Nordstrom 2011 Annual Report Download - page 4

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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 225 U.S. stores located in 30 states as of March 16, 2012. The west and east coasts of the United States are
the areas in which we have the largest presence. We have two reportable segments: Retail and Credit.
As of March 16, 2012, the Retail segment includes our 116 ‘Nordstrom’ branded full-line stores and our online store at www.nordstrom.com, our 105
off-price ‘Nordstrom Rack’ stores and our other retail channels including our online private sale subsidiary ‘HauteLook,’ our two ‘Jeffrey’ boutiques,
one philanthropic ‘treasure&bond’ store and one clearance store that operates under the name ‘Last Chance.’ Through these multiple retail channels,
we offer our customers a wide selection of high-quality brand name and private label merchandise focused on apparel, shoes, cosmetics and
accessories. Our integrated Nordstrom full-line stores and online store allow us to provide our customers with a seamless shopping experience
across all channels. Purchases within our stores are primarily fulfilled from that store’s inventory, but may also be shipped to our customers from
our fulfillment center in Cedar Rapids, Iowa, or from other Nordstrom full-line stores for inventory unavailable at the original store. Online purchases
are primarily shipped to our customers from our Cedar Rapids fulfillment center, but may also be shipped from our Nordstrom full-line stores. Our
customers also have the option to pick up online orders in our Nordstrom full-line stores if inventory is available at that location. These capabilities
allow us to better serve customers across various channels and improve sales. The Nordstrom Rack stores purchase high-quality name brand
merchandise directly from vendors and also serve as outlets for clearance merchandise from our Nordstrom stores. In the first quarter of 2011, we
acquired HauteLook, an online private sale retailer offering limited-time sale events on fashion and lifestyle brands. This acquisition enables us to
participate in the fast-growing private sale marketplace. See Note 2: HauteLook in Item 8: Financial Statements and Supplementary Data for further
discussion. In the third quarter of 2011, we opened treasure&bond, a philanthropic store in New York.
Our Credit segment includes our wholly owned federal savings bank, Nordstrom fsb, through which we provide a private label credit card, two
Nordstrom VISA credit cards and a debit card. The credit and debit cards feature a shopping-based loyalty 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.
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 and Note 16: Segment Reporting in Item 8.
FISCAL YEAR
We operate on a 52/53-week fiscal year ending on the Saturday closest to January 31st. References to 2011, 2010 and 2009 relate to the 52-week fiscal
years ended January 28, 2012, January 29, 2011 and January 30, 2010, respectively. References to 2012 relate to the 53-week fiscal year ending
February 2, 2013.
TRADEMARKS
We have 135 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, Halogen, Caslon, Classiques Entier and John W. Nordstrom. 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 liberal return policy at our Nordstrom full-line stores and online at www.nordstrom.com. In general, our return policy is
considered to be more generous than industry standards. Our Nordstrom Rack stores accept returns up to 30 days from the date of purchase with
the original price tag and sales receipt. HauteLook accepts returns of certain specific merchandise categories within 21 days from the date of
shipment.
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
typically higher in the second and fourth quarters of the fiscal year than in the first and third quarters. In 2012, our Anniversary Sale will shift to the
last week of July and the first week of August, which will move one week of event sales to the third quarter.
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 has historically extended over the last two weeks of July. As discussed above, in 2012, this will shift to
the last week of July and the first week of August. 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 December). 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, including domestic
and foreign businesses. We also have arrangements with agents and contract manufacturers to produce our private label merchandise. We expect
our suppliers to meet our “Nordstrom Partnership Guidelines,” which address our corporate social responsibility standards for matters such as legal
and regulatory compliance, labor, health and safety and the environment.