Nordstrom bullish on online and outlet business; to double Rack count over next four years
New York -- On the heels of a strong performance in 2012 that included a 7.3% same-store sales increase, Nordstrom Inc. is investing heavily in its future. Two big areas of investment: online and expansion of the Nordstrom Rack outlet division, both in the United States and in Canada.
“Rack, direct and Canada will make up approximately half of our sales in the next five years,” Blake Nordstrom, president, Nordstrom Inc., said during the company’s quarterly conference call.
Some 24 new Rack locations are planned for this year, with more than 30 expected in 2014. The company is looking to double its Rack portfolio, from its current 119 locations to more than 230 stores over the next four years.
“Rack's total sales were up 20% in 2012, with same-store sales up 7.4%,” Nordstrom said. “Its sales productivity, even with the 15 new stores reached its highest level in recent years, over $550 per square foot.”
With regards to Canada, the company said it sees the potential for up to eight to 10 full-line stores and 15 to 20 Rack locations.
Nordstrom will also continue to invest in its direct (online) business and mobile operations. After increasing nearly 30% in 2011, Nordstrom’s direct revenues grew 37% in 2012, generating $1.3 billion in sales.
“It's our fastest-growing channel and it is expanding our reach to existing and new customers,’ Nordstrom said. “We see substantial opportunities for outside growth to continue as we further improve the online customer experience.”
Over the next five years, Nordstrom plans to double its capital expenditures (relative to the past five years).
“Our current five-year capital plan is $3.7 billion,” CFO Michael Koppel said during the call. “Roughly 20% represents entry into Canada and Manhattan, and approximately 55% is planned for a combination of new full-line stores, Rack stores and remodels. The remaining 25% relates to e-commerce and technology investments, including initiatives to improve our e-commerce delivery and fulfillment, online and mobile experience and personalization.”