Nordstrom Nearly Doubles CapEx, Invests 25% in IT

For fiscal 2013, Nordstrom will double its CapEx spending continuing to make investments in e-commerce, fulfillment, online and mobile as well as expansion of its Fashion Rewards program. For the fourth quarter ended February 2, 2013, the retailer's sales grew 13% and same-store sales increases of 6.3%.

 

Capital expenditures are expected to be in the range of $750 million to $790 million, a $455 million increase from 2012. Of these investments, 25% relates to e-commerce and technology investments, including initiatives to improve our e-commerce delivery and fulfillment, online and mobile experience and personalization.

 

Nordstrom remains focused on providing a superior customer experience and increasing relevance with existing and new customers. "We are a growth story, with a business and operating model consistent with that," said Blake Nordstrom, principal executive officer on a recent call with analysts. "It is these growth opportunities, whether Canada, Rack, e-commerce, Manhattan and other new full-line stores, and the improvements to our existing stores, that drive the investments we're making. Some of these investments yield immediate benefits, while others will benefit the future. We are confident that in total, they will provide a platform for sustainable, profitable growth, which we characterize by high single-digit total sales increases and mid-teens return on invested capital."

 

During the year, the Fashion Rewards program was enhanced to make the benefits more accessible to customers. In response, Nordstrom has opened a million new Fashion Rewards accounts in 2012, helping the retailer to reach new customers and deepen its relationships with existing ones.

 

The Fashion Rewards program played an integral role in contributing to our overall results, with cardholders continuing to spend more and shop more than non-members. In 2012, sales from Fashion Rewards members increased over $800 million, or 23% over last year. There are now 3.3 million active members, which increased 27% from last year and Nordstrom card penetration reached nearly 36%, up from 32% a year ago.

 

"We saw 20% of our online volume come from mobile," said Michael Koppel, CFO of Nordstrom on a call with analysts. " So that's an area that we've invested very strongly, whether it's mobile in the stores with checkout and service or whether it's our iPhone app or our iPad app, we're going to continue to invest in that. And I think long term, it's going to be about creating a more personalized experience, whether you're online or in the store or whether you're using mobile or at a desktop."

 

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