Nordstrom 1Q15 Earnings Call Notes

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20B by 2020

We’ve shared our sales ambition of over $20 billion by 2020. To achieve this, increasing customer acquisition and cross-shopping are important outcomes to improve our relevance with both new and existing customers.

A peak year for investments

we expect 2015 to be the peak investment year due to the concurrent timing of multiple growth initiatives. This includes Canada, Manhattan, several flagship remodels, and a third fulfillment center. We expect CapEx in subsequent years to normalize below our plan average of 5% of sales.

Typically turn inventory about six times a year

We typically, given our five to six times inventory turns to clear merchandise out, roughly six times a year, (13:07) depending on department and we’ve found that we have opportunities to be more effective and how we clear that merchandise out, clear out the old stuff to make room for the new stuff. Our business is at its best when we have a consistent flow of fresh, new goods.

We’re not a promotional retailer

Just to be clear we’re not a promotional retailer, we’re a full-price retailer. We only have one promotion a year, that’s our Anniversary Sale in July. But the half yearly clearance events are just that, it’s a clearance event and we’ve experimented a little bit with communicating those clearance events using different titles, different marketing techniques.

Half yearly is a brand that we used over the years to communicate what that event is all about. But we typically use that last weekend, Memorial Day Weekend, in May to clear out a big chunk of our early spring assortment and make room for the anniversary goods that are coming.

Buyback was lower because share price was higher

buyback was a little lower in the quarter. Is there any reason for this or any change in how you’re thinking about capital allocation going forward?
Michael G. Koppel – Chief Financial Officer & Executive Vice President
Yeah. Matt (sic) [Esteban] (19:07), this is Mike. No, there’s no change in our approach. I mean, we set up a buyback plan matrix ahead of time. It’s governed through a 10b5-1 plan. It was purely a function of the repurchase amount that was set based on share price. So no, there’s no change in our long-term view on share buyback.

We want to let customers shop how they want to

our focus is letting the customers shop how they want to shop. We look at it totally across the board when we put as an off-price, both online and in the stores.

Nordstromrack.com and hautelook serve two different types of off price customers

I’d say overall it’s, what Blake said earlier, that our plan is to provide customers choices to shop, how they want to shop. One of the interesting things about launching Nordstromrack.com is seeing the difference in customers between that business and our HauteLook business. The flash sale business is still a very viable business, a big business. It’s one that we think is really additive to what we do and there is a synergy there, that foundation that HauteLook had allowed us to launch Rack.com much sooner than we would have been on our own.

So, we’re seeing synergies of those businesses in things like product. I think our product in Nordstromrack.com has improved significantly since launch. There’s – we’re continuing to explore some synergies with marketing. But again there’s a point – while there’s some customers that go back and forth, there’s – they are separate customers. Customers, some customers prefer flash. Some categories are stronger in flash and some prefer persistence. So we really like the combination.