Nordstrom Outlines Long-Term Growth Strategy: Closer To You
"We have a unique business model with two powerful brands, highly integrated digital and physical assets, incredible brand partners and employees who are truly unmatched when it comes to their commitment to the customer," said
Accelerating Market Share Gains and Driving Profitable Growth
At the event, executive leaders will outline the Company's focus on three areas of greatest opportunity:
- Winning in
Nordstrom's Most Important Markets. Nordstromis extending the rollout of its market strategy to its 20 top markets that represent approximately 75 percent of sales, integrating Nordstrom Rackassets and further evolving the Company's distribution capabilities. This strategy has proven to be a powerful enabler for the business and has now become its fundamental operating model.
- Broadening the
Reach of Nordstrom Rack. Nordstromis expanding the range of price points offered at NordstromRack and better connecting physical and digital inventory to increase selection, all while improving profitability. The Company expects Nordstrom Rack to contribute approximately $2 billionin incremental sales over the long-term.
Nordstrom's Digital Velocity. Nordstromis growing its assortment, delivering personalization at scale and increasing linkages between the Company's digital and physical assets. The Company expects its digital business to represent approximately 50 percent of total sales going forward.
Unlocking the Full Potential of The Digital-First Platform: Closer To You
To deliver on the Company's growth priorities,
- Deeper Insights.
Nordstromis leveraging its technology platform to create a unified view of the customer as well as the Company's product and inventory. These efforts enable Nordstromto provide personalization at scale and enhance the overall customer experience.
- New Customers.
Nordstromis expanding the aperture of who it serves, as well as where and how it serves them, with a particular focus on increasing the breadth of customers at NordstromRack.
- More Choices.
Nordstromis expanding its product offering, particularly in high growth categories, with potential to increase total selection from approximately 300,000 customer choices to more than 1.5 million.
- Better Service.
Nordstromis translating its excellence in service to a digital world, creating a truly seamless and interconnected experience to deliver meaningful and personal connections with customers wherever and however they choose to shop.
Through these efforts,
Fourth Quarter 2020 Outlook
In conjunction with today's announcement, the Company is reiterating its fourth quarter 2020 outlook.
- Sales are expected to decrease in the low 20 percent range relative to the prior year
- Earnings before interest and taxes (EBIT) and operating cash flow are expected to be positive
- EBIT margin is expected to deleverage by approximately 500 basis points relative to the prior year
Fiscal 2021 Outlook
The Company also introduced its fiscal year 2021 financial outlook:
- Revenue, including retail sales and credit card revenues, is expected to grow more than 25 percent, with digital representing approximately 50 percent of total sales
- EBIT is expected to be positive
- Leverage ratio is expected to be approximately 3x by year-end
Long-Term Financial Outlook
Based on its new strategic framework, the Company outlined long-term outlook and capital allocation priorities, including:
- Revenue is expected to grow low single-digits annually from 2019 levels
- Operating income is expected to grow faster than revenue
- EBIT margin, as a percentage of sales, is expected to exceed 6 percent
- Return on invested capital is expected to be in the low teens
- Annual operating cash flow is expected to exceed
- Annual capex is expected to be 3 to 4 percent of sales
- Leverage ratio is expected to return to approximately 2.5x or below by the end of 2022
Investor Event Details
This event, which starts at
Certain statements in this news release contain or may suggest "forward-looking" information (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties. The words "will," "may," "designed to," "outlook," "believes," "should," "targets," "anticipates," "assumptions," "plans," "expects," or "expectations," "intends," "estimates," "forecasts," "guidance" and similar expressions identify certain of these forward-looking statements. The Company also may provide forward-looking statements in oral statements or other written materials released to the public. All statements contained or incorporated in this news release or in any other public statements that address such future events or expectations are forward-looking statements. Important factors that could cause actual results to differ materially from these forward-looking statements are discussed in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2020 and its Form 10-Qs for the fiscal quarters ended
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