Earnings

Nordstrom’s Small-Format Stores, Services Engage Shoppers

Nordstrom’s Small-Format Stores Engage Shoppers

As Nordstrom reported fourth-quarter results that fell below analyst estimates, shares plummeted on the news – but the department store retailer highlighted a bright spot with its smaller-format stores and services. Nordstrom CEO Erik Nordstrom said in the firm’s Q4 earnings call on Wednesday (March 4), “Customers have responded well to our service and experience offerings, including express services at our flagship and our Nordstrom Locals and Racks.”

And in New York, Erik pointed out, “We’ve opened up the customer engagement – both the locals ramped up quite a bit faster than we saw in Los Angeles, and really encouraged our engagement there.”

The retailer aims to increase convenience with more Nordstrom Local neighborhood service hubs in New York and Los Angeles, while also providing full-price express services, alterations, returns and order pick-up at over 50 Rack locations.

As reported in September, the retailer brought its Nordstrom Local concept to the Big Apple. At the time, it was also noted that Nordstrom Local has three locations out west in California: downtown Los Angeles, Brentwood and Melrose. The department store retailer also opened its inaugural flagship store for women and children on West 57th Street across from the new Nordstrom Men’s Store that debuted in April 2018, according to news in October.

“I’d say … we learned in New York [that] it’s not as much about the product, but it just confirms the idea that where we create our biggest point of differentiation is [in] the way we serve customers and the way we sell,” noted President and Chief Brand Officer Pete Nordstrom. He believes New York showed that “if we pay attention to that, if we focus on the execution, the way we serve customers, there’s a lot of opportunity for us to grow and improve.”

The retailer also plans to roll out a dedicated online shopping site for Canadian customers. It also intends to intensify its supply chain network in the latter half of 2020 to bolster its delivery speed on the West Coast, which Erik said represents 40 percent of its base of customers.

Nordstrom reported revenue of $4.5 billion and adjusted earnings per share of $1.42 for the fourth quarter, while analysts had expected revenue of $4.56 billion and $1.47 earnings per share. The firm noted that digital sales increased 9 percent and comprised 35 percent of sales, while “online order pickup contributed more than half of digital sales growth in full-price.”

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