We are catching up on the Nordstrom earnings call from last week where executives talked about interesting strategies the company is implementing to adjust to the rapidly evolving retail environment.
The overall trends in Nordstrom business are strong online and off-price Nordstrom sales, offset by disappointing sales at full-line stores.
Full price Q4 comps dropped 2.7%. Rack comps rose 4.3%.
Total company same-store sales in Q4 dropped 0.9%. Earnings turned out better than expected because of expense cuts and tight inventory controls, which led to fewer price promotions.
To boost performance at full price stores, Nordstrom is focused on editing its assortment to ensure there is lots of newness in the mix and relying more on less widely distributed brands and private label. Executives believe that gives shoppers a reason to visit stores and allows Nordstrom to sell more full price goods.
The company is also focused on customer service in full-line stores, including adding features like buy online, pick up curbside in all stores.
Buy online, pick up in stores sales grew 45% in 2016.
Total company sales grew 2.9% in 2016 to $14.5 billion.
Growth of E-Commerce
Nordstrom has had more success online than many of its competitors, with online sales now accounting for approximately 25% of total sales.
Online sales reached approximately $3 billion in 2016, and have grown 30% annually since 2010.
Nordstrom’s expansion to Canada, which now includes five full-line stores, accounted for $300 million in sales in 2016.
The company projects that Canadian sales could reach $1 billion once it opens a total of six full-line stores and 15 to 20 Rack locations.
2017 Expectations
Nordstrom is forecasting flat comps for 2017, with negative trends once again in full-line stores offset by strong growth in off-price and online.
Executives stressed that all 120 of Nordstrom’s full-line stores make money and are cash flow positive.
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