Financial Analysis of Nordstrom Inc.
In Seattle Washington in 1901 John W. Nordstrom and Carl F. Wallin founded one of the countries largest and well-known retail stores in North America, Puerto Rico, and Canada. Nordstrom began as a shoe retailer but quickly expanded its inventory to include clothing, accessories, handbags, jewelry, cosmetics, and fragrances; along with some locations housing wedding dress and home furnishing departments. Currently Nordstrom has 347 stores that operate in 40 different states, as well as stores in Puerto Rico and Canada. The Nordstrom brand not only includes the Nordstrom department stores but 215 Nordstrom Rack stores, 5 Trunk Club clubhouses, 2 Jeffrey Luxury “Last Call” boutiques, and 2 clearance stores. …show more content…
The business aspect of the company is segmented into two sectors; retail stores and the credit sector. The Credit segment provides customers several payment products and services, including a Nordstrom private-label card, two Nordstrom VISA credit cards, and a debit card for Nordstrom purchases. This segment generates revenues from finance charges and other fees on these cards. Each segment has a different role that plays a part in the success of the company. In fiscal 2013, the Retail segment contributed 97% of Nordstrom’s revenues, while the Credit segment accounted for only 3%. When looking at the retail segment of Nordstrom’s revenue profile the core category of the full-line store accounted for 62% of all retail revenue. However, these revenues have been in a slow decline due to growing Nordstrom Rack revenues and increasing direct or online business. (Bailey, …show more content…
In 20013 Nordstrom’s debt ratio was 80% while the retail industry’s was 60%. Considering the difference between the two, there is a reasonable margin between the differences. Another example of Nordstrom’s debt is the debt-to-equity ratio for Nordstrom, 4.02, is higher than the industry’s, 1.53. This shows that the company has borrowed money at a higher rate which can be attributed to their favorable position with liquidity. Also, when analyzing the company’s equity multiplier, at 5.02, we find a high equity multiplier, which shows the company is relying more on debt to spend on assets. This retailer’s high debt can be justified by their favorable position with liquidity. Nordstrom’s high debt has likely allowed them to invest more in profitable
In Seattle Washington in 1901 John W. Nordstrom and Carl F. Wallin founded one of the countries largest and well-known retail stores in North America, Puerto Rico, and Canada. Nordstrom began as a shoe retailer but quickly expanded its inventory to include clothing, accessories, handbags, jewelry, cosmetics, and fragrances; along with some locations housing wedding dress and home furnishing departments. Currently Nordstrom has 347 stores that operate in 40 different states, as well as stores in Puerto Rico and Canada. The Nordstrom brand not only includes the Nordstrom department stores but 215 Nordstrom Rack stores, 5 Trunk Club clubhouses, 2 Jeffrey Luxury “Last Call” boutiques, and 2 clearance stores. …show more content…
The business aspect of the company is segmented into two sectors; retail stores and the credit sector. The Credit segment provides customers several payment products and services, including a Nordstrom private-label card, two Nordstrom VISA credit cards, and a debit card for Nordstrom purchases. This segment generates revenues from finance charges and other fees on these cards. Each segment has a different role that plays a part in the success of the company. In fiscal 2013, the Retail segment contributed 97% of Nordstrom’s revenues, while the Credit segment accounted for only 3%. When looking at the retail segment of Nordstrom’s revenue profile the core category of the full-line store accounted for 62% of all retail revenue. However, these revenues have been in a slow decline due to growing Nordstrom Rack revenues and increasing direct or online business. (Bailey, …show more content…
In 20013 Nordstrom’s debt ratio was 80% while the retail industry’s was 60%. Considering the difference between the two, there is a reasonable margin between the differences. Another example of Nordstrom’s debt is the debt-to-equity ratio for Nordstrom, 4.02, is higher than the industry’s, 1.53. This shows that the company has borrowed money at a higher rate which can be attributed to their favorable position with liquidity. Also, when analyzing the company’s equity multiplier, at 5.02, we find a high equity multiplier, which shows the company is relying more on debt to spend on assets. This retailer’s high debt can be justified by their favorable position with liquidity. Nordstrom’s high debt has likely allowed them to invest more in profitable