Nordstrom 2005 Annual Report Download - page 4

It’s always a pleasure to share good news. Here are a few highlights from 2005, an incredible year for Nordstrom:
• Total sales increased 8.3% to $7.7 billion and same-store (comparable) sales increased 6% —
our fourth consecutive year of same-store sales gains
• Our SG&A rate (expenses as a percentage of net sales) improved for the fifth consecutive year,
with our lowest SG&A rate in over 10 years
• Reaching new heights, we topped our 2004 best-ever gross margin performance in 2005,
marking the fourth consecutive year of gross margin improvement
• Our pre-tax margin improved for the third consecutive year — at 11.5%, it is at the highest level
in our company’s history and ranks in our industry’s top tier
We’ve achieved significant progress over the last three years in improving our company’s operating efficiency. While we will continue
to see some improvement in this area, moving into 2006, we are strategically positioned and focused on exceeding $8 billion in sales
and continuing to improve our pre-tax margin, SG&A and same-store sales.
Our long-term strategy is to drive profitable growth by earning more business from the customers we currently have, serving more
customers, and increasing our presence where our customers shop. There are a number of reasons why we believe now is an opportune
time to take the next step forward. Here’s a snapshot of the potential that lies ahead:
maximizing women’s apparel
We’ve pinpointed Women’s Apparel as key to increasing our share of our customers’ spending. This merchandise category has great
potential in relation to total company sales and we’re laying the groundwork in 2006 to make it an even stronger part of our business.
We are approaching this effort from the perspective of the customer — combining feedback from our selling floor with objective
demographic data — to gain a clearer picture of how we can better serve our customers. Being competitive in this category requires
a blend of art (merchandising talent) and science (operational efficiencies). To that end, we’ve carefully reorganized our merchant
teams, and we’re leveraging our system tools in an effort to identify market opportunities and react to them quickly.
a seamless shopping experience
Early on, our focus in Direct — our catalog and online business — was to promptly get up to speed with the growing trend of online
shopping. Now that we have a foundation to build upon, we have fine-tuned our approach to better serve all our customers. We’ve
learned already that customers who have a multi-channel relationship with Nordstrom spend four times as much with us as those
who do not. We believe that by offering our customers a consistent “Nordstrom experience” — whether they shop with us by phone,
online or in our stores — we’ll attract new customers, many of whom will eventually become loyal to Nordstrom Full-Line stores.
Last fall we introduced new Nordstrom catalogs, which closely mirror the merchandise assortment in our stores and are designed
to inspire customers to shop with us along whichever “path” they prefer. We’re also making a substantial investment in our Web site,
which is now more robust and easier to use. And on the horizon, system upgrades will enable us to have a single view of inventory,
ultimately providing a seamless customer experience.
dearcustomers, employees and shareholders,