Nordstrom does discount: Rack outlets gain ground on full line stores in 2012

Nordstrom’s transition from a retailer best known as an operator of upscale department stores to an off-price discounter is poised to continue in 2012 as expansion plans for Rack outlet stores outpace those of full line Nordstrom stores.

The company disclosed its 2012 expansion plans along with fourth quarter results and said it would spend between $480 and $520 million this year. Most of those dollars will go to build 11 new Rack stores and add to the existing base of 104 outlet stores, while only one new department store is planned. The company currently operates 117 full-line stores. If the current expansion trend continues, Rack stores will surpass Nordstrom stores in 2013 in terms of units but not square footage as the department stores average around 125,000 sq. ft., compared with the smaller Rack stores at 35,000 sq. ft.

Details regarding 2012 expansion plans were disclosed with the company’s fourth quarter results that saw profits increase a meager 1.7% to $236 million, despite a 7.1% increase in same store sales. Earnings per share advanced to $1.11 from $1.04. Net sales in the fourth quarter were $3.17 billion, an increase of 12.5% compared with net sales of $2.82 billion during the same period in fiscal 2010.

The company said its fourth quarter performance was consistent with the strong trends the company experienced throughout 2011. The company achieved record sales of $10.5 billion for fiscal 2011, while continuing to make significant investments in the business to evolve with customers and to enhance its platform for sustainable, profitable growth.

For the full year, profits were up $70 million to $683 million, an increase of 11.4%, compared with net earnings of $613 million for the prior year while earning per share increased to $3.14 from $2.75.