The department store is looking for a helping hand

0


A customer leaves a Nordstrom store on May 26, 2021 in Chicago, Illinois.

Scott Olson | Getty Images

As Americans leave their homes and return to their offices, weddings, and college campuses, Nordstrom is betting they’ll need a whole new wardrobe.

In recent months, the department store chain has seen a 165% spike in searches for “work clothes” on its website. Nordstrom is hoping buyers will use its annual anniversary sale – its biggest event of the year – to restock their closets.

This week, Nordstrom launched its anniversary sale for members of its Nordy Club loyalty program. Deals on everything from AG denim and Charlotte Tilbury makeup to Dyson vacuums will open to the public on July 28 and end on August 9. Nordstrom held their mega sale, usually in the summer months before school started. rush, since the 1960s.

But the stakes are much higher for this year’s event. Nordstrom knows it needs a helping hand to encourage stakeholders and analysts to keep its stores as relevant to customers as ever. Some may have lost confidence, as the company’s quarterly sales have yet to recover to pre-pandemic levels.

Nordstrom’s current outlook for fiscal 2021, which projects 25% growth from net sales of $ 10.36 billion in 2020, means revenue would still fall below the $ 15.13 billion achieved in 2019. It’s also below analysts’ expectations for a 28% increase, according to a Refinitiv. investigation.

“Every year, we think of the anniversary sale as the biggest thing we do,” Jamie Nordstrom, president of Nordstrom stores, told CNBC in an interview from the company’s flagship store in New York City. “This year is special.”

“There is an emergence of a pandemic and this wardrobe refresh that is happening,” he said. “The anniversary sale represents a truly unique opportunity to serve this customer well.”

According to Nordstrom, more than 100 brands have been added to the company’s sales event this year that have never attended before. In addition to clothing, a variety of household items will be highlighted.

And Nordstrom’s loyalty members – who made up around 80% of purchases made during the offers event last year – have more time during this anniversary sale than they ever had to purchase one. early access in front of the public.

“They need a good anniversary sale,” said Neil Saunders, Managing Director of GlobalData Retail. “Because the numbers haven’t been great compared to the others. They need them to increase the numbers and to be able to tell investors that things are improving. They have to drive this narrative.”

“The hope is that this will be the start of the reset,” Saunders said.

Possibility of taking market share

A preview on Nordstrom’s website in the days leading up to the event showed a variety of discounted products: Nordstrom lingerie pajamas on sale for $ 29 to $ 49; a Vince merino wool cardigan on sale for $ 324.90 from $ 545; and the Vince Camuto heeled sandals range from $ 79.90 to $ 130.

It was largely a mix of casual items, including leggings and tracksuits, as well as work-friendly pieces and other more dressy pieces.

The activewear is on display at Nordstrom’s annual anniversary sale, at the company’s flagship store in New York City.

Source: Lauren Thomas

“This trend towards casualization is not stopping,” said Jamie Nordstrom. “It’s not like the pandemic is over and everyone is going to wear a wool suit again. This is not happening. What we are seeing is this tendency towards precariousness, but without sacrificing the style.”

Steph Wissink, managing director and retail analyst at Jefferies, has watched similar style trends emerge among consumers in recent weeks.

“We’re back in fashion, with just a little bit of edge,” she said. “It’s almost like a signal to the pandemic that we’re done with you. We’re ready to go back to normal. But we’re not ready to go back to what we were before, because it wasn’t all that comfortable to start with. “

If Nordstrom can offer shoppers that balance through its merchandise, Wissink said, the company is expected to seize market share following a number of clothing retailer bankruptcies in 2020, including some department stores in malls. commercial.

Lord & Taylor, the country’s oldest department store chain, liquidated all of its stores after filing for bankruptcy last August. Neiman Marcus filed for Chapter 11 protection last May, emerging later in the year with fewer locations.

JC Penney has also closed more than 100 of its stores since filing for bankruptcy in May 2020. Penney has since emerged with new owners, US mall operator Simon Property Group and Brookfield Asset Management.

As more people return to shopping malls and have fewer options, Nordstrom expects to take back some of that lost business.

“People know Nordstrom is a destination for Edge,” said Wissink. “This is why the anniversary sale is so important, as a test, to see how far the fashion consumer is willing to go now.”

Nordstrom announced earlier in the week that it had acquired a minority stake in four clothing brands – Topshop, Topman, Miss Selfridge and sportswear brand HIIT – from British online fashion house Asos. He made the investment to better target consumers in their twenties with fast fashion clothes.

Supply chain issues: “Everybody’s jostling”

Despite the optimism, supply chain complications pose a challenge for Nordstrom’s anniversary sale this year. During much of the pandemic, retailers experienced shipping backlogs that delayed orders for weeks.

The delays have various reasons. Manufacturing facilities have been closed in parts of South Asia, such as Bangladesh, where cases of Covid continue to rise and threaten the well-being of workers. Shortages of freight containers and truck drivers have left goods in ports. Orders that companies thought they had placed long before meeting demand suddenly don’t come soon enough.

Businesses run the risk of not having enough goods, or the right goods, in stock. Jamie Nordstrom has acknowledged that this is something his company is still working on.

“There are a handful of articles that are on the [Anniversary Sale] event that we don’t have yet, “he told CNBC.” They are being unloaded onto a ship right now. “

“So we are seeing delays,” he added. “Everyone works as hard as they can, from the factory, to the shipping lines in Asia, to the ports. Everyone is scrambling.”

Nordstrom has marked down a number of children’s clothing brands, in hopes parents will use the birthday sale to kickstart their back-to-school shopping.

Source: Lauren Thomas

When it released its financial statements for the period ending May 1, Nordstrom said it pulled about $ 120 million in revenue from spring and summer inventory in the first quarter compared to the second, to try to stay ahead of consumer demand.

Nordstrom called supply chain complications one of the pressures weighing on first quarter earnings. It reported a loss of $ 166 million, or $ 1.05 per share, compared with a loss of $ 521 million, or $ 3.33 per share, a year earlier.

“Retailers are anticipating this phenomenal demand and therefore scrambling to catch up with supply because we are in this strange situation where demand exceeds supply,” said Simeon Siegel, analyst at BMO Capital Markets.

“The question that Nordstrom is now going to have to show is: can Nordstrom capitalize on greater will and capacity [from consumers] spend and use their anniversary sale to catalyze purchases, while doing so with healthy margins? ”Siegel added.

When retailers discount products, it equates to less profit per sale. But Nordstrom can try to maintain profitability by further reducing its private label (which is more profitable initially) and encouraging buyers to fill their baskets with high-cost national brand items.

The right combination of promotional purchases and full price at Nordstrom’s anniversary sale could put the company in a healthier position ahead of the 2021 holidays.

Nordstrom shares have only risen about 7% since the start of the year. Its market cap is around $ 5.3 billion, which is lower than rival Macy’s, at $ 5.4 billion.

“The reset, in terms of the fashion cycle, it’s obviously too late now for summer and spring,” said Saunders, managing director of GlobalData Retail, referring to Nordstrom’s struggle to get the right items in stock for the correct season due to supply chain issues. .

“It’s got to happen in the fall and winter. So it’s going to be really interesting to see, once Nordstrom starts to dump summer stock, are the fall goods in the stores, or are they poorly rated this season as well? “


Leave A Reply

Your email address will not be published.