Nordstrom 2009 Annual Report Download - page 12

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PART I
Item 1. Business.
DESCRIPTION OF BUSINESS
Founded in 1901 as a retail shoe business in Seattle, Nordstrom later incorporated in the state of Washington in 1946. We are one of the nation’s leading
fashion specialty retailers, with 187 U.S. stores located in 28 states as of March 19, 2010. The west and east coasts are the areas in which we have the
largest presence. We have four reportable segments: Retail Stores, Direct, Credit, and Other.
The Retail Stores segment derives its revenues from sales of high-quality apparel, shoes, cosmetics and accessories. It includes our 112 ‘Nordstrom’
full-line stores, 72 off-price ‘Nordstrom Rack’ stores, two ‘Jeffrey’ boutiques, and one clearance store that operates under the name ‘Last Chance.’
The Nordstrom Rack stores purchase merchandise directly from manufacturers and also serve as outlets for clearance merchandise from our
full-line stores.
Direct generates revenues from sales of high-quality apparel, shoes, cosmetics and accessories by serving our customers on the Internet at
www.nordstrom.com. The Direct segment’s merchandise is primarily shipped from our fulfillment center in Cedar Rapids, Iowa. However, beginning in
the third quarter of 2009, we linked our Direct segment’s inventory with that of our full-line stores and now have the ability to fulfill online orders from
any of our full-line stores. This has given our customers access to more of our merchandise. Additionally we offer our customers the option to
purchase items on our Web site and pick them up in our full-line stores. These enhancements have enabled us to better serve customers across various
channels and improve sales.
Our Credit segment includes our wholly owned federal savings bank, Nordstrom fsb, through which we offer a private label card, two Nordstrom VISA
credit cards and a debit card for Nordstrom purchases. The credit and debit cards feature a shopping-based program designed to increase customer
visits and spending. Although the primary purpose of our Credit business is to foster greater customer loyalty and drive more sales, we also generate
revenues through finance charges and other fees on these cards.
Our Other segment includes our product development team, called Nordstrom Product Group, which designs and contracts to manufacture private label
merchandise sold in our Retail Stores and Direct segments. In addition, this segment includes our corporate center operations.
For more information about our business and our reportable segments, see Item 7, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” on page 16 and Note 14 of the Notes to Consolidated Financial Statements in Item 8.
FISCAL YEAR
We operate on a 52/53-week fiscal year ending on the Saturday closest to January 31st. References to 2009, 2008 and 2007 relate to the 52-week
fiscal years ended January 30, 2010, January 31, 2009 and February 2, 2008, respectively. References to 2010 relate to the 52-week fiscal year ending
January 29, 2011.
TRADEMARKS
We have 136 trademarks, each of which is the subject of one or more trademark registrations and/or trademark applications. Our most notable
trademarks include Nordstrom, Nordstrom Rack, John W. Nordstrom, Caslon, and Classiques Entier. Each of our trademarks is renewable indefinitely
provided that it is still used in commerce at the time of the renewal.
RETURN POLICY
We offer our customers a fair and liberal return policy at our full-line stores and online at Nordstrom Direct. Our Nordstrom Rack stores accept returns
up to 30 days from the date of purchase with the original price tag and sales receipt. In general, our return policy is considered to be more generous
and liberal than industry standards.
SEASONALITY
Due to our Anniversary Sale in July, the holidays in December and the half-yearly sales that occur in the second and fourth quarters, our sales are
historically higher in the second and fourth quarters of the fiscal year than in the first and third quarters.
INVENTORY
We plan our merchandise purchases and receipts to coincide with expected sales trends. For instance, our merchandise purchases and receipts
increase prior to our Anniversary Sale, which extends over the last two weeks of July. Also, we purchase and receive a larger amount of merchandise in
the fall as we prepare for the holiday shopping season (from late November through early January). We pay for our merchandise purchases under the
terms established with our vendors.
In order to offer merchandise that our customers want, we purchase merchandise from a wide variety of high-quality suppliers. We also have
arrangements with agents and contract manufacturers to produce our private label merchandise. Our suppliers include domestic and foreign
businesses. We expect our suppliers to meet our “Nordstrom Partnership: Standards and Business Practice Guidelines,” which address our standards for
matters such as legal and regulatory compliance, labor, health and safety, and the environment.