Erik Nordstrom: Keeping Nordstrom Focused, Acting With Urgency

Nordstrom Inc. continues to be “focused and acting with urgency” and sees strong evidence that its “Closer to You” strategy is working, Erik Nordstrom, chief executive officer, said at the retailer’s annual meeting held virtually Wednesday.

“We are continuing to act with urgency to win in our most important markets, expand the reach of Nordstrom Rack, and increase our digital velocity,” Nordstrom told shareholders. “We know that to win with customers we need to continue building on what we do best, our commitment to customer service, interconnected digital and physical assets, and strong partnerships with the world’s best brands.” Digital, he noted, accounts for 42 percent of the Seattle-based retailer’s business.

“If the past two years have taught us anything, it’s the value of knowing who we are and what we stand for. In the face of continuing uncertainty, both within our industry and around the world, we kept our focus and priorities clear. Nordstrom exists to help customers feel good and look their best.”

Recapping last year, Nordstrom said, “Despite presenting new operational challenges, 2021 gave us a lot to be optimistic about. We continued to invest in our digital platforms, raise the choice count by 50 percent, launched more than 300 new brands, expanded customer-facing services like order pickup and personal styling and built deeper connections through our customer loyalty program.”

Nordstrom’s “Closer to You” strategy, the CEO said, remains focused on delivering customers more convenient and interconnected experiences across our stores and digital platforms. We outlined this approach in 2020 and it continues to be a powerful enabler of our business, combining the strength of our Nordstrom and Nordstrom Rack stores, with robust digital capabilities to deliver on our reputation for unmatched customer service.”

The agenda calls out the Rack off-price chain, the market strategy leveraging physical and digital assets to provide greater services and conveniences, and digital sales as Nordstrom’s biggest growth opportunities for the future.

“We have seen strong evidence that our strategy is working,” Nordstrom said, adding that the average customer who shops both stores and online across the Nordstrom and Nordstrom Rack banners spends 12 times more than a customer shopping a single channel.

He also said a customer who uses the retailer’s in-store pickup spends three-and-a-half times more than customers who don’t.

“Customers who use our services like alterations and personal styling spend by a factor of five to seven times more than customers who don’t.”

President and chief brand officer Pete Nordstrom characterized 2021 as “transformative for our business in many ways, but even as we anticipate and adapt to the needs of customers, our values remain the same.”

He said the company is “proud of the work we are doing to serve a more diverse customer base and use our influence to drive change in the fashion industry.”

Nordstrom, he said, committed to $500 million in retail sales from brands owned, founded or designed by Black, Hispanic and Latinx individuals by 2025.

“Last year alone, we added 140 of these brands to our assortment. We also signed the 15 Percent Pledge, underscoring our commitment to growing our purchases from Black-owned and founded business growing by 10 times by the end of 2030.”

This year, added Pete, the company returned to in-person, state-of-the-company meetings, and that over a five-week period, over five executives hosted more than 260 meetings in stores, fulfillment and distribution centers and corporate offices.

Nordstrom will report its first-quarter results on May 26, but for the fourth quarter of last year the company showed progress in its strategic initiatives and efforts to recover from some merchandise and pricing misses of previous quarters, reporting a big boost in earnings to $200 million from $33 million in the year-ago period, while sales rose 23 percent to $4.38 billion versus $3.55 billion in the same period in fiscal 2020, and decreased 1 percent versus the same period in fiscal 2019.

For 2021 overall, Nordstrom earned $178 million, compared to a loss of $690 million in 2020, which was heavily impacted by the pandemic. Sales reached $14.4 billion, versus $10.36 billion in 2020.

Net earnings for the latest fiscal year included an $88 million debt refinancing charge.

For 2022, Nordstrom projects revenue growth, including retail sales and credit card revenues, of 5 to 7 percent versus fiscal 2021; earnings before interest and taxes of 5.6 to 6 percent of sales, and earnings per share of $3.15 to $3.50, excluding the impact of share repurchase activity, if any.