About NORDSTROM, INC.

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.

Operations

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 levels.

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.

Geographic Reach

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.

Financial Performance

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.

Strategy

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 late 2015.

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 men.

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 (trunkclub.com).

Company Background

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.

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NORDSTROM, INC.

1617 6th Ave
Seattle, WA 98101-1707
Phone: 1 (206) 628-2111
Fax: 1 (206) 373-4035
www.nordstrom.com

Stats

  • Employer Type: Public
  • Stock Symbol: JWN
  • Stock Exchange: NYSE
  • CEO and Co-President: Blake W. Nordstrom
  • CEO and Co-President: Blake W. Nordstrom
  • EVP and Co-President; President, Merchandising: Peter E. Nordstrom

Major Office Locations

  • Seattle, WA

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