Nordstrom Inc., after posting a 7.2 percent jump in third-quarter earnings, said it’s furthering “localization” efforts, testing a new women’s format and broadening the online assortment among other investments to enhance the customer experience.
This story first appeared in the November 11, 2011 issue of WWD. Subscribe Today.
“We have made large investments in technology and infrastructure that should enable our buying people and processes to be more effective,” Pete Nordstrom, president of merchandising, told WWD on Thursday. “Essentially it gives us the tools to use the data to maximum effect. We have always had a localization strategy with regards to our merchandising.”
Nordstrom said, with the bulk of the implementation continuing in 2012, “maybe some results benefit as we get into the second half of the year. By 2013, we should be able to talk more about the benefits to results.”
Nordstrom recently opened stores in St. Louis and Nashville with a new women’s apparel scheme. “It’s more about an intuitive organization and presentation of merchandise based on style, occasion, fit and price…and less about the boundaries and limitations of a strict lifestyle layout like we have traditionally had,” Nordstrom said.
“We did these two new stores, which are doing well, and we did a handful of existing, older stores so we can learn. Our hope is to be able to take what we’ve learned by the end of fiscal ’11 and implement a best layout for our stores going forward. We are learning things.”
Although Nordstrom’s business is strong overall, women’s apparel, in general, is more challenging than other categories.
On the other hand, “Shoes and accessories have been terrific for some time. Men’s is showing strong momentum, and designer was particularly strong across all categories,” observed Blake Nordstrom, president, during Thursday’s conference call.
According to Jamie Nordstrom, president of Nordstrom Direct: “We have a large shoe business in our stores. We are the dominant retailer of a lot of well-known brands, whereas online we have a much smaller selection than a lot of our competitors. We need to carry a broader assortment.”
Nordstrom said earnings rose to $127 million, or 59 cents a diluted share, in the quarter ended Oct. 31, compared with $119 million, or 53 cents a share, for the 2010 quarter. Same-store sales rose 7.9 percent, marking the eighth consecutive quarter of positive comps. Net sales reached $2.38 billion, an increase of 14.2 percent, compared with $2.09 billion for the same period in fiscal 2010. A 6 percent same-store sales gain is projected for the year, because the company will be up against “the headwinds” of strong comps achieved in last year’s fourth quarter.
The Seattle-based Nordstrom said it also got a lift from free shipping and returns for all online orders. Nordstrom has also begun utilizing mobile point-of-sale devices to speed store transactions. Additionally, two full-line stores and nine Nordstrom Racks were opened during the quarter.
By division, Nordstrom’s net sales, which include results from the full-line stores and direct business, increased $159 million, or 9.8 percent, compared with the same period in fiscal 2010. Same-store sales increased 8.5 percent. The direct channel outpaced the overall Nordstrom increase, and a 20 to 30 percent growth rate is seen as sustainable.
Rack’s net sales increased $101 million, or 23.6 percent, while same-store sales were up 6.8 percent. Rack remains highly productive, exceeding $500 a square foot in sales.
Gross profit, as a percentage of net sales, increased approximately 40 basis points due to leveraging buying and occupancy expenses during the quarter. Nordstrom also cited improvements in customer payments in its credit segment.