Nordstrom Business Report
Executive Summary
Nordstrom Inc. has been in business since 1901. It began in Seattle and originally
only sold shoes. John W. Nordstrom, one of the founders of the store, then expanded
the company and added three new stores. When both founders retired, they sold
the company to John W. Nordstrom’s sons. Then in the 1960’s the expanded their
market to include women’s apparel as well as shoes. They soon after added men’s
and children’s apparel making in a family friendly store. By 1968 the third
generation of Nordstrom men took over and by 1971 the company went public.
They then successfully transitioned to become a coast-to-coast company and from
there quickly became the apparel powerhouse they are today.
The recession hit Nordstrom Inc. very hard in the fourth quarter of 2008, which is
normally their biggest quarter. Market prices dropped dramatically over a 4-month
period and Nordstrom Inc. has spent much of the 2009 yeah trying to regain some
stock value and stabilize the company once again. Their main competitors are
privately held, so it is hard to tell exactly how well they are doing in terms of their
competitors.
Nordstrom Inc. has noticed the growing public concern for the well-being of the
environment and has tried to address that issue. Today they have reduced the
amount of paper products they use as well as reduce the amount of energy they are
consuming. They are using more environmentally friendly materials in their
clothing lines and are looking to only use other vendors who also do so. While they
have made some effort to become more environmentally friendly, they have not
done anything extraordinary in this department.
The EEOC recently filed a lawsuit against Nordstrom Inc that settled in April of
2009. Ten employees from the Palm Beach, Florida branch had been picked on and
discriminated against by their supervisor. The EEOC won the case and as a result
Nordstrom Inc. has reevaluated some of their training standards and regulations in
order to make sure this does not happen again.
To: Robert Evans
From: Laura Goldberg
Date: April 13, 2010
Subject: Nordstrom Inc. Business Report
I have begun to do some research on Nordstrom Inc. to help as you consider
possibly investing in the company. To make it as easy as possible I have broken the
information you asked for into sections so that you can access the information more
quickly. Please let me know if you need any other information on the company, as I
will be happy to find it for you.
Background Information
In 1901, John W. Nordstrom’s opened the first Nordstrom’s store with his business
partner Carl Wallin (Company History, 2010). The one store in Seattle only sold
shoes. The company did very well, expanding to 3 stores and crossed state boarders
with in three short years. After 20 years both the company’s founders retried and
sold their part of the company to Nordstrom’s three sons. By 1960 they were the
biggest shoe retailer in the country but they were looking to expand. Nordstrom’s
sons bought clothing companies in Seattle and Portland. They merged both
companies in Portland offering shoes and clothing at one convenient location. They
then made the store more family friendly by adding both men’s and children’s
clothing in 1966 making it a one stop shop. Then the company was passed down to
the third generation of Nordstrom’s men who decided to take the company public in
1971 and thus Nordstrom Inc. was born (Company History, 2010). In 1988 they
took the company from coast to coast by opening a store in Virginia.
The major success of Nordstrom Inc. has come from their commitment to customer
service. John W. Nordstrom believing that people would be able to have the best
possible shopping experience while they are in his store. Along with the service, he
wanted to provide the best quality and prices he could to ensure his customers
would enjoy their experience in their stores. I believe it is this philosophy that has
made the company so successful. This belief and practice is still held in all their
stores today.
Current Market Stats
Nordstrom Inc. is currently competing in the apparel market. However many of
their main competitors are privately owned such as Niemen Marcus and
Bloomingdales, so it is hard tell how they are doing in relation to their main
competitors. Nordstrom Inc. was not able to get out of the recession on scathed.
Normally department stores will see an increase in their stock prices around the
holiday season due to increased consumerism, however during the 2008 season
prices dropped astronomically. On September 11, 2008 the stock we still high at
$35.53 by November mid it was $7.81 (Yahoo!Finance, 2010). As a result both
revenue and income suffered from that year and since then the company has been
trying to build up the stock price again. Below are charts of revenues, earnings and
EPS for Nordstrom Inc. over the past 3 years.
Revenue
EPS
$1.00
$8,900,000
$0.80
$8,800,000
$0.60
$8,700,000
$0.40
$8,600,000
$0.20
$0.00
$8,500,000
2007
2008
2009
2007
2008
2009
*Data for charts from Yahoo!Finance.com and
DailyFinance.com
Income
**Revenue and Income reported in thousands
$800,000
$600,000
$400,000
$200,000
$0
2007
2008
2009
Due to the extreme drop in the 2008 shopping season it make sense that all of these
charts show a dip in 2008. Income took the smallest hit because the dramatic drop
in prices happened at the end of the year so the beginning of the year helped them
make at least a profit. However the in 2009 the income increased the least. This is
because to compensate for the last quarter in 2008 they had to make cutbacks in
staff, figure out ways to compensate for lack of sales, and rearrange their
advertising. This all costs lots of money so even though they made a lot more money
in 2009, they also had a lot more expenses. The EPS is not ttm so it is slightly less
than the average EPS (ttm), which simply means it the best of the trailing twelve
months. The numbers from the EPS graph are the exact numbers from the last day
of the years. The EPS is nearly the same as it was when the market took as nose
dives so this makes me think that there may be a big increase and revenue and
income sometime soon. This significant change in their stock prices could not have
been foreseen, and it has been hard for the company to make a full recovery within
just one year’s time but they are already showing some improvement.
Environmental Standings
Nordstrom Inc.’s is very away of their environmental impact and the company has
been in the process of trying to minimize their carbon blue print for the past two
years. There are currently 5 areas within which Nordstrom Inc. is making
improvements and those are resource conservation, waster management, packing
and product innovations, organic cotton developments, and their restaurant
(Sustaining the Environment, 2008). They have reduced the number of mailings
they send a year to reduce the amount of paper they use as well as improve heating
and cooling systems. They also have a comprehensive recycling plan and are in the
process of designing a more eco friendly bag. Nordstrom Inc.’s has their own
personal line of organic cotton clothing and try and only purchase organic clothing
from vendors.
While Nordstrom Inc. has not received resounding cheers from the media on their
move to a more sustainable life style; there have also been no complaints. Many of
these changes were made right before the market price crashed. There may have
been some intention of making their “Go Green” efforts more known to the public,
however when their stock dropped so suddenly they had to focus all their efforts on
the company making a profit for the year. As a result a lot of the sustainable efforts
have been put on the back burner until the company is more stable.
Ethical Issues
In April of 2009, Nordstrom Inc. settled a lawsuit that had been filed against them
from the EEOC or Equal Opportunities Commission. The lawsuit alleged that there
had been unethical treatment of African American and Hispanic employees. The
manager at the alterations department, in Palm Beach, Florida, allegedly called her
subordinates “lazy” and when the employees tried to complain to the division, upper
management did nothing and allowed it to continue. The suit was settled for a total
of $292,500 to ten different individuals (Schwartz and Perry, 2009). Despite these
serious claims, the event was not a national news story and Nordstrom Inc. had
minimal damages to recover from.
Still, Nordstrom Inc. wanted to make sure that this would never become a problem
in their work force again. In November of 2009 Nordstrom Inc. amended their code
of conduct. According to the code of conduct their first loyalty is still to the
customers and the professional image of the company, stating what they should
wear and making it clear they can be let go if they do no adhere to these standards
(Code of Business Conduct and Ethics, 2009). While I understand the importance of
your company’s image, if you have just had a lawsuit against you I feel the first and
fore most responsibility would be to correct the problem that caused the lawsuit in
the first place.
There is no mention on their Equal Employment Opportunities until the second
section and their Harassment Policies are the third section in the document. The
information they offer about these policies is still minimal but it does get the point
across that they are unwilling to let this type of discrimination happen within their
company again.
They now have an entire office division that has to do with diversity in the work
force. It is called Diversity@Nordstrom and works to create diversity within the
workforce. Their mission statement is “To maintain a workforce that represents
many backgrounds, while remaining deeply committed to cultivating an
environment where the contributions of every employee, customer and vendor are
valued and respected” (Diversity@Nordstrom, 2009). On the website, there is very
little information on the topic, with one or two short paragraphs under each
subheading. Whether the information is limited because this is a new department or
because they don’t feel it is an important part of the company is uncertain. However,
there has been a new set of training standards for employees and especially
managers on how to treat their subordinates and make the work place and safe and
well-liked environment. Nordstrom Inc. is still doing things to ensure people still
have a good image of the company.
References
Company History - Nordstrom. (n.d.). Retrieved April 13, 2010, from
http://about.nordstrom.com/aboutus/companyhist/companyhist.asp#growing
Diversity Affairs - Nordstrom. (n.d.). Retrieved April 13, 2010, from
http://about.nordstrom.com/aboutus/diversity/diversity.asp
JWN: NORDSTROM INC Stock Quote. (n.d.). Retrieved April 13, 2010, from
http://www.dailyfinance.com/quotes/nordstrom-inc/jwn/nys
JWN: Summary for Nordstrom, Inc. Common Stock- Yahoo! Finance. (n.d.). Retrieved
April 13, 2010, from http://finance.yahoo.com/q?s=JWN
Nordstrom.com - Investor Relations - Corporate Governance - Conduct. (n.d.). Retrieved
April 13, 2010, from http://phx.corporate-ir.net/phoenix.zhtml?c=93295&p=irolgovConduct
Nordstrom.com - Nordstrom Cares - Sustaining the Environment. (2008). Retrieved April
13, 2010, from http://phx.corporateir.net/phoenix.zhtml?c=211996&p=respEnvironment
Schwartz, M., & Perry, D. S. (2009, April 27). EEOC Harassment Lawsuit Settled with
Nordstrom, Inc. :: New York Employment Lawyer Blog. Retrieved April 13, 2010,
from
http://www.nyemploymentlawyer.com/2009/04/eeoc_harassment_lawsuit_settle.html