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Nordstrom Switches Gears to Focus on Omnichannel Capabilities

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With social distancing becoming the new norm due to the coronavirus pandemic, consumers have taken to digital shopping, which in turn is boosting online sales. In catching up with this current trend, the majority of the retailers are improving their websites and mobile apps, and omnichannel capabilities to serve customers better. One such retailer is Nordstrom, Inc. (JWN - Free Report) , which has witnessed robust digital growth in the past few months.

Despite dismal first-quarter fiscal 2020 results due to the COVID-19-related store closures, solid online show provided Nordstrom with the much-needed shield. While stores remained temporarily closed for almost seven weeks, the company witnessed solid traffic and conversion. Digital sales advanced 5% in the reported quarter. This represented 54% of the company’s business, up from 31% in the year-ago quarter.

Other retailers benefiting from the sudden surge in online sales include American Eagle Outfitters (AEO - Free Report) , Abercrombie & Fitch (ANF - Free Report) and V.F. Corp. (VFC - Free Report) . Although in-store comps for American Eagle fell 3% in the fiscal fourth quarter, digital sales rose in double digits, up 200 basis points (bps) from the year-ago period. While Abercrombie’s sales declined 34% in first-quarter fiscal 2020, digital sales grew 25% year over year. Also, sales for V.F. Corp. fell about 11% year over year in fourth-quarter fiscal 2020. However, its digital revenues were up 8%, with 9% growth in constant dollars during the fiscal fourth quarter, driven by double-digit growth in Vans, The North Face, Dickies and other emerging brands.

Coming back to Nordstrom, it is investing in physical and digital business as the current trend is likely to last longer than expected even after stores reopen. Also, the company’s market strategy is enabling it to bring inventory closer to where customers live and work, facilitating the use of its stores as fulfillment centers to enhance faster delivery and connecting digital and physical experiences to provide curbside pickup and returns. More than half of Nordstrom.com orders are currently fulfilled from full-line stores and 25% of Nordstromrack.com and HauteLook.com orders are now fulfilled by Nordstrom Rack stores.

Moving on, management has decided to reopen stores in a phased manner, in sync with local health guidelines, as governments have started easing restrictions. In this regard, it began reopening stores in early May, with about 40% of its fleet now open. Apart from store and online operations, contactless curbside services are available at full-line stores.

However, continued uncertainty regarding the coronavirus pandemic has compelled the company to not provide any guidance for fiscal 2020. This might have led shares of this Zacks Rank #3 (Hold) company to decline 7.3% in the past three months against the industry’s growth of 24.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



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