ordstrom defines itself as a fashion retailer and it is still headed by a member of the family that founded the company and whose name is also Nordstrom. Originally started as a shoe retailer, Nordstrom continues to sell shoesùmore than 30 million pairs in 2004ùbut it also sells clothing accessories and cosmetics. The annual report notes that the company sold more than 4.5 million lipsticks in 2004, as well. There are, of course, many fashion retailers in the United States; Nordstrom has built a reputation for providing a high-quality experience for shoppers. This includes the environment of the stores, the knowledge of the employees, the designs of the goods that are carried and the variety of goods, and the quality of the goods themselves. Consumers typically pay higher-than-average prices at Nordstromùwhich tends to be the most expensive "anchor" in a mallùbut are willing to pay those prices in exchange for the perceived quality (2004 Nordstrom Annual Report 15).
Nordstrom stores are largeùexceeding 100,000 square feet in most casesùand serve as the primary way in which consumers transact business with the company. However, Nordstrom also has an online presence at Nordstrom.com as well as mail-order catalogs that it sends to select customers. In addition, the company has its own off-price outlet, Nordstrom Rack, where goods that do not sell even after being discounted in the traditional Nordstrom stores are sent. In this way, consumers who might not be able to afford Nordstrom prices but who are interested in the Nordstrom level of quality can shop at Nordstrom for less moneyùand out-of-season goodsùand take advantage of the branding (2004 Nordstrom Annual Report 15).
MANAGEMENT'S OBSERVATIONS ON 2004 OPERATIONS
The company's performance for 2004 was impressive, with earnings per share increasing 57.4 percent. Sales exceeded $7 billion for the first time in the company's history, and same store sales increas...