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Expansion, Remodelings at Top of Nordstrom Agenda

Nordstrom is casting a wide net to expand.

SEATTLE — Nordstrom is casting a wide net to expand.

“We are in a very strong niche right now,” said Blake Nordstrom, president of the 98-store fashion specialty chain, in brief comments after the retailer’s annual meeting in the conference room of its downtown flagship here.

Earlier, before an audience of about 200 shareholders, Nordstrom cited various financial milestones reached last year, such as sales, gross profit, stock price and earnings before taxes. He also took note of Moody’s and Standard & Poor’s pecking orders for retailers in terms of credit ratings. “Only Wal-Mart and Target are ahead of us,” said Nordstrom.

The company plans to add at least 26 stores in the next five years, and executives said more store openings could be added. Existing stores also are being aggressively remodeled, with $100 million targeted to revamp seven stores annually, Nordstrom said.

Regarding online sales, the president said he expects business on the store’s Internet site to double in size to $1 billion in the next few years. To that end, this year the company is doubling the size of its online and catalogue distribution center in Cedar Rapids, Iowa, to 600,000 square feet.

On Thursday the publicly held retailer, with the Nordstrom family at its helm since 1901, reported first-quarter revenues of $1.96 billion, up 9.3 percent from the same quarter last year.

Total sales in 2006 were up 10.8 percent for an annual record of $8.6 billion. Last year, same-store sales — for doors open at least one year — posted a year-over-year gain of 7.5 percent for the fifth consecutive annual increase. For this year, same-store sales are expected to increase 3 to 4 percent, a company spokesman said.

While retail basics such as tight management of inventory and improved technology are boosting the bottom line, Nordstrom cited customer demand for more and diverse fashions as key to the business flourishing. In addition, Nordstrom said the company has been able to take advantage of market openings for demand in fashion created by the consolidation of competitors, among other changes in the industry.

Not affecting sales, Nordstrom said, is the spike in gasoline prices or other increases in the cost of living. “If we were a basic-commodity” business, things would be different, he said.

This story first appeared in the May 23, 2007 issue of WWD.  Subscribe Today.

Instead, Nordstrom has focused more and more on a fashion label-driven business, with the amount of apparel produced under the retailer’s own brand amounting to just 13 percent, well below the industry norm of upward of 40 percent.

“We’re chasing dresses,” remarked Loretta Soffee, general merchandise manager for women’s apparel, of the nonstop demand for contemporary silhouettes. “The more we offer, the more we sell, especially the brighter colors — like pure kelly, pure orange, yellow — and modern patterns.”

London-based Burberry is one of Nordstrom’s fashion standouts. Nordstrom is Burberry’s largest U.S. retail customer, said Angela Ahrendts, Burberry’s chief executive officer. She and U.S. Burberry president Eugenia Ulasewicz attended the shareholders’ meeting, where they accepted Nordstrom’s Partner in Excellence Award. The other recipient was the Urban Outfitters’ division Free People.

“I was already a huge Nordstrom fan,” said Ahrendts, who, after joining Burberry last year, launched a Nordstrom-Burberry strategy. Last year, Burberry business at Nordstrom increased 57 percent, said Pete Nordstrom, the retailer’s head of merchandising.