Nordstrom 2013 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 Washington State in 1946 and went on to become one
of the leading fashion specialty retailers based in the U.S. We operate 262 U.S. stores located in 35 states as of March 17, 2014, as well as a
robust e-commerce business through Nordstrom.com and HauteLook. 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 17, 2014, the Retail segment includes our 117 “Nordstrom” branded full-line stores and online store at Nordstrom.com (“Direct”),
142 off-price “Nordstrom Rack” stores, one clearance store that operates under the name “Last Chance” and other retail channels including
our online private sale subsidiary “HauteLook” and our two “Jeffrey” boutiques. Through these multiple retail channels, we strive to deliver the
best customer experience possible. We offer 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. In-store purchases are primarily fulfilled from that store’s inventory, but when inventory is unavailable at that
store it may also be shipped to our customers from our fulfillment center in Cedar Rapids, Iowa, or from other Nordstrom full-line stores.
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 can also pick up online orders in our Nordstrom full-line stores if inventory is available at one of our
locations. These capabilities allow us to better serve customers across various channels and improve sales. Nordstrom Rack stores
purchase high-quality brand name merchandise primarily from the same vendors carried in Nordstrom full-line stores and also serve as
outlets for clearance merchandise from our Nordstrom stores. Our online private sale retailer, HauteLook, offers limited time sale events on
fashion and lifestyle brands, as well as a persistent selection of off-price high-quality brand name merchandise.
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 purposes of our Credit business are to foster greater customer loyalty and drive more
sales, we also generate revenues from finance charges and other fees on these cards and save on interchange fees that the Retail Segment
would incur if our customers used third-party 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: Financial Statements and Supplementary Data.
FISCAL YEAR
We operate on a 52/53-week fiscal year ending on the Saturday closest to January 31st. References to 2013 and all years except 2012 within
this document are based on a 52-week fiscal year, while 2012 is based on a 53-week fiscal year.
TRADEMARKS
We have 152 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, HauteLook, Halogen, BP. and Zella. Each of our trademarks is renewable
indefinitely, provided that it is still used in commerce at the time of the renewal.
RETURN POLICY
We have a liberal approach to returns as part of our objective to provide high-quality customer service. We do not have a formal return policy
at our Nordstrom full-line stores or online at Nordstrom.com. Our goal is to take care of our customers, which includes making returns and
exchanges easy, whether in stores or online, where we offer free shipping and free returns. Our Nordstrom Rack stores generally accept
returns up to 90 days from the date of purchase with the original price tag and sales receipt, and also accept returns of HauteLook
merchandise. HauteLook generally accepts returns of apparel, footwear and accessories within 30 days from the date of shipment.
SEASONALITY
Due to our Anniversary Sale in July, the holidays in December and the Half-Yearly sales that normally 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 2013, our
Anniversary Sale took place in the second quarter, while in 2012 it occurred during both the second and third quarters.
COMPETITIVE CONDITIONS
We operate in a highly competitive business environment. We compete with other national, regional and local retailers that may carry similar
lines of merchandise, including department stores, specialty stores, off-price stores, boutiques and Internet businesses. Our specific
competitors vary from market to market. We believe the keys to competing in our industry are providing great customer service and customer
experiences in store and online, which includes compelling price and value, fashion newness, quality of products, selection, convenience,
technology, product fulfillment, personalization and appealing and relevant store environments in top locations.
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