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Nordstrom eclipses $3 billion in online sales in 2016

February 24, 2017 02:04 PM
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Online sales are growing for department store chain Nordstrom Inc., and more shoppers are picking up their online orders in its stores.

Nordstrom, No. 18 in the Internet Retailer 2016 Top 500 Guide, reported e-commerce sales in 2016 of $3.219 billion, up 13.7% from $2.832 billion in fiscal 2015. That total includes sales through its full-price flagship site Nordstrom.com as well as its off-price e-commerce sites NordstromRack.com and HauteLook. E-commerce accounted for 22.2% of overall sales in 2016, compared with 20.1% a year ago, Nordstrom said in its fiscal fourth quarter 2016 earnings release.

Co-president Blake Nordstrom told analysts on the retail chain’s fiscal Q4 2016 earnings call Thursday that online orders picked up in stores increased 45% year over year in 2016.

In the fiscal fourth quarter ended Jan. 28, Nordstrom’s e-commerce sales were $1.062 billion, up 11.7% from $951 million last year, with e-commerce accounting for 25% of sales during the quarter, compared with 23% a year ago.

Online sales are growing in the retailer’s full-price business while store sales are sliding. Nordstrom posted sales declines of 6.6% in its full-price stores during Q4 and 5.9% in fiscal 2016. The retail chain is working to drive those online shoppers into its stores heading into 2017.

Blake Nordstrom told analysts the retailer piloted a new feature, “reserve and try in store,” on its mobile app. The feature allows shoppers to select items available in nearby stores that they want to try on before purchasing. Store associates will then have those items ready in two hours, texting shoppers when the products are ready to try on.

“Since the launch last fall in six Seattle-area stores, we had over 10,000 customer reservations,” he said. “Based on this strong response, we are planning to expand to 50 full-line stores this year.” Those 50 stores represent 42.4% of Nordstrom’s 118 full-price stores in the U.S.

“Store reserve is a good example where we can use our stores to really connect our online experiences and our store businesses in a pretty profound way,” executive vice president of stores Jamie Nordstrom said on the call. “So there's blending of the digital experience across the customers' entire shopping journey. It's a place we've been investing in for some time, and we think we're in the early innings on being able to maximize the foundation and the capabilities that we have there.”

Nordstrom also is using omnichannel initiatives to drive sales for its off-price brands.

Nordstrom’s off-price business is growing at a faster pace than its full-price brand, and sales at Nordstrom Rack stores grew 7.5% year over year in the fiscal fourth quarter and 7.8% for fiscal 2016.

“In our off-price business, we are further integrating the digital and store experience,” Blake Nordstrom said. “For example, we recently added a feature in the (Nordstrom Rack) mobile app that allows customers to scan an item and buy it online if the color or size is not available in the store. In addition, last October, we tested a new store design at the Rack with improvements to the store layout and fitting room experience. This format will be incorporated in most of our 17 new stores planned this year.”

For the fiscal fourth quarter ended Jan. 28, Nordstrom reports:

  • Net sales of $4.243 billion, up 2.4% from $4.143 billion in fiscal Q4 2015.
  • A year-over-year comparable sales decline of 0.9%.
  • Sales at Nordstrom.com of $844 million, up 7.9% from $782 million. Online sales accounted for 29.1% of the retailer’s full-price business during the quarter, compared with 26.2%.
  • Sales at NordstromRack.com and HauteLook of $218 million, up 29.0% from $169 million.
  • Net profit of $201 million, up 11.7% from $180 million last year.

For fiscal 2016, Nordstrom reported:

  • Net sales of $14.498 billion, up 2.9% from $14.095 billion in fiscal 2015.
  • A year-over-year comparable sales decline of 0.4%.
  • Sales at Nordstrom.com of $2.519 billion, up 9.5% from $2.300 billion. Online accounted for 26% of Nordstrom’s full-price sales in 2016, compared with 23.2%.
  • Sales at NordstromRack.com and HauteLook of $700 million, up 31.6% from $532 million.
  • Net profit of $354 million, a decrease of 41% from $600 million. That figure includes a $197 million write-down that Nordstrom took in Q3 on men’s and women’s apparel e-retailer Trunk Club.
 

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