Nordstrom, Inc., a fashion retailer, provides apparel, shoes, cosmetics, and accessories for women, men, young adults, and children. It offers a range of brand name and private label merchandise through various channels, such as Nordstrom branded full-line stores and online store at Nordstrom.com; Nordstrom Rack stores; Nordstromrack.com and HauteLook; Jeffrey boutiques; clearance stores that operate under the Last Chance name.
Three months ago I wrote about Nordstrom quarterly report and how they missed Wall Street estimates, but how the Nordstrom blamed the dismal numbers on the roll out of their new loyalty program and slowing sales in women’s clothing.
Co-president Erik Nordstrom said on a post-earnings conference call the company stopped sending rewards "notes" to its loyalty customers by mail in an attempt to get the program online and reach customers faster. That shift caused a reduction in foot traffic at all of its stores, the executive said, as many customers rely on receiving these rewards by mail.
I believe in my heart, Norstrom sees the bigger shift that happening around them, but they are still doing what they think is right in order to maintain survival.
The rise of ecommerce outlets has made it harder for traditional retailers to attract customers to their stores and there is no bigger culprit than Amazon.
The Amazon effect is the ongoing evolution and disruption of the retail market. Retailers closed over 102 million square feet of store space in 2017 and 2018 and in 2019, over 8,000 stores will close their doors.
Last week, Norstrom opened their 363,000 sq ft flagship store in New York City. The flagship store features a wave-form glass face, soaring 19-foot ceilings and custom lighting design.
And when you get hungry, you can eat seven different eateries range in style and price from a mochi doughnut stand and a contemporary pizza joint to the more luxe small-plate restaurant Wolf.
The store also features three shoe departments, including an entire floor for women's shoes and a sneaker boutique in partnership with Nike.
Great marketing for Norstrom…short term, but the novelty will wear off and Norstrom will still have to face the reality that’s suffocating them.
The back story. Retail has struggled in 2019, bombarded with tariffs and shifting consumer habits. Yet department stores have performed even worse than other areas in the industry, to the point that Nordstrom’s (ticker: JWN) 20.4% decline doesn’t even make it the worst of the bunch. In August, Nordstrom’s most recent earnings led to the start of a mini rally, although expectations were low and analysts weren’t impressed.
Moreover, the Christmas shopping season may not bring much relief, as U.S. consumers continue to focus on value and Nordstrom’s prices “are increasingly high relative to peers,” which could undermine the company’s strategy of differentiating itself with customer service.
Price did react to the weekly demand at $28 and just missed the weekly supply at $40. The chart suggests the next stop will be the weekly demand at $15.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
