Nordstrom Sees Success With Topshop

On its first-quarter earnings call, retailer said the collection will be rolled out to another 28 stores this fall and 30 additional stores in early 2014.

A view of the Nordstrom store.

Topshop has had a major impact on the women’s business at Nordstrom.

This story first appeared in the May 17, 2013 issue of WWD.  Subscribe Today.

Last summer, the two companies revealed a partnership under which Nordstrom would add the trendy British retailer’s line to 14 stores around the U.S. The customer reaction has been strong and on its first-quarter earnings call Thursday afternoon, Nordstrom Inc. said the collection will be rolled out to another 28 stores in late September or October and 30 additional stores in early 2014.

“It behooves both Topshop and us to get it going as quickly as possible,” said Pete Nordstrom, president of merchandising. “I would say in general it’s been productive — more productive than the average department in women’s. So, when you combine that with the fact that it attracts a lot of new customers as well, it’s been a good thing for us.”

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The introduction of Topshop merchandise helped drive women’s wear sales to among the best-performing categories in the period, and is having an effect on the store’s young women’s department as a whole.

“One of the ways in which we increase our relevance with customers is through product innovation,” said Blake Nordstrom, president. “Within the women’s apparel area, which continues to perform above our multichannel average, we repositioned our Savvy department during the quarter, to maintain its trendy fashion appeal but at more accessible prices. It is too early to evaluate its overall performance, but we’re excited about this important strategic change to further enhance our product offering and build on the learnings from our partnership with Topshop.”

Pete Nordstrom said the average price points within the Savvy department have dropped “considerably, and that has made a brilliant, interesting difference for us. In total, it’s really benefited women’s apparel.”

He also pointed to the improvement the company has had with its private label, NPG. “We’ve had really good success with our private label brands in women’s and really excellent growth, which has not only been great for the top line, but it’s very good for our margins as well.”

Overall, in the first quarter ended May 4, a soft sales trend in the beginning of the period led to a fall of 2.7 percent in net income to $145 million, or 73 cents a diluted share, from $149 million, or 70 cents, a year ago. Net revenues rose 4.7 percent to $2.75 billion from $2.63 billion. That includes a 4.8 percent gain in net sales to $2.66 billion, with the balance of revenues from credit card income. The company said same-store sales rose 2.7 percent, which was on top of an 8.5 percent gain in the year-ago period.

In addition to women’s wear, top categories in the quarter included cosmetics and handbags. Men’s wear was a “solid performer” in the period, according to Pete Nordstrom, with strength across the board, particularly in tailored clothing. He credited the company’s men’s buying team with “evolving the assortment” to be “more modern and relevant.”

In April, overall sales trends showed improvement.

The retail chain said it expected annual diluted annual earnings per share in line with the prior outlook of $3.65 to $3.80, which anticipates full-year same-store sales increases of 3 to 5 percent.

By business, the company said full-line same-store sales were flat versus last year’s same-store sale increase of 5.6 percent. Direct continued to generate strong sales growth, rising 25 percent in the quarter on top of last year’s gain of 44 percent. Nordstrom Rack sales saw a 10 percent jump, reflecting 16 store openings since the first quarter of fiscal 2012, as same-store sales rose 0.8 percent on top of last year’s gain of 6.8 percent.