NORDSTROM SALES DOWN 1.3%

Byline: Jennifer Weitzman

NEW YORK — Nordstrom’s quest to become the cherished specialty store institution for today’s trendy teens as well as their more conservative parents and grandparents fell somewhat short last month as the Seattle-based chain reported January same-store sales fell 1.3 percent.
However, there were positive signs as apparel for women and juniors was cited as among the areas showing increases for the month.
The drop marks the fourth straight decline for the retailer, best known for its customer service. In addition, the company warned last month that sales shortfalls and markdown activity would result in earnings for the fourth quarter ended Jan. 31 of between 18 and 23 cents a share, far below Wall Street’s consensus estimate of 38 cents.
After adjusting for differences in the days of the week — January 2001 had one more Tuesday and Wednesday and one less Sunday and Monday compared with January 2000 — the upscale retailer said same-store sales at its full-line stores slipped 0.7 percent. On that basis, and at those stores, increases were tallied in junior and women’s apparel, cosmetics and men’s shoes, as well as in the Southwest and on the East Coast.
The news sent shares of Nordstrom up 17 cents to $19.49 on the New York Stock Exchange. Although comfortably above its 52-week low of $14, that’s still a far cry from its high for the last year of $34.50.
Neiman Marcus Group and The May Department Stores Co. last week reported comp-store gains of 5.5 and 3.4 percent, respectively. The rest of the industry is expected to report results Thursday.
Commenting on the outlook for Nordstrom, Shari Schwartzman Eberts with J.P. Morgan Securities said, “It was a very disappointing year from an earnings perspective and the earnings issue will continue into at least the first half of this year.”
Industry insiders point to Nordstrom’s transition of including more contemporary clothing and attracting more fashion-forward shoppers with its “Reinvent Yourself” campaign as alienating its traditional customer base.
Bear, Stearns retail analyst Steve Kernkraut said he was not surprised with January’s sales results. “They have been doing badly,” he said, blaming Nordstrom’s woes on its merchandise transition in women’s apparel.
The other part of the identity crisis that has been plaguing the firm began last summer when the retailer’s family members returned to full control of the 120-unit company. Those returning members include fourth-generation scion Blake Nordstrom as president and Bruce Nordstrom coming out of retirement to return as chairman.
Wall Street reacted to the changes in management and direction this past summer with a series of downgrades, saying that they believed the new management might impede progress made in installing merchandising and fiscal controls and were worried about its direction.
Analysts said they do not see the century-old family business, which was opened as a small shoe store in Seattle by John W. Nordstrom with money earned from the Alaska gold rush, being sold. Still, they said it will be several years before the chain can resume its reign among the shining stars of better retailing.
“They have a lot of work ahead of them,” Eberts said. Eberts said January’s results were in-line with company plans and her own expectations.
“They are still trying to tweak women’s apparel merchandise,” she said. “They had gotten too boring, then moved to being very contemporary, which has had mixed results.”
Although the jury is still out on its merchandise mix, women’s apparel has been gaining ground.
While Eberts said she is encouraged by results in women’s apparel, “one month is not a trend.” In addition, she said the company would have inventory issues, which will carry over into the first quarter.
Since Nordstrom rolled out its updated merchandise mix strategy last February, a company spokeswoman said its focus is now on a store-by-store basis.
Overall, Nordstrom’s sales for the month were up 6.4 percent to $317 million, putting preliminary sales for the year at $5.5 billion, 7.2 percent ahead of the prior year and up 0.3 percent on a same-store basis.
Nordstrom will report results for the fourth quarter and year on Feb. 22.

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