Nordstrom 4Q14 Earnings Call Notes

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Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

Omni-channel=greater loyalty

“We also believe we are competitively advantaged by serving customers better through our multiple touch points in full-price, off-price, stores and online. As a result we have more customers shopping with us and more customers shopping two or more channels. This is meaningful as customers who shop multiple channels spend more and demonstrate greater loyalty.’

Rack customers in full price business

“1/3 of our Rack customers also shop in our full-price business.”

Grew sales 7.8% last year

“We added nearly $1 billion to our top line with record sales of over $13 billion. Our sales growth of 7.8% and comparable sales increase of 4% were ahead of our expectations.’

Planning for 7-9% sales growth mostly from e-commerce

“turn to our 2015 financial outlook. Our plan for earnings per diluted share of $3.65 to $3.80 incorporates total sales growth of 7% to 9%. We are planning a comparable store increase of 2% to 4% based on current trends. Our sales outlook assumes in full-price flat comparable sales at full-line stores and roughly a 20% total sales increase from our online business of nordstrom.com and Trunk Club with mid-teens growth at nordstrom.com.”

Being great at returns is part of our strategy

‘returns is a big strategic subject for us. Being great for customers around returns is something that’s long been part of our deal and that certainly includes online. For us, a big part of the value in our approach to returns is in having returns in the store. So online purchases being able to be return to our store, well over 60% of our Nordstrom.com returns end up at our full-line stores, well over 70% HauteLook and Nordstrom Rack returns end up at our Rack stores.’

Have to be transparent with price because customers can see these days

“with the way that online business has done now, the customers are way more enabled and they’ve got a lot of information and we’ve got be respectful of that, responsive to it.”

We have a natural rhythm of markdown cycles

“We’re trying to run a full-price business here. We have the natural rhythm cycles of markdowns that happen which gets addressed in our clearance strategy’

Earnings growth after 2015

“I think what we were saying is post-2015 we would start to see earnings growth improve. I don’t think we used the word accelerate but we thought it would improve beginning after the peak year of 2015 investment.”