped women’s sales.
Last year, Nordstrom aggressively increased online merchandise, took a more customized approach to entice shoppers, improved the functionality of its digital platforms including search, navigation and checkout, added 360-degree videos on certain product pages, and provided early access online to the anniversary sale. The online merchandise selection expanded by more than 50 percent and attained virtual parity with the full-line store selection, Nordstrom said. Twenty percent of the company’s online volume came from mobile last year.
“Rack, direct and Canada will make up approximately half of our sales in next five years,” Nordstrom said.
During the conference call, some concerns among analysts about merchandise margins arose. Gross margin was 37.7 percent of sales, or flat against last year. Margins have been affected by the continued growth of Rack where merchandise margins are lower but where bottom-line margins are equal to or above Nordstrom full-line stores. Margins have also been impacted by the Fashion Rewards program, though the program generates increased sales and loyalty.
For the year, earnings per diluted share came to $3.56, up 13.4 percent compared to $3.14 for the year before. Net earnings rose 7.7 percent to $735 million from $683 million earned the year before.
Total sales reached $11.8 billion, a 12.1 percent gain compared to $10.5 billion in 2011. Same-store sales increased 7.3 percent.
Nordstrom forecasts a profit of $3.65 to $3.80 per share, same-store sales rising between 3 percent and 5.5 percent and total sales ahead 4.5 to 6.5 percent ahead.
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye