Consumer

Sarah Halzack is a Bloomberg Gadfly columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.

Nordstrom Inc. had a message for investors as it announced a strong increase in online sales in its latest quarter: Don't get too excited.

Going Down
Like other department stores, Nordstrom has seen its stock decline in the last year
Source: Bloomberg

As the department store giant reported earnings on Thursday, it said its e-commerce sales were up 20 percent compared to the same period a year earlier, buoyed by robust interest in its massive annual deals event known as the Anniversary Sale.

E-commerce Improvement
Nordstrom's online sales growth sharply improved in the latest quarter
Source: Bloomberg, Company Filings

That growth, coupled with a 1.8 percent year-over-year increase in comparable sales at its full-line stores, made Nordstrom look relatively good on a day when Macy's Inc. and Kohl's Corp. had earlier reported gloomy earnings.

Nordstrom executives cautioned on a conference call with investors, though, that underlying trends haven't changed much, and they don't expect sales to be similarly turbo-charged for the rest of year. But the strength of the Anniversary Sale still offers some insights into how department stores can successfully scrap for customers in a difficult environment for selling apparel.

Looking For Its Footing
Nordstrom has not managed to consistently deliver comparable sales growth
Source: Bloomberg, Company Filings
Includes full-line department stores and online sales

For one, Nordstrom said private-label brands accounted for three of the five best-selling labels in the event. As Gadfly noted earlier this week, department stores are at risk of becoming fashion no-man's lands as big-name labels such as Michael Kors Holdings Ltd., Coach Inc. and Ralph Lauren Corp. pull back from them.

That means private-label offerings will increasingly help choose winners and losers in the department store business. It's a favorable sign for Nordstrom that its offerings in this category resonate so strongly with customers.

Also, the Anniversary Sale differs from the typical department store playbook. Instead of marking down goods nearing the end of their shelf life, Nordstrom offers discounts on its new arrivals for the fall season, goods that will later be sold for full price.

In other words, even when a shopper's inbox is perpetually deluged with "20 percent off your purchase" e-mail coupons, this event is distinctive. It cuts through the noise. Other retailers would benefit from trying to think more creatively about what value actually means to their customers, instead of relying on the same tired tricks.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Sarah Halzack in Washington at shalzack@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net