Corporation examines the sustainability of Nordstrom’s prowess:
‘Nordstrom is developing a critical mass of stores in the Capitol region and
in the New York and New Jersey areas. It is a company possessing enor-
mous customer appeal. Its concept cannot be readily duplicated. Such
combinations are rare in retailing, where good things are predictably
copied.’^2
Bucking the trends
The decade of the eighties witnessed a major convergence of strategies
among most of the US department-store chains. Hostile takeovers by the
Campaneau Group and Hooker of Australia led to massive consolidations.
Independent retailers such as Dillards and Dayton-Hudson embarked on
aggressive acquisition efforts. Nordstrom, in the meantime, stuck to its
guns and built slowly but deliberately through de novoexpansion. The
primary reason for this approach was Nordstrom’s belief that its culture
and values had to be integrated into each new unit from infancy and that,
in the last analysis, the Nordstrom culture wasits sustainable competitive
advantage. Growth was largely funded by retained earnings, keeping
Nordstrom’s debt relatively low. (See Tables 5.3.1 and 5.3.2 for balance
sheet and income statement.)
An essential ingredient to its expansion formula was Nordstrom’s insis-
The recruitment and internal market domains 377
Table 5.3.1 Nordstrom Inc. and subsidiaries, consolidated statements of
earningsYear ended 31 January 1991 % of 1990 % of 1989 % of
($000) sales ($000) sales ($000) sales
Net sales 2 893 904 100.0 2 671 114 100.0 2 327 946 100.0
Costs and expenses:
Cost of sales and related
buying and occupancy costs 2 000 250 69.1 1 829 383 68.5 1 563 832 67.2
Selling, general and administrative 747 770 25.8 669 159 25.1 582 973 25.0
Interest, net 52 228 1.8 49 121 1.8 39 977 1.7
Service charge income and
other, net (84 660) (2.9) (55 958) (2.1) (57 268) (2.4)
Total costs and expenses 2 715 588 93.8 2 491 705 93.3 2 129 514 91.5
Earnings before income taxes 178 316 6.2 179 409 6.7 198 432 8.5
Income taxes 62 500 2.2 64 500 2.4 75 100 3.2
Net earnings 115 816 4.0 114 909 4.3 123 332 5.3
Net earnings per share 1.42 1.41 1.51
Cash dividends paid per share 0.30 0.28 0.22