Insight into Nordstrom’s Sales-Driving Strategies
Investments in growth
Nordstrom (JWN) has been aggressively investing in its growth initiatives, including its expansion into Canada and the strengthening of its online business.
On its fiscal 2Q16 conference call, the company’s chief financial officer Michael G. Koppel stated that JWN’s investments in HauteLook, its expansion into Canada, and its Trunk Club were expected to contribute over $1 billion to its fiscal 2016 sales.
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Nordstrom’s growth strategies aim to uplift its same-store sales, which have been under pressure in recent quarters. In fiscal 2Q16 ended July 30, 2016, the company’s same-store sales fell by 1.2% year-over-year (or YoY), compared to a 1.7% fall in its fiscal 1Q16 same-store sales and a 4.9% rise in its fiscal 2Q15 same-store sales. This weakness has been primarily in the company’s full-line business.
Nordstrom’s peers Macy’s (M), Kohl’s (KSS), and Dillard’s (DDS) reported falls of 2.6%, 1.8%, and 5% in their same-store sales, respectively, in 2Q16. In contrast, JCPenney (JCP) impressed with a 2.2% same-store sales rise in 2Q16.
Nordstrom, Macy’s, Kohl’s, and JCPenney constitute a total of 0.5% of the holdings of the iShares Russell Mid-Cap ETF (IWR).
Nordstrom is trying to attract more consumers to its stores through fresh merchandise. The company continues to expand its partnership with popular brands such as Ivy Park, Madewell, and Charlotte Tilbury. On July 27, 2016, Nordstrom announced its plans to expand its partnership with Madewell by extending the availability of the brand to an additional 20 stores in Fall 2016.
The company is also trying to enhance its consumer shopping experience both in its stores and online. The company’s initiatives in this direction include new mobile features, improvements to its website, and enhanced selling tools. On its 2Q16 conference call, the company’s co-president and director Blake W. Nordstrom disclosed that in Fall 2016, the company would launch a new mobile feature that would enable customers to reserve merchandise online and try it on in store.
Aside from the above-mentioned initiatives, the company is also implementing several measures to improve its margins. We’ll discuss these in the next part of the series.