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Nordstrom’s 3Q15 Online Business Continues to Look Promising

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Online channels

Nordstrom (JWN) has online channels in its full-line as well as off-price businesses. The company’s Nordstrom.com website caters to the full-line consumers. The company launched Nordstromrack.com in May 2014, and built it on a shared platform with HauteLook, the company’s flash sale business. Nordstromrack.com and HauteLook offer off-price merchandise at 30%–70% discounts compared to regular priced merchandise. In 3Q15, Nordstrom’s online channels delivered strong performance.

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3Q15 online sales

In 3Q15, the sales of Nordstrom.com rose by 11.6% to $414 million from the comparable period of the previous year. This rise was attributed to the continued expansion of merchandise selection. In the 3Q15 conference call, Blake W. Nordstrom, the company’s co-president, talked about the progress the company made as it expanded merchandise selection in the channel by ~20%. He mentioned how the company’s online channel benefited from increased capacity with the opening of the new East Coast fulfillment center.

Sales of Nordstromrack.com and HauteLook rose by 38.7% to $129 million in 3Q15. The company’s co-president stated that Nordstromrack.com sales are growing at a faster-than-anticipated pace. It took the company’s Nordstrom.com business nearly 15 years to reach $1 billion in annual sales. Nordstrom expects its online off-price business of Nordstrom.com and HauteLook to touch the $1 billion mark in about half that time.

Nordstrom makes up 0.1% of the holdings of the iShares S&P 500 Growth ETF (IVW).

Digital IQ Index

With a digital IQ score of 141, Nordstrom, along with JCPenney (JCP), ranks second in the Digital IQ Index released by L2, a benchmarking and education firm. Macy’s (M) occupies the position of the most digital-savvy department store based on its digital IQ of 142. According to L2, macys.com had 10% more monthly unique visitors than its closest competitor. Kohl’s (KSS) ranks fourth in the Digital IQ Index. These department stores are taking several initiatives to improve their online channels to fight competition from online retailers like Amazon (AMZN).

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