After stabilising its financial position and resetting inventory to better meet demand, Nordstrom is eyeing improved results in the back half of the year and has several key areas of growth on the agenda. Among the strategies — expanding luxury distribution, opening additional Rack off-price stores, offering a larger assortment of lower prices at Rack, and increasing the digital business.
“We have a big designer business. It’s been the biggest area of growth in the last several years and has actually performed pretty darn well during the pandemic,” said Erik Nordstrom, CEO. Coming out of the second quarter with close to (US)$1bn in cash, and (US)$1.3bn in liquidity, the company is in a better position today than five months ago. The company is very pleased with results from Nordstrom’s Anniversary Sale, the biggest event of the year for the Seattle-based retailer. It shifted from July to August, and was therefore more in tune with when customers wanted to shop for fall fashion. By moving the event later, the store was able to receive merchandise with a higher level of newness and more casual goods to meet the changing demand. Nordstrom had the highest sell-through of Anniversary merchandise ever.
Nordstrom sees also opportunities for the Rack off-price brand to open more stores and beef up lower price offerings. Nordstrom also cited a goal to deliver personalisation “at scale,” and increase links between digital and physical. By the end of this year, the company will have its market strategy in its top 10 markets, which account for half of the retailer’s business. The market strategy entails linking the assets of Nordstrom full-line, Rack and Nordstrom Local stores to provide additional conveniences for customers and greater engagement by them. In the second half of 2020, Nordstrom expects top-line, EBIT and cash-flow improvement, due to the shift of the Anniversary Sale, the fact that stores were closed for 50% of days in the second quarter, and because the store has amplified categories becoming increasingly relevant. Nordstrom eliminated 20% of costs, excluding occupancy.