Brittany Gorski |1
Brittany Gorski
Prin. Of Management
2.24.2014
Project I
Nordstrom
1. History
a. Nordstrom was founded in 1901 by John W. Nordstrom and Carl F. Wallin.
They created “Wallin & Nordstrom,” a small downtown shoe store in Seattle.
His focus was “to provide exceptional service, selection, quality, and value.”
In 1923, they opened a second store. In 1928, John retired and sold his
share to sons Everett and Elmer. Wallin sold his shares to Nordstrom’s sons
as well, including Lloyd. By 1960, Nordstrom’s was the largest shoe store;
with 8 locations, they were the largest independent chain. They “went public”
in 1971. They opened a Nordstrom rack in 1973 as a clearance store for the
main chain. They continued to expand to the mass it is today.
b. The founders were John W. Nordstrom and Carl F. Wallin.
c. As stated, in the beginning, they were a strictly shoe store manufacturer and
seller. However, as they expanded, they started selling other women’s
interest items: clothes, accessories, and continue making shoes as well
(www.Nordstrom.com, 2014).
2. Strategic Management Process
a. Mission statement: “At Nordstrom, our goal is to provide outstanding
service every day, one customer at a time.” I think this is a great mission
statement because it is clear, concise, and is direct. Their number one
concern is customer service, and this is necessary for being in the retail
industry. They focus on each individual customer, making sure every
single one of them are taken care of.
b. Objectives: “We work hard to make decisions in the best interest of our
customers and those serving them.”
c. Specific strategies: “Nordstrom’s competitive strategy is differentiation
through superior customer service, product quality, and continuous
improvement. Fashion is what sells. With compelling merchandise and
unyielding commitment to customer service, we can be the retailer
customer’s trust. Personalized sales associates research customers and
assist them with their shopping. The Sales associate will know what type
of clothes they prefer and guide them to a department that compliments
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their style. Nordstrom products are of the highest quality available, and
are presented in the most appealing way to customers. To have a
competitive advantage, Nordstrom’s must continually keep up with the
latest fashion trends” (www.Nordstrom.com, 2014).
3. Other
a. Main NAIC number: 452110 Department Stores
b. Other applicable NAIC numbers:
448140 Family Clothing Stores
448210 Shoe Stores
454110 Electronic Shopping and Mail-Order Houses
522299 All other non-depository credit intermediation
414110 Clothing and clothing accessories merchant
wholesalers
315210 Cut and Sew Apparel Contractors
448190 Other Clothing Stores
453998 All Other Miscellaneous Store Retailers (except
Tobacco Stores)
453999 All other miscellaneous store retailers (except beer
and wine-making supplies stores)
452999 All other miscellaneous general merchandise stores
236220 Commercial and Institutional Building Construction
(www.Marketline.com, 2014)
c. Company Location: Headquartered in Seattle, Washington. Nordstrom is in
31 states, with 117 full-line stores, and 123 Nordstrom Rack locations.
They also serve customers online in 44 countries.
d. Employee count: 61,000 average in 2012. In July, increased to 63,500. In
December, increased to 64,500 for seasonal sales.
e. Current CEO: Blake W. Nordstrom
f. Stock Price: JWN $57.33 (NYSE)
g. Website: www.Nordstrom.com
h. Net Sales: $11,762 million. Earnings before interest and income taxes
(EBIT) - $1,345 million. Cash dividends paid per share- $1.08 million
(www.yahoo.com, 2014).
i. Values: Nordstrom provides further guidance for employees on how to
achieve Nordstrom’s mission. These are the phrases they suggest: “we’re
family, use good judgment, be empowered, setting goals matters, it’s your
business, healthy competition is good, be honest, be recognized, be a
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good neighbor, be kind, have fun, our door is always open”
(www.Nordstrom.com, 2014).
4.
60.00%
50.00%
40.00%
Nordstrom, Inc. Market
Share
30.00%
Walmart Stores, Inc. Sales
20.00%
Target Corp. Sales
10.00%
0.00%
2008
2009
2010
2011
2012
This line graph displays the market share of Nordstrom and its competitors over
the five year period of 2008 to 2012. Nordstrom’s market share percent ranges
from about 7% to 10%. This is a small piece of the market compared to the
share of their main competitors. However, their market share trend is increasing,
which is favorable, and will hopefully continue on in the future. While Walmart
and Target seem to have unsteady and varying market share, Nordstrom’s share
percentage is constantly increasing. When Walmart’s market share increased,
Target’s decreased, and Nordstrom’s increased.
2011 Market Share
Target Corp.
Sales
46%
Nordstrom, Inc.
Market Share
9%
Walmart Stores,
Inc. Sales
45%
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This pie chart shows the market share of the department stores industry main
competitors in 2011. Nordstrom has a relatively small market share (9%) when
compared to its competition. Walmart has a 45% share, and Target comes close
with a 46% share. As you can see, Target and Walmart are the fierce
competitors, and Nordstrom has a long way to go to grab as much share as
those two. Below is the same pie chart depicting the market share of the
department stores industry in 2012. Walmart’s share increased by one
percentage point to 46%, while Target’s share dropped two percentage points to
44%. Nordstrom’s market share increased to 10%.
2012 Market Share
Target Corp.
Sales
44%
Nordstrom, Inc.
Market Share
10%
Walmart Stores,
Inc. Sales
46%
5. Operations
a. Online services in 44 countries
b. USA Nordstrom Full-Line Stores and Nordstrom Rack’s – Total 240
i. Alaska (1), Arizona (8), California (65), Colorado (7), Connecticut
(2), Delaware (1), Florida (16), Georgia (7), Hawaii (2), Idaho(1),
Illinois (11), Indiana (2), Kansas (2), Maryland (7), Massachusetts
(7), Michigan (6), Minnesota (3), Missouri (4), Nevada (2), New
Jersey (7), New York (8), North Carolina (4), Ohio (5), Oregon (9),
Pennsylvania (4), Rhode Island (2), Tennessee (1), Texas (17),
Utah (4), Virginia (10), Washington (15), Washington, D.C. (1).
(www.Nordstrom.com, 2014)
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6.
Nordstrom Sales and Profits
$14,000,000,000
$12,000,000,000
$10,000,000,000
$8,000,000,000
Revenue
Net Profit
$6,000,000,000
$4,000,000,000
$2,000,000,000
$2010
2011
2012
The graph above displays Nordstrom’s sales and profits over three years: 2010
through 2012. The blue bars represent the revenue, or net sales, of the
company, while the red bars represent the net profit, or net income. As the
graph shows, the revenue is much greater than net income. This is due to the
expenses and liabilities that the company has to pay off first. The revenue of
Nordstrom has increased by about one and a half billion dollars each year. This
trend is very favorable. However, as you can see, the net profit does not seem to
follow that increasing trend. In the graph below, which shows specifically the net
profit, we see that it does increase by about seventy million each year. As the
revenue increases, so must the expenses and liabilities, because if they stayed
constant, the net income would increase at the same rate as the revenue, which
would be highly favorable.
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Nordstrom Net Profit
$760,000,000.00
$740,000,000.00
$720,000,000.00
$700,000,000.00
$680,000,000.00
$660,000,000.00
$640,000,000.00
$620,000,000.00
$600,000,000.00
$580,000,000.00
$560,000,000.00
$540,000,000.00
2010
2011
2012
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7.
(www.smartdraw.com, 2014)
Above is a chart found on smartdraw.com in an article about Nordstrom and
their company’s organization. Nordstrom refers to their organizational chart as a
“hierarchy of importance” as titled above. The Board of Directors are located at
the bottom of the triangle because they are the fewest in terms of numbers,
however, they hold the rest of the company. They are the base, from which all
other branches rest on. As shown, the executive team comes next, followed by
Store and Department Managers. As you go up each layer, the section of the
triangle becomes bigger because those members are more numerous. The
management is followed by the Floors Sales Associates followed by the
Customers. The customers are the most important, according to Nordstrom.
Below is the organizational chart of Nordstrom’s top executives that I created
followed by a list of the top executives.
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Blake W. Nordstrom
President
Erik B. Nordstrom
Brian K. Dennehy
Executive VP and
President, Stores
Executive VP and Chief
Marketing Officer
Daniel F. Little
Robert B. Sari
Ken Worzel
Executive VP and Chief
Administrative Officer
Executive VP, General
Cousel and Secretary
Executive VP, Strategy and
Development
Robert E. Campbell
Treasurer and VP, Investor
Relations
James A. Howell
VP- Finance
Delena M. Sunday
Executive VP, HR and
Diversity Affairs
Geevy S.K. Thomas
Executive VP and
President, Nordstrom Rack
Stores
James F. Nordstrom
Executive VP and
President, Nordstrom
Direct
Paige L. Thomas
Steven C. Mattics
Executive VP and General
Merchandise Manager,
Nordstrom Rack
Executive VP; Chairman and
Chief Executive Officer of
Nordstrom fsb, President of
Nordstrom Credit, Inc.
Mark J. Tritton
Executive VP and
President, Nordstrom
Product Group
Michael G. Koppel
Scott A. Meden
Executive VP and General
Merchandise Manager,
Cosmetics Division
Executive VP and General
Merchandise Manager,
Shoe Division
Margaret Myers
David M. Witman
Executive VP and General
Merchandise Manager,
Men's Apparel
Executive VP and General
Merchandise Manager,
Accessories and Women's
Specialized Divisions
Teri Bariquit
Executive VP-Nordstrom
Merchandise Group
Tricia D. Smith
Executive VP and General
merchandise Manager,
Women's Apparel
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Teri Bariquit, 46
Executive Vice President - Nordstrom Merchandise Group
Robert E. Campbell, 56
Treasurer and Vice President, Investor Relations
Brian K. Dennehy, 47
Executive Vice President and Chief Marketing Officer
James A. Howell, 46
Vice President, Finance
Michael G. Koppel, 55
Executive Vice President and Chief Financial Officer
Gemma Lionello, 47
Executive Vice President and General Merchandise Manager, Cosmetics Division
Daniel F. Little, 50
Executive Vice President and Chief Administrative Officer
Steven C. Mattics, 43
Executive Vice President; Chairman and Chief Executive Officer of Nordstrom fsb,
President of Nordstrom Credit, Inc.
Scott A. Meden, 49
Executive Vice President and General Merchandise Manager, Shoe Division
Margaret Myers, 65
Executive Vice President and General Merchandise Manager, Accessories and Women's Specialized Divisions
-Blake W. Nordstrom, 51
President
Erik B. Nordstrom, 48
Executive Vice President and President, Stores
James F. Nordstrom, Jr., 39
Executive Vice President and President, Nordstrom Direct
Peter E. Nordstrom, 50
Executive Vice President and President, Merchandising
Robert B. Sari, 56
Executive Vice President, General Counsel and Secretary
Tricia D. Smith, 41
Executive Vice President and General Merchandise Manager, Women's Apparel
Delena M. Sunday, 51
Executive Vice President, Human Resources and Diversity Affairs
Geevy S.K. Thomas, 47
Executive Vice President and President, Nordstrom Rack
Paige L. Thomas, 41
Executive Vice President and General Merchandise Manager, Nordstrom Rack
Mark J. Tritton, 48 Executive Vice President and President, Nordstrom Product Group
David M. Witman, 53 Executive Vice President and General Merchandise Manager, Men’s Apparel
Ken Worzel, 47 Executive VP, Strategy and Development
(www.Nordstrom.com, 2014)
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8.
Nordstrom Stock Price
$ 58.50
58.00
57.50
57.00
56.50
56.00
55.50
Open
55.00
54.50
54.00
Nordstrom’s stock price from the beginning of September in 2013 to the end of
the month was not steady. The price began at $56.29, to a small immediate
drop, and then steadily increased until its peak on the 18th. The maximum value
was $58.25. Continuing through the end of the month, the price steadily
decreased. When looking at the five year trend (below) instead of this isolated
thirty day chart, we see that during September of 2013, Nordstrom’s stock prices
were actually only taking a slight dip. Overall, their prices have been
overwhelmingly increasing. The range over the five years was $49.90 (62.0912.19). In comparison, the $2.33 dip in the latter half of September 2013 is not
much of a concern. Based on the given trends of the five year data, I would
invest in Nordstrom stock if I were an investor.
B r i t t a n y G o r s k i | 11
Nordstrom Stock Price
$ 70.00
60.00
50.00
40.00
Open
30.00
20.00
10.00
0.00
1/2/2009
1/2/2010
1/2/2011
1/2/2012
1/2/2013
9. Brand Info: Nordstrom is a fashion specialty retailer offering apparel, shoes,
cosmetics and accessories for women, men and children. The company's key
products and services include the following:
Kid's apparel
Ladies’ fashion apparel
Men's fashion apparel
Footwear
Fragrances
Gifts
Cosmetics
Jewelry and accessories
Service:
Credit and debit cards
Brands:
Nordstrom
Nordstrom Rack
Halogen
B r i t t a n y G o r s k i | 12
Caslon
Classiques Entier
John W. Nordstrom
Jeffrey
Last Chance
treasure&bond
(www.ebscohost.com, 2014)
This is a general list of the items that Nordstrom sells in their stores and online.
Below are some pictures from their website. The first, fourth, and fifth picture
are on their clothing page. They were showing off the types of clothes and
accessories that Nordstrom offers. The second picture was from their locations
tab, showing what one Nordstrom looks like from the outside. The third visual,
that of just the name of the company, shows the font and size of text that
Nordstrom uses to display their company’s name.
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(www.Nordstrom.com, 2014)
10. Total assets= $8,089,000,000
Total liabilities= $6,176,000,000
Stock Price= $57.33
Shares Outstanding= 193,360,000
Market Value= Stock price x # of shares
= $57.33 x 193,360,000
= $11,085,328,800
Book Value= Assets – Liabilities
= $8,089,000,000 – 6,176,000,000
= $1,913,000,000
(www.yahoo.com, 2014)
The market value is obviously much greater than the book value. The larger
value for market value can be attributed to the fact that the market gives a
higher value to the company because of the earning power of the company’s
assets. The market value is typically higher than the book value because the
market typically views companies in a good light with respect to their outlook on
the future earnings.
B r i t t a n y G o r s k i | 14
11.
Nordstrom, Inc.
2012
61,000
Walmart Stores,
Inc.
2012-2013
2,000,000
Target
Corporation
2012-2013
360,000
Number of
Employees
Average Salary $93,885
$90,248
$68,683
Gross Revenue $11,762,000,000
$52,077,000,000
$54,975,800,000
Gross Revenue $192,819.67
$26,038.50
$15,271.67
per Employee
Net Income
$735,000,000
$324,000,000
$3,375,100,000
Net Income
$12,049.18
$162.00
$9,375.28
per Employee
(www.Nordstrom.com, 2014; www.ibis.com, 2014; www.yahoo.com, 2014)
In terms of the number of employees, Walmart has a much greater number than
Nordstrom or Target. This affects their gross revenue per employee, which
causes a significant difference in the three companies’ performance on the gross
revenue per employee ratio. Nordstrom’s revenue per employee is $192,819.67,
which is much higher than its competitors. Walmart and Target have a revenue
per employee ratio of $26,038.50 and $15,271.67, respectively. This difference is
very favorable for our company because it means that we bring in a lot of money
with fewer employees. Each employee brings in a gross revenue of over $190
thousand dollars. Fortunately, Nordstrom retains a good amount of their
revenue, which makes the net income per employee to be $12,049.18. This is a
larger ratio than both Target ($9,375.28) and Walmart ($162.00). Nordstrom’s
performance is excellent in terms of these ratios.
12.
Item
Revenue
2012
Revenue
2011
Revenue
2010
Net
Income
2012
Net
Income
Company
Annual
Statement
11,762,000,000
Yahoo
Finance
12,148,000,000
193,749,100,000
10,497,000,000
10,877,000,000
191,453,900,000
9,310,000,000
9,700,000,000
192,998,600,000
735,000,000
735,000,000
-------------
683,000,000
683,000,000
IBIS
Report on
Company
Not a
major
competitor
IBIS Report on
Industry
-------------
B r i t t a n y G o r s k i | 15
2011
Net
613,000,000
613,000,000
------------Income
2010
Assets
8,089,000,000
8,089,000,000
------------2013
Liabilities 6,176,000,000
6,176,000,000
------------2013
Owner’s
1,913,000,000
1,913,000,000
------------Equity
2013
All of the recorded net incomes are congruent; the data from Yahoo Finance and
the Annual Company Statement match. The data for the revenues contains some
discrepancies though, as Yahoo Finance’s numbers recorded are higher than that
of the Annual Statement. This could be due to the fact that the Annual
Statement accounts for certain discounts or expenses before the revenue is
marked.
13. As an investor, I would invest a lot of money into this company. Although its
revenues do not compare to that of its competitors like Target and Walmart,
Nordstrom has many good aspects. For one, the gross revenue per employee
ratio is very favorable. It shows that even with fewer employees, Nordstrom can
produce a lot of revenue. Compared to Target and Walmart, Nordstrom retains
much of its earnings as well. Their net income is greater than Target and
Walmart, showing me that their expenses are not extensive and they are making
a good profit margin when compared to their costs. Nordstrom’s stock price has
increased almost fivefold since 2009, and their net profit has also steadily
increased. Although there are some opportunities, I think that Nordstrom has a
solid foundation both financially and socially, and they will do increasingly better
in the future. I would invest money in the company.
14. Reference List:
www.ebscohost.com, 2014
www.ibisworld.com, 2014
www.Marketline.com, 2014
www.Nordstrom.com, 2014
www.smartdraw.com, 2014
www.yahoo.com, 2014