Nordstrom to grow Rack into $2 billion brand in new strategy

Jonathan Roeder

Nordstrom Inc. announced plans to expand its product selection and improve its e-commerce reach as part of its strategy to win back customers – and investors – amid a slump that’s been exacerbated by the global pandemic.

Seattle-based Nordstrom also laid out its long-term and fiscal 2021 outlook. The company sees revenue growing more than 25% in the current fiscal year. Longer-term, it sees that measure growing in the low single-digits annually from 2019 levels.

Pedestrians walk past an entrance for a Nordstrom Rack store next to the retailer's flagship store in downtown Seattle, Wednesday, Sept. 13, 2017.

Key Insights

  • Nordstrom Rack is a big part of its growth plan. The discount chain, where it will add more price points, is seen contributing about $2 billion in incremental sales over the long-term.
  • E-commerce is clearly a key focus in the post-pandemic economy as consumers migrate online faster than ever, and the company, slower than some rivals to gain a large online presence, said its digital business will represent about half of total sales going forward.
  • Nordstrom is planning to grow its selection of products, particularly in what it calls “high growth categories,” from just 300,000 choices now to more than 1.5 million items.
  • Nordstrom saw a pronounced decline in sales last year, with the company expected to report its fourth consecutive quarterly decline when it reports final results for the year. Last month, Nordstrom said sales fell 22% during the nine-week holiday period that ended on Jan. 2.

Market Reaction

  • Nordstrom shares rose 4.1% before trading was halted ahead of the announcement.