A shopper leaves a Nordstrom store on May 26, 2021 in Chicago, Illinois.
Scott Olson | Getty Images
As Americans come out of their homes and return to offices, weddings and college campuses, Nordstrom bets they need a brand new wardrobe.
In recent months, the department store chain has seen a 165% increase in searches for “workwear” on its website. Nordstrom hopes shoppers will use its annual anniversary sale — the biggest deals event of the year — to stock their closets.
This week, Nordstrom kicked off its anniversary sale for members in its Nordy Club loyalty program. The deals on everything from AG denim to Charlotte Tilbury makeup to Dyson vacuums will open to the public July 28 and run through August 9. Nordstrom has been hosting its mega sale, usually during the summer months leading up to the back-to-school rush, since the 1960s.
But the stakes are much higher for this year’s event. Nordstrom knows it needs a boost to encourage stakeholders and analysts that its stores are still just as relevant to customers. Some may have lost confidence as the company’s quarterly sales have not yet returned to pre-pandemic levels.
Nordstrom’s current outlook for fiscal 2021, which calls for 25% growth from 2020 net sales of $10.36 billion, means revenue would still be below $15.13 billion. who achieved it in 2019. That’s also less than analysts’ expectations for a 28% increase, according to a Refinitiv survey.
“Every year, we consider the anniversary sale to be the biggest thing we do,” Jamie Nordstrom, president of stores at Nordstrom, told The Washington City Times in an interview from the company’s flagship location in New York City. “This year is special.”
“There is a rise of a pandemic and this wardrobe refresh that is taking place,” he explained. “The Anniversary Sale is a really unique opportunity to really serve that customer well.”
According to Nordstrom, more than 100 brands have been added to the company’s sales event this year that have never participated before. In addition to clothing, a variety of household items will be discounted.
And Nordstrom’s loyalty members — who accounted for about 80% of purchases made during the deals event last year — have more time during this Anniversary Sale than they’ve ever had buying early access for the public.
“They need a good anniversary sale,” said GlobalData Retail Managing Director Neil Saunders. “Because the numbers weren’t great compared to others. They need this to boost the numbers and tell investors that things are getting better. They need to drive that story.”
“The hope is that this will be the start of the reset,” Saunders said.
Opportunity to capture market share
A preview on Nordstrom’s website in the days leading up to the event showed a variety of merchandise being discounted: Nordstrom lingerie pajamas on sale for $29 from $49; a Vince merino wool cardigan retails for $324.90 from $545; and Vince Camuto heeled sandals for $79.90 from $130.
It was largely a mix of casual items, including leggings and tracksuits, along with work-appropriate and other garments.
Activewear is on display at Nordstrom’s annual Anniversary Sale event at the company’s flagship store in New York City.
Source: Lauren Thomas
“This trend towards easing is not going to end,” said Jamie Nordstrom. “It’s not like the pandemic is over and everyone’s going to wear wool suits again. That’s not happening. What we’re seeing is this trend towards casualization, but without sacrificing style.”
Steph Wissink, managing director and retail analyst at Jefferies, has seen similar styling trends emerge among consumers in recent weeks.
“We’re going back to fashion, with a little bit of edge,” she said. “It’s almost a signal to the pandemic that we’re done with you. We’re ready to get back to normalcy. But we’re not ready to go back to where we were before, because it wasn’t all comfortable to begin with.”
If Nordstrom can offer shoppers this balance through its merchandise, Wissink said, the company should gain market share after a number of clothing store foreclosures in 2020, including some mall department stores.
Lord & Taylor, the country’s oldest department store chain, liquidated all its stores after going bankrupt last August. Neiman Marcus filed for Chapter 11 bankruptcy protection last May, with fewer locations later in the year.
J.C. Penney has also closed more than 100 of its stores since filing for bankruptcy in May 2020. Penney has since gained new owners, US mall operator Simon Property Group and Brookfield Asset Management.
As more people return to malls and they have fewer options, Nordstrom expects to pick up some of those lost business.
“People know that Nordstrom is a destination for edge,” Wissink said. “That’s 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 this week that it has acquired a minority stake in four clothing brands – Topshop, Topman, Miss Selfridge and activewear label HIIT – from online British fashion house Asos. It has made the investment to better target consumers in their 20s with fast-fashion clothing.
Supply chain issues: ‘Everyone is clambering’
Despite the optimism, supply chain complications pose a challenge to Nordstrom’s anniversary sale this year. During much of the pandemic, retailers have faced shipping backlogs, delaying orders for weeks.
The delays have several reasons. Manufacturing facilities were closed in parts of South Asia, such as Bangladesh, where the number of Covid cases continues to rise and threatens workers’ well-being. Shortages of freight containers and truck drivers have left goods in ports. Orders that companies thought could be met well in advance of demand suddenly don’t come in fast enough.
Companies run the risk of not having enough or the right goods in stock. Jamie Nordstrom acknowledged it’s something his company is still working on.
“There’s a handful of items that are on the… [Anniversary Sale] event that we don’t have yet,” he told The Washington City Times. “They’re being unloaded onto a ship right now.”
“So we’re seeing delays,” he added. “Everyone is working as hard as they can – from the factory to the shipping companies in Asia, to the ports. Everyone is scrambling.”
Nordstrom has discounted a number of children’s clothing brands in the hopes that parents will use the anniversary sale to kickstart their back-to-school shopping.
Source: Lauren Thomas
When Nordstrom reported its financial data for the period ended May 1, Nordstrom said it pulled about $120 million in spring and summer inventory receipts from the second quarter into the first quarter, trying to keep up with consumer demand. stay.
Nordstrom cited supply chain complications as one of the pressure points that weighed on Q1 earnings. It reported a loss of $166 million, or $1.05 per share, compared to a loss of $521 million, or $3.33 per share, a year earlier.
“Retailers are anticipating this phenomenal demand and so they are trying to catch up to supply because we are in this strange circumstance where demand is outpacing supply,” said BMO Capital Markets analyst Simeon Siegel.
“The question that Nordstrom will now have to face is: can Nordstrom benefit from greater willingness and capability [from consumers] spend and use their anniversary sale to catalyze purchases, but still do so at healthy margins?” Siegel added.
When retailers discount goods, it means less profit per sale. But Nordstrom may try to maintain profitability by selling more of its private label (which is more profitable in the beginning) and encouraging shoppers to fill their shopping carts with full-price national brand items.
The right mix of promotional and full-price purchases during Nordstrom’s Anniversary Sale could put the company in a healthier position for the 2021 holiday season.
Nordstrom’s stock is only up about 7% so far. Its market cap is about $5.3 billion, which has plunged below rival Macy’s, at $5.4 billion.
“The reset, in terms of the fashion cycle, is now clearly overdue for summer and spring,” said Saunders, the GlobalData Retail director, referring to Nordstrom’s struggle to get the right items in stock for the right season because of supply chain problems. .
“It should come in the fall and winter. So it’s going to be really interesting to see, when Nordstrom starts to clear out summer supplies, are there any fall items in stores, or have they misjudged that season too?”