Nordstrom unveils plan to expand rack sales by US$2 billion

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

Nordstrom rack is a central part of the growth plan, announced on Thursday ahead of a presentation to investors. The discount chain, where it will add more price points, is seen contributing about us$2 billion in incremental sales over the long-term.

The strategy hinges on serving its biggest markets — such as New york and California — with stores and improved distribution, while serving the rest of the country with e-commerce. Nordstrom, which has spent recent years building its online presence, said its digital business will represent about half of total sales going forward.

The shares fell following the announcement — a sign that Wall Street may have expected a more comprehensive overhaul from a company that has faced consistent sales declines in recent years.

Nordstrom’s stock slumped 6.3 per cent by late-afternoon in New york, reversing an earlier gain. The shares had advanced about 17 per cent this year through Wednesday’s close. The company has seen its stock value decline for six consecutive years.

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

In a webcast, Chief executive Officer erik Nordstrom said the company is targeting us$17 billion of annual revenue in the medium term. That compares with us$15.9 billion in fiscal 2019. For instance, management is looking to triple its selection of home goods.

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.