Service with a smile is a part of Nordstrom's corporate culture.
One of the nation's largest upscale apparel and shoe retailers,
Nordstrom sells clothes, shoes, and accessories through more than
115 Nordstrom department stores and over 165 off-price outlet
stores (Nordstrom Rack) in nearly 40 states and online. It also
operates a pair of Jeffrey luxury boutiques, a "Last Chance"
clearance store, online private sale site HauteLook, and
personalized clothing service Trunk Club. With its easy-return
policy and touches such as thank-you notes from employees,
Nordstrom has earned a reputation for top-notch customer service.
Nordstrom family members, who own about 25% of the retailer's
stock, closely supervise the chain.
The family-run company operates two business segments. The
Retail segment, which accounted for 97% of Nordstrom's revenue in
fiscal 2015 (ended January 2015), includes sales from its full-line
and Nordstrom Rack stores as well as from its Nordstrom.com,
nordstromrack.com, Hautelook.com, Trunk Club.com, Jeffrey, and
Canadian operations. Its Credit segment (3% of sales) owns a
federal savings bank, Nordstrom fsb, through which it offers a
private-label credit card, two co-branded Nordstrom VISA cards, and
a debit card for Nordstrom purchases. The cards also include a
loyalty program that rewards shoppers depending on their spending
Nordstrom's full-line stores generated nearly 59% of its net sales
in FY2015, while its Nordstrom Rack stores contributed another
roughly 25%. Its fast-growing Nordstrom.com channel generated 15%
of net sales, while its Nordstromrack.com and Hautelook channels
combined made up less than 3%.
By product, the company generated 30% of its FY2015 net sales from
women's apparel, while shoe sales made up another 23%. The rest of
its net sales came from men's apparel (16%), women's accessories
(14%), cosmetics (11%), kid's apparel (4%), and other items.
Nordstrom has nearly 290 full-line and Nordstrom Rack stores in
38 US states, and two Nordstrom full-line stores in Canada.
California is the retailer's largest market with 70 full-line and
Rack stores. Other major markets for the chain include Florida,
Texas, and Washington.
Sales and Marketing
Nordstrom has boosted its advertising spend in recent years. It
spent $195 million on advertising (net of vendor allowances) in
FY2015, up from the $167 million and $161 million it spent in
fiscal years 2014 and 2013, respectively.
Nordstrom's revenues have been trending higher mostly thanks to
new store expansion over the past few years. Its profits have
flatlined in recent years, however, as selling, general, and
administrative costs have been rising faster than revenue with new
technology investments and staff additions.
The retailer's revenue jumped 8% to $13.5 billion in fiscal 2015
(ended January 2015), mostly thanks to a 4% gain in same-store
sales, along with added revenue from its Trunk Club acquisition and
from the opening of 27 new Nordstrom Rack stores since FY2013.
Same-store sales from the company's e-commerce channels grew by
more than 20% during the year, representing Nordstrom's fastest
growing businesses by far. Meanwhile, its two brick-and-mortar
channels grew by nearly 4% during the year.
Despite generating higher revenue in FY2015, Nordstrom's net income
dipped 2% to $720 million mostly due to the expenses associated
with its Trunk Club acquisition and ongoing investments in
technology. The retailer's operating cash levels fell by nearly 10%
to $1.2 billion for the year due to lower earnings and higher state
tax payments, as well as unfavorable working capital changes.
Nordstrom is all about increasing market share, across all
retail channels and by entering new markets. Indeed, in 2015 the
retailer planned to add stores in relatively untapped Canada in
Ottawa and Vancouver, with more stores planned in Toronto in 2016
and 2017. It also planned in 2015 to open three full-line stores in
Puerto Rico, Minneapolis, and Milwaukee after opening two full-line
stores in The Woodlands, Texas and Jacksonville, Florida. The chain
also announced plans to open its first full-line store in Manhattan
in 2016 -- an important, high-profile retail market.
Looking to build its business by reaching out more to less-affluent
shoppers, Nordstrom has also been accelerating the pace of
expansion of its off-price Nordstrom Rack stores, with plans to
have more than 230 stores by the end of 2016, up from about 167 in
The chain also continues to invest in its fast-growing
e-commerce business to expand the merchandise selection, and to
enhance the website and mobile experience with improvement to
search, navigation, and checkout, and increasing the speed of
fulfillment and delivery. Indeed, in late 2015, the company
projected that its online sales would was on track to contribute
about 20% to its overall sales, representing a major part of its
business. The retailer's recent acquisition of Trunk Club presents
an opportunity to grow its online sales, particularly with
Mergers and Acquisitions
In August 2014, Nordstrom purchased Trunk Club, a personalized
clothing service for men, for $350 million. The acquisition allowed
the retailer to offer a high-tough personalized shopping
experienced through the convenience of an online platform
In 2011, extending its reach to the private-sales arena, the
company acquired e-tailer HauteLook for $180 million in stock.
HauteLook, launched in 2007, offers discounted apparel,
accessories, and home decor to registered Web shoppers in the US
and Canada. As part of the deal, HauteLook became a subsidiary of
Nordstrom, and it continued to be based in Los Angeles and led by
founder Adam Bernhard. Nordstrom took notice of HauteLook amid the
rising popularity of (and sales generated through) private-sale
sites during the recession; also referred to as flash sales, sites
such as HauteLook provide steep discounts on name-brand merchandise
for short periods of time (generally 24 to 48 hours).
Patriarch Bruce A. Nordstrom and other members of the Nordstrom
family control about a quarter of the company's shares.