Nordstrom Management Discusses Q4 2011 Results - Earnings Call Transcript

Nordstrom (JWN)

Q4 2011 Earnings Call

February 16, 2012 4:45 pm ET

Executives

Robert Campbell - Vice President of Investor Relations and Treasurer

Blake W. Nordstrom - Principal Executive Officer, President and Director

Michael Koppel - Chief Financial Officer and Executive Vice President

James F. Nordstrom - Executive Vice President and President of Nordstrom Direct

Peter E. Nordstrom - Executive Vice President, Director and President of Merchandising

Erik B. Nordstrom - Executive Vice President, Director and President of Stores

Analysts

Charles X. Grom - Deutsche Bank AG, Research Division

Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division

Jennifer Black

Paul Lejuez - Nomura Securities Co. Ltd., Research Division

Barbara Wyckoff - CLSA Asia-Pacific Markets, Research Division

Dorothy S. Lakner - Caris & Company, Inc., Research Division

Neely J.N. Tamminga - Piper Jaffray Companies, Research Division

Paul Swinand - Morningstar Inc., Research Division

Deborah L. Weinswig - Citigroup Inc, Research Division

Lizabeth Dunn - Macquarie Research

Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division

Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division

Michael Exstein - Crédit Suisse AG, Research Division

Presentation

Operator

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Hello, and welcome to the Nordstrom's Fourth Quarter and Fiscal Year 2011 Conference Call. At the request of Nordstrom, today's conference call is being recorded. [Operator Instructions] And I would now like to introduce Rob Campbell, Treasurer and Vice President of Investor Relations for Nordstrom. You may begin, sir.

Robert Campbell

Hello, everyone, and thank you for joining us. Today's earnings call will last approximately 45 minutes and will include roughly 30 minutes for your questions.

As a reminder, all forward-looking statements on this call are subject to risks and uncertainties that could cause the company's actual results to differ materially from the expectations and assumptions discussed due to a variety of factors that affect the company, including the risks specified in the company's most recently filed Forms 10-K and 10-Q.

Participating in today's call are Blake Nordstrom, President of Nordstrom Inc.; and Mike Koppel, Executive Vice President and Chief Financial Officer, who will discuss the company's fourth quarter and full year performance and outlook for fiscal 2012.

During the Q&A session, we will be joined by Erik Nordstrom, President of Stores; Pete Nordstrom, President of Merchandising; and Jamie Nordstrom, President of Direct.

Before we begin, I want to mention that Mike will be using slides that can be viewed within the Investor Relations section of our nordstrom.com website. If you are listening to this conference call as a webcast, you should already see the title slide.

With that, I'll turn the call over to Blake.

Blake W. Nordstrom

Thank you, Rob, and good afternoon, everyone.

As we've communicated in the past, we recognize that customers have a growing number of options regarding their shopping experience. The consistency of the customer experience, both in-store and online, and things like selection, multichannel capabilities, personalization, speed, convenience and price, all are becoming more important. Simply stated, we want to be the retailer of choice whenever, however, wherever customers choose to shop by providing a superior customer experience.

As we continue our efforts to improve the level of service in our stores, we also have accelerated our investments to elevate the customer experience in e-commerce. This is where we saw the highest year-over-year sales increase in 2011 and it's where we expect the strongest growth in the future.

There were a number of highlights in 2011. For the full year, our company achieved an all-time high in sales, which exceeded $10 billion. We ended the year with same-store sales up 7.2% on top of the 8.1% increase that we achieved in 2010. Our regular-priced selling remains at historically high levels, which is indicative of the integrity of our pricing and the fashion and newness in our offering.

We continue to challenge ourselves on inventory turn. In 2011, we reached 5.6x, matching our all-time best in 2010 and a tribute to the high level of execution of our merchants.

Our company performance reflects the progress we've made in many parts of our business. Full-line grew same-store sales of 6% while opening new stores in Delaware, Nashville and a second store in St. Louis. We continued our efforts to connect salespeople with more customers to make the shopping experience better. Over the last 3 years, we've roughly tripled the number of personal stylists in our program and now have close to 1,300. They represent some of our best salespeople and are leading our efforts in building one-on-one relationships with our customers and improving the overall customer experience. We enhanced the ability of our salespeople to serve customers with the rollout of mobile point-of-sale devices and e-receipt capabilities.

Part of our effort in connecting and deepening relationships with new and existing customers is through our Fashion Rewards program, with over 2.6 million active participants. A month ago, we announced a number of enhancements which give customers more control over how and when they can earn rewards and extends more benefits to our cardholders.

Our Direct business grew close to 30% in 2011. We took a number of steps during the year to raise our level of service and accelerate overall e-commerce growth.

We launched online free shipping and free returns in September, which had a significant impact on direct sales and generated incremental profit. We followed that with a small pilot of same-day delivery for online orders, and we're continuing to build the knowledge in this area.

We implemented a Nordstrom app for iPhones and Androids, upgraded our website while enhancing our mobile website to make both easier to use and improve the speed and quality of the delivery of merchandise to customers.

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