Nordstrom Loyalty Program Accounts for Nearly Half of All Sales

Upscale retailer Nordstrom has a knack for keeping customers happy.

After the holiday season, Nordstrom was one of the four top brands revealed in a ClickFox Holiday Experience Survey for offering the best customer service.

During its Aug. 15 second-quarter financial results conference call, Nordstrom officials said that its Nordstrom Rewards loyalty program continues to contribute to overall results, with members shopping more frequently and spending more on average than non-members.

During the second quarter, Nordstrom opened nearly 370,000 new accounts in, which was an increase of 18% compared with the same period last year. With 4.1 million active members, sales from loyalty club members in the second quarter rose 11%, and represented 44% of total sales−up from 42% for the same period the previous year.

Total company net sales rose 6.2%, to $3.3 billion for the second quarter while same-store sales increased 3.3%.

On July 31, 2014, Nordstrom announced that it entered into an agreement to acquire Trunk Club, a personalized clothing service for men. Founded in 2009, Trunk Club delivers a stylist service that combines the convenience of online with a high-touch, personalized shopping experience.

According to company officials, Trunk Club is a high-growth company and expects to achieve operational profitability and more than double its annual sales to over $100 million. The company believes this acquisition represents a natural extension of its core business, aligns with its strategic priorities around a relevant customer experience and accelerates entry into this fast-growing market.

The company will acquire Trunk Club for $350 million in Nordstrom stock, a portion of which is retention-based and subject to future vesting.

Trunk Club will operate as an independent, wholly-owned subsidiary and will be managed by its current leadership. The transaction is expected to close in the third quarter, subject to closing conditions including customary regulatory and shareholder approvals.

Nordstrom comparable sales, which consist of the full-line and Direct businesses, increased 2.7 percent. Top-performing merchandise categories included Cosmetics, Accessories and Men's Apparel. Nordstrom comparable sales during the Anniversary Sale, which is the Company's largest sale event of the year, increased 3.6 percent.

Full-line comparable sales for the second quarter decreased 1.2 percent. The Southeast and Southwest regions were the top-performing geographic areas.

Direct net sales increased 22 percent in the second quarter, primarily driven by expanded merchandise selection.

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