Nordstrom 2004 Annual Report Download - page 9

dear customers, employees and shareholders,
It’s an exciting time to be in the business of fashion. For the past few years we’ve been working hard
to ensure the long-term success of our company. Our business is now performing at a higher level than
ever – and we’re confident in our game plan. Here are a few highlights from 2004, a breakthrough year
in which Nordstrom:
• achieved total sales of $7.1 billion, a milestone for our company. Total sales increased 10.6%,
and comparable sales increased 8.5% – our third consecutive year of positive comparable
store sales.
• marked the fourth consecutive year of SG&A rate improvement.
• posted our best gross margin percentage in the history of our company.
• increased inventory turn 10%, with sales growth exceeding inventory growth, 10.6% vs. 1.7%.
• achieved a pre-tax margin of 9.1% – our best in over 10 years (it exceeded the 7.5%-8.5%
level we planned to achieve by 2006).
We’re pleased by these results – and we’re equally excited by the strides we’ve made behind the scenes
and on the frontlines. Going into 2004, we wanted to improve our inventory management disciplines and take
advantage of new system tools. One significant advance: our merchants are doing a better job of reacting
quickly to feedback from the sales floor by leveraging our new perpetual inventory management system.
As a result, we’re selling more of the right merchandise in the right store at the right time. This improved
merchandise flow brings more fresh and compelling goods to the floor, resulting in fewer markdowns.
On the selling floor, our goal has been to create an environment that’s fair and positive, while at the same
time, providing our people with the tools they need to run their own businesses within our four walls. By
giving each individual the ability and freedom to excel, we enhance our company’s ability to do the same.
Our top performers are now selling even more. Last year, a record 61 Nordstrom salespeople sold $1 million
or more – that’s twice the number of million-dollar sellers we had just two years ago. An important
enhancement has been our implementation of new touch-screen registers, completed last November in all
Full-Line stores. We also added Personal Book to the registers, a dynamic tool that allows salespeople to
build and strengthen customer relationships. We are just beginning to realize the benefits of this powerful
tool. Personal Book will be a key focus for our company in 2005. We believe it will help improve the
experience customers have in our store – and the overall service we provide them.
It’s our belief that successful, top-line performance starts and ends with the experience each customer has
in our stores. For us, the foundation of that experience is the consistent offering of compelling product and
customer service. Our primary focus is on our Full-Line stores. We’ve begun an extensive remodel schedule
to continue to ensure that all our stores will be the best Nordstrom stores possible. In addition, we opened
two new Full-Line stores in 2004 at SouthPark Mall in Charlotte, North Carolina, and at Dadeland Mall in
Miami, Florida. At Dadeland – one of the leading malls in Florida – we were able to acquire a former
Lord & Taylor store and transform it into a Nordstrom store in less than nine months. This rapid makeover
proves we’re positioned to take advantage of similar opportunities that may arise throughout the country.
On March 11 of this year, we opened in another former Lord & Taylor store at Phipps Plaza in Atlanta, Georgia
(140,000 sq. ft.). Additionally, we’ll be opening three more new stores in 2005:
The Shops at La Cantera in San Antonio, Texas (Sept. 11; 149,000 sq. ft.)
The Spectrum Center in Irvine, California (Sept. 20; 129,000 sq. ft.)
NorthPark Center in Dallas, Texas (Nov. 11; 212,000 sq. ft.)
Other highlights from 2004 include a record year by our Nordstrom Rack stores, which far outpaced other
off-price retailers, and an excellent year by our online business, which outpaced industry average growth
rates and contributed to our overall success.
We’re confident we can continue to build momentum in the coming year. For some time now, we’ve
been taking a look at the different ways our customers choose to shop with us, whether by phone, online,
or in our stores. We want to create a seamless shopping experience, sending customers a clear and
consistent message with the merchandise we offer, across all channels. Starting this summer, we’ll better
integrate our Direct and Full-Line store catalogs, sending out roughly one catalog per month, each of
which will be filled with exciting merchandise we hope our customers will love. We want to leverage
our resources and expertise to tell our story in a clearer, more concise and more efficient manner.
Our goal is to be in the best position to take advantage of opportunities as they may present themselves.
We’ve greatly improved our shareholders’ return on equity and significantly reduced debt. Our merchant
team is responding well to what our customers have been asking for: interpreting trends and bringing in
fresh, compelling merchandise. The result of these efforts has been a significant increase in sales. We have
the best talent, a distinct shopping experience, multiple sales channels, and the discipline to make the
right choices that will drive our company to the next level.
We’re incredibly proud of our people and all the hard work they’ve put forth – work that’s put us in the
position we’re in today. Our business is not static. There’s always work to be done. But we believe we can
continue to build on our momentum and redefine what’s possible at Nordstrom. Thank you for your support
over the past years. We look forward to bringing you more positive news in the months and years ahead.
Blake W. Nordstrom
President, Nordstrom, Inc.
message to
shareholders
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