SEATTLE — Contemporary fashion is fueling the men’s business at Nordstrom.
In an interview following the firm’s annual meeting here last week, David Witman, executive vice-president of men’s wear, said: “Our contemporary fashion business has been strong and continues to be strong.”
Additionally, the downturn in denim sales seen elsewhere hasn’t hit Nordstrom, Witman said, citing demand for such labels as Stitch’s, Rag & Bone and Rock & Republic. The sport shirt business, too, “has been very, very good,” he noted, citing bold stitching and trimming designs by Robert Graham as hot sellers.
At the meeting, Nordstrom executives told shareholders that they’re 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 post-meeting comments in the conference room of its downtown flagship.
Earlier, before an audience of about 200 shareholders, Nordstrom cited various financial milestones reached last year, including 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 new stores in the next five years, and executives said more store openings could be added. Existing stores are also being aggressively remodeled with $100 million targeted each year to redo seven stores, Nordstrom said.
Regarding online sales, Nordstrom 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 catalog distribution center in Cedar Rapids, Iowa, to 600,000 square feet.
Earlier this month the publicly held retailer, which has had Nordstrom family members at its helm since 1901, reported first-quarter revenues of $1.96 billion, up 9.3 percent from the same quarter in 2006.
Total sales last year were up 10.8 percent to a record $8.6 billion. Last year, same-store sales posted a year-over-year gain of 7.5 percent for the fifth consecutive annual increase. For 2007, same-store sales are expected to increase 3 percent 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 flourishing business. Nordstrom said the company has been able to take advantage of the demand for 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.
Overall, Nordstrom has focused more and more on a fashion-label driven business, with the amount of private-label apparel amounting to just 13 percent, well below the industry norm.
London-based Burberry is one of Nordstrom’s fashion standouts. For Burberry, Nordstrom is its largest U.S. retail customer, said Angela Ahrendts, Burberry CEO. She and U.S. Burberry president Eugenia Ulasewicz attended the shareholder meeting, where they accepted Nordstrom’s Partner in Excellence Award. The other recipient was the Urban Outfitters’ Free People division.
“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, head of merchandising.