NEW YORK -- Nordstrom Inc. has entered the Nineties.
A Johnny-come-lately in reining in costs, restructuring and upgrading merchandise tracking systems, Nordstrom astonished the industry last week by reporting the payoffs from catch-up efforts -- first-quarter earnings of $32 million, triple the year-ago figure. The news flagged a turnaround for the Seattle-based $3.8 billion specialty chain, which has 77 stores. It now has three consecutive robust quarters under its belt, after a dry spell through much of the Nineties. The low point was the year-ago first quarter, when earnings plummeted nearly 50 percent.
"We did bounce off a poor quarter a year ago," said co-chairman James F. Nordstrom, in an interview Friday. "But even without that, this year's quarter was still good."
Sales in the latest period increased 9.6 percent to $762 million from $695.6 million. Same-store sales rose 6.9 percent, gross margins improved to 33 percent of sales from 30.6 percent, and selling, general and administrative expenses dropped to 28.2 percent from 29.9 percent. The stage is set for what should be a very upbeat Nordstrom annual meeting Tuesday in Oak Brook, Ill., a suburb of Chicago. Nordstrom is expected to announce some new ventures, including details on a Nordstrom Visa Card, entitling customers to a variety of shopping incentives. "Doing better has had a real effect on our confidence to make money and for new ventures," Nordstrom said.
Two years ago, the company timidly starting upgrading systems. The going was slow for fear the changeover would interfere with the decentralized buying. Management has never been keen on letting systems run the business and prefers buyers to be in the stores, keeping close to shoppers. But attitudes about costs and computers changed as the California economy sank, and the streamlining began. In May 1993, the northern California buying region was consolidated from three to two divisions, triggering 71 layoffs. Around the same time, 20 jobs at the corporate headquarters data processing were dropped. Earlier, the office of the president was downsized.
"Going to two presidents from four was a real signal this company was going to get expenses under control and become lean and mean," said Jennifer Black Groves, executive vice president and retail analyst, Black & Co. Inc., a Portland, Ore., brokerage firm. More costs have been eliminated by shifting to a different medical plan and reducing bad debts from $35 million to about $20 million, she added.
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