Nordstrom Reports 23% Q2 Gain in Ecommerce

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Nordstrom reported a healthy 23% increase in ecommerce sales for the second quarter, accounting for more than a third of the company’s total sales, which were up 7% over last year. The company reported $162 million in earnings for the quarter, up 46% from $110 million in 2017.

“We had robust digital sales growth for the quarter, reflecting our market leading presence and significant progress toward our long-term goals,” said co-president Blake Nordstrom on an earnings call. “We remain on track for 2018 to be an inflection point for profitable growth.”

Nordstrom saw sales gains of over 25% in its Nordstromrack.com and Hautelook.com ecommerce sites.  Sales from Nordstrom Rewards members represented 58% of Q2 sales, up from 56% last year.

“When customers engage with us across stores and online, on average they spend five times more and profitability per customer doubles,” Nordstrom said. “Through our focus on our top markets we’re combining the scale of our national infrastructure with our local assets of people, product and place to drive increased customer engagement and gain market share.”

Nordstrom said the company is starting in Los Angeles, its largest market. It will bring all of its digital and physical assets together and continuing to invest in supply chain as well.

Comp sales increased 4% in Q2, driven by growth across both full-price and off-price products. Full price saw a 4.1% comp gain. The company also saw a heightened shift of customers shopping online during its anniversary sale from July 20-Aug. 5.

“Digital sales accounted for more than 40% of our event,” Nordstrom said. “On the first day of early access for our Nordstrom cardholders, we had our biggest day ever online, exceeding our previous record by 80% at 10 times our average daily demand.”

Nordstrom said while the company worked hard to manage its systems for peak demand, it did experience website issues due to unprecedented levels of demand on the first day of the event. “While our team resolved this, we know we disappointed many of our customers and in response we offered cardholders 10 points per $1 on purchases made on the first day of the anniversary,” he said.

From a merchandising perspective, Nordstrom’s partnership with brands strengthen its product margin. Sales from strategic brands grew 13% in Q2, representing about 45% of its full-price business.

Nordstrom said the company has identified sites for its West Coast fulfillment center, scheduled to open in late 2019. “These investments in our supply chain network will help us address our opportunities to better serve customers, improve our efficiencies and leverage inventory in our local market,” he said.

In July, the company said two new local concept stores will open in Los Angeles this fall. They represent part of Nordstrom’s local market strategy to engage with customers through enhanced services such as buy online pickup in store, alterations, store reserve and personal styling.

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