Nordstrom reported tremendous success with its online off-price business which saw a sales growth of 50% in the first quarter, according to an earnings call.
Michael Koppel, chief financial officer and executive vice president of Nordstrom, said the 50% increase significantly accelerated since the launch of Nordstromrack.com a year ago.
With Nordstrom Rack, the company reported that it is on track with accelerated growth plans with the opening of 10 stores in the first quarter.
“In addition to six full lines stores announced in Canada, we also look forward to introducing Nordstrom Rack [in Canada] in the fall of 2017,” said Blake Nordstrom, co-president and director of Nordstrom. “In March, we also expanded our full-line presence in our store opening in San Juan, Puerto Rico.”
“In off-price, the store and online businesses grew 16%,” said Koppel. “Rack sales were up 12% reflecting above-planned performance in new stores. Rack had a slight comp decrease of 0.2%. We believe these results are temporary and are maintaining full-year expectations of low single-digit comp increases at the Rack.”
Koppel said Nordstrom’s full-price business generated a total sales increase of 5% which included full-line stores’ comp increase of 0.5%, reflecting improving trends over the last year. Nordstrom.com’s momentum continues with a 20% increase.
Blake Nordstrom added that the company is making personalization efforts to elevate the customer experience. In 2014, Nordstrom saw tangible results from its mobile enhancements to make shopping easier and more convenient.
“We’ve added location-based features that are driving in-store sales and enabling a more seamless experience,” said Blake Nordstrom. More recently we integrated our rewards program to make it more convenient for customers to receive notifications as well as check and redeem their rewards.”
Nordstrom said this fall the company will provide faster delivery enabled by its third fulfillment center in Pennsylvania and the company plans to roll out an expanded multi-tenant awards program to all stores and online in the second half of the year.
Koppel said Nordstrom is investing growth in existing channels, since stores represent the core of the Nordstrom brand and the foundation for a multi-channel experience, 40% of Nordstrom’s plan will support new store growth and reinvestment. Total sales growth was 10% and a comparable store sales increase of 4.4%.
“Additionally technology and fulfillment are key enablers in creating synergies across our business, making up the remainder of the plan at 35%,” said Koppel.