Nordstrom Inc. (NYSE:JWN)
2013 Annual Meeting
May 14, 2013 2:00 pm ET
Blake W. Nordstrom - Principal Executive Officer, President and Director
Enrique Hernandez - Non-Executive Chairman, Member of Corporate Governance & Nominating Committee and Member of Compensation Committee
Peter E. Nordstrom - Executive Vice President, President of Merchandising and Director
Erik B. Nordstrom - Executive Vice President, President of Stores and Director
Blake W. Nordstrom
Good morning. Welcome to the 2013 Annual Meeting for Nordstrom. Today, we are pleased to have all of you with us. We -- I'm looking in the audience, we've got a long time shareholders and some of our key folks and other supporters. So we're here today to talk about the results and the performance of the company in 2012. I have behind me on the slide, the famous forward-looking statement of the Safe Harbor, and I'm going to spare you and not read that, so you can quickly read that. But I am to, as per our legal team, remind all of you that we will be talking about some forward-looking aspects of our business today. We -- on Thursday, we'll be releasing, Thursday afternoon, our first quarter earnings. And so again, I am -- we're prevented from giving you the detail in the first quarter, so we will talk about that on Thursday afternoon. But we have a lot to go over today to talk about 2012. There was a lot in our agenda, and we're very pleased with what the team was able to accomplish.
I would like to start of by introducing you to our Board of Directors. And it's very appropriate, this is in alphabetical order, that we start with a terrific leader here in our own town, Phyllis Campbell. Phyllis has been a Director at Nordstrom since 2004. She's the Chair of our Audit Committee. She is the Chairman of the Northwest division of JPMorgan Chase. She's also the lead Director of Alaska Air Group. So we thank you for your help.
And then next is Michelle Ebanks. Michelle? Michelle joined us recently in 2011. She is the President of Essence Communications, as well as the President of People en Espanol.
Okay. Next, Rick Hernandez. Rick is the Chairman of our company and he joined our board in 1997. He is the President and CEO of Inter-Con Security, as well as the principal partner in Interspan Communications. He is also on the board of Wells Fargo, Chevron and, let's see, McDonald's. So we're lucky to have him on our board.
Next is Bob Miller. Bob? Bob has been with us since 2005. He's been chair of our Finance Committee. He is the CEO of Albertsons, LLC.
Next is myself and then my brother Erik. EriK, do you want to stand up? In addition to the 3 of us working as a team, Erik is President of our Stores.
Next is Pete Nordstrom. And Pete is President of our Merchandising.
Phil Satre. Phil joined us in '06. He is the Chair of our Governance and Nominating Committee. He is the retired CEO and Chairman of Harrah's. He is also the Chairman of International Game Technology, as well as the Chairman of NV Energy.
Bob Walter. Oops, I jumped ahead, Bob. I think it was supposed to -- oh, I got Kevin Turner on my slide here, so did I screw that up, Rick? Well, here's Bob Walter. So Bob Walter joined us in '08. He's the chair of our Compensation Committee. He is founder and former Chairman and CEO of Cardinal Health. He is also the lead Director of American Express, as well as the Director of YUM! Brands.
So, I guess, it's Kevin Turner now. If [ph] I got that mixed up, so there is Kevin Turner. Kevin's also a local. He is the COO of Microsoft, and so we're pleased to have him on our board.
Alison Winter. Alison joined us in 2001. She's a retired Northern Trust executive. She is the founder and CEO of Braintree Holdings, LLC.
Now there's a pretty special group. There's a couple that are here today that are, in principle, who are responsible for a company we enjoy today and that's part of the third-generation team. And I would like to start with introducing Wayne Gittinger. Wayne is a partner at Lane Powell here in town. He is the founding member of our board when we went public in '71. And he was, for over 40 years, the General Counsel of this company. So Wayne, thank you very much.
Next is retired Co-Chairman John Nordstrom. Next is his partner, retired Co-Chairman Bruce Nordstrom. And also, my dad.
All right. Now next, there's a terrific leadership team that's here. And I'd like the executive management group to stand so we could recognize the team that's responsible for these results.
Okay. We have some representatives here today to help make this all legal and binding, and so we've got our auditors from Deloitte & Touche, so we have John Salata and Karen Chang who are going to stand so we can recognize them.
And then we have our proxy tabulator from Broadridge, Leah Grant. So she is going to make sure everything is counted properly. Robert Sari is our General Counsel and Corporate Secretary, and he informed me right before the meeting that we have a quorum.
So with that, I'd like to turn the meeting over to our Chairman, Rick Hernandez.
Good morning, everybody. As Blake said, my name is Rick Hernandez and I'm privileged to serve as Chairman of Nordstrom. So the responsibilities of the Chairman include having the official part of this meeting. So we have some business to attend to, which is voting. So if anybody would like to cast a vote or change their vote, please raise your hand, and somebody will come around and collect your ballot.
We have 4 proposals for you -- to be considered today by the shareholders. The proposals actually involve many of the people who just stood up.
The first proposal is for the election of the directors, so the people right in this neighborhood that you saw. The second proposal is for the ratification [ph] of Deloitte & Touche as the official auditors of the company. And that's a selection that's actually made by the Audit Committee, but we're seeking that the shareholders ratify that selection. The third proposal before you has to do with the kind of advisory vote on executive compensation. And so we're -- that's pretty commonly known to you today as say [ph] on pay. So we're asking the shareholders to consider how we compensate our executives in the company and we will take into consideration the results of that voting. And the fourth and final proposal before you today has to do with the amendment of the 2010 equity participation plan. So those are the 4 items that are before us today. I will come back a little bit later and tell you how the voting is going.
But before we do that, we're going to receive, from Blake, kind of a recap of 2012 performance like he talked about. And we're also going to hear from Blake on a subject that's very important to all of us, which is about the customer and the ways that the company is serving the customer. And Blake is also -- will address how we are looking at growth into the future.
But I thought that before we start that, we take a little bit of a look at how -- what is this company today? So it's a unique collection of ways to serve the customer with apparel and find products. So we have 117 full-line stores. Those are stores like the one we're in today, which have a broad range of products and a full offering of the many things that people enjoy wearing. In addition to that, there are 127, as of this Thursday, rack stores, which are a different approach but, again, provide a very high value to customers with very fine apparel.
In addition -- well, in fact, I was asking about this earlier today. That's about 26 million square feet of stores across 33 states in our country. That's the equivalent, when I asked about it, of the National Mall at Washington DC, which many of you probably visited, times 2. So it's 2 National Malls worth of store space.
In addition, we have a growing online business. The online business, for those of you who are familiar, is just e-commerce. That's what we call it. The online business is growing at a tremendous rate. To give you a frame of reference, it took 84 years for the company to grow from nothing from its beginning to $1 billion in business. It took the online business 12 years to grow that [ph] $1 billion. So that means the online business, in its first 12 years of existence, was growing at 6x the rate of the company from its initial beginning. So you can get a sense of how fast and how important that is to us.
In addition, there is another part of the business called HauteLook, which is called a flash site. So that's the e-commerce site where different offerings come up each day and people have the opportunity to buy them that day, a very important part of the future.
And if you've been following the company, you probably also know that the company has announced that we will be entering New York, which is a very, very important event for the company, but also a very important event for New York. It'll be the first time a major retailer has entered Manhattan since the last century, actually since the Depression of the last century. So that's going to be a very big deal. That's going to be a 7-floor building, with hundreds of thousands of square feet and a brand new experience for New Yorkers. I think there's a really great picture of Pete posing the mayor of [ph] Bloomberg.
The last thing I wanted to mention initially is about Canada. So as you know, Nordstrom is -- has traditionally been an American business and had plenty of business to do in the United States. So the company has announced that we'll be moving into Canada soon. And with the combination of racks and full-line stores, we'll end up with something that will be the rival of the largest or highest-presence Canadian stores that exist today. So we're going to enter into the big time with a couple of dozen stores in Canada in the very near future.
In addition to these methods of selling, though, the company is really kind of exploring new and different ways to serve customers, and some of those are through partnerships. So the partnerships that we've entered into so far, was one particularly important [ph] called Topshop. Now Topshop, many of you may know, is a pretty iconic brand out of Britain that produces kind of very stylish wear particularly -- not particularly expensive, but particularly fashionable. So Topshop has been tremendously successful in Britain. Nordstrom has a special partnership that's been formed with Topshop, where only Nordstrom will have a major combination and Topshops will exist in Nordstrom stores. So that's one type of partnership.
But in addition, there are other things that the company is doing. We -- the company is investing in something called, for example, Bonobos, which is something I have a hard time saying. But it's kind of men's chino-type pants. The company has made an investment in Bonobos. [ph] And as a result, we have this additional offering and experience for the customer. And there is something called Sole Society. Sole Society is a club, where shoes are offered kind of on a regular basis for the members. Again, this is different. It's not the old way of doing business, but it's kind of an exploratory new way of doing business as the management team tries to serve customers better and well.
For the people in Nordstrom. Yes, that's what it's really all about. There's 60,000 people that work in this company. 60,000 people doing all sorts of different things. We have some security people to seamstresses to accountants to whatever. You can imagine all of those very many different things that have to take place here each day. Of those 60,000, many are salespeople, and they are the people who are privileged to touch, on a first-hand basis, the people who make this ultimately go to the customers.
So of those salespeople, 1,500 are designated personal stylists. The personal stylists are people who can really help you with what you're trying to accomplish with your apparel. So they're kind of the best and in -- of what we have in terms of salespeople, and of -- many of them are personal stylists. But to give you an idea of the level of competency or ability to serve people, 108 people from the company have been able -- have sold in the last year over $1 million worth of merchandise. Think about that. 108 people selling over $1 million of merchandise of whatever type.
There's one person I want to kind of speak to in particular. That's a fellow named Chris Sharma, who's at the Washington DC area. He has been the top salesman for 10 years. He must have some magic or some really great customers that keep coming back. But he personally sold, this last year, $2.1 million worth of merchandise to his customers.
And so to accomplish this, though, it's just not being friendly. It's not just having the right kind of apparel, although that's a huge part of it, it's really using the technology and the ways of the future to serve customers better. So among the things that have been introduced to the store are mobile checkouts. So many of you may have seen mobile devices. They're handheld devices, where people who are attending to customers can move throughout the store. They can perform a checkout in the dressing room if that's the most convenient. As it [ph] basically takes the activity to the customer, they're able to serve them in a better way.
In addition, iPads are now being used throughout the store. And you say, "Well, maybe that's not particularly novel." But what the iPad connects to, actually, is because it's the entire inventory of the company. So through the iPad, the person who's attending to the customer can know all the sizes, all the colors, all the availability of whatever that he or she may want. And so to give you an idea of how this is penetrating the business, 20% of all the direct sales are now being accomplished through these mobile devices.
Fashion Rewards has long been a part of the company and it remains so. So Nordstrom Inc. has as part of its business a bank, FSB Bank, through which the Nordstrom card is offered. There has been debate at the board level from time to time whether it really makes sense for this company to have a bank and to have a credit card. You're probably aware that other companies have decided to sell their credit card businesses, and we're one of the few that actually maintains that sort of activity. But the reason is really simple. Again, we keep coming back to the customer. It is a long-standing belief and something that's true to our values that the best way to serve the customer is by all means. And when you make a credit purchase on a Nordstrom credit card, you have fine people who are responding to you and able to receive you in a way to which your customer is part of Nordstrom. My wife and I personally have that. We were overseas and we needed something from our credit card. One of my credit cards didn't work, but the Nordstrom one was honored, so it really does work.
There are 3.5 million people participating in that program now. So what does it really all mean? What is all this stuff? And to me, it's pretty simple. It means more people -- serving more people at more places with more products. It's really about service and it's really about the customer. And really what ties this all together, again, to me, it's very simple, value. This company has an unwavering commitment to the customer, absolutely unwavering. But it also has a commitment to the team members, to the people who make up the company. We care about your team and you care about your customer, you got some terrific results.
So right now, I'd like to have them show a short video about the company. I'll be right back.
I'm back. That was a nice short video. But the [indiscernible] point, I've been talking about the way the company is today. But I thought it would also be helpful to think about kind of where the company has been. The Board of Directors represents the shareholders as a whole. And so this is a New York Stock Exchange public corporation. It's not a family business. But it's built upon an amazing legacy of a family. You have met many of them here today. But at the end of it, it's a public company. And so taking you back to the year 2000, thereabouts of the late 1990s. There was kind of a change that was taking place, in that the third generation who really lead this company to amazing heights. They had done many, many things over years to make the Nordstrom known and known for good things, and as a successful company. So it was an opportunity for them to also kind of retire and enjoy some of the fruits of their labor, but it meant that there needed to be a new management. So that's the time where some -- the public corporation aspect of this kind of comes into place. And so we had to determine what would be the next leadership organization of the company.
And I remember it was kind of a fun time. Bruce Nordstrom and I and one of the person who are in the search committee that the board formed to find the next CEO, the next President of Nordstrom. We traveled around the country. We met different people. We met some very, very capable people, people well known within the retail industry. But at the end of the search, it became obvious to us. The most talented people were right here, right in front of us, and that's the fourth generation.
Now it's sometimes difficult for people to believe that we actually did it that way. But in fact, I'm telling you that's how it was done. We didn't just say, "Oh, you are the sons of..." So it's actually, they were selected as the people best able to run the company.
So with that era, I guess it was 2000, about 12 years ago, that Blake Nordstrom, Pete Nordstrom and Erik Nordstrom were asked to lead the company into the future. And it was kind of a big responsibility. They are very young men. The complexities of running a public corporation are steep and particularly, if you haven't been well steep in what they do. So it's a big thing to tackle. But as I look back and think about where we were to where we are, it's an amazing story.
So I thought I'd share some. Now remember also that during this era, it was 2008, the economic situation in United States really was impaired. So this was not an easy time to manage any business, let alone a retail business that's focused on quality. But listen to some of these statistics. If you had purchased stock in 2000 when the management team took responsibility, you had purchased stock at $9 a share. When the stock closed yesterday afternoon, it was $60.49. That's a 572% increase in stock value. Now to put that in perspective, if you were to have bought an S&P index bond, which is a basket of all the different stocks that are traded by the S&P or followed by the S&P, you would have had an increase of, let's see, 8%. 572%, 8%.
So to illustrate this in a different way, if you invested $100 in Nordstrom in September of 2007 -- excuse me, $100 in Nordstrom in September of 2000, it would be worth $847. So you would have had a shareholder return of 700%. The total value of this company has quadrupled. So it's now 4x more valuable than it was when this leadership team took responsibility, and it was about $11.8 billion yesterday. Sales from the company more than doubled during this period. And all the while, there was a strong balance sheet and a very strong operating discipline, so milestones of a different sort. During this time from 2000 to now, there have been 100 new stores built and 9.2 million square feet added to the company. And I think now in 2013 as we think about it, one of the most important achievements is that we have added 17,000 new jobs. There are 17,000 people who are working today at Nordstrom, and jobs that were created because of this growth because of the success of the team.
Men's wear crossed the $1 billion mark during this period. Cosmetics passed $1 billion during this period. The Direct exceeded $1 billion during this time. The Rack exceeded $2 billion. Shoes exceeded $2 billion. I think you're getting the point. It's been a very, very successful time from a financial standpoint.
For the same period, same time, there are things that you have to judge a company by -- that are others than just financials, rewards and returns. And I think these achievements speak to that.
First, Nordstrom is considered the #1 retailer by the American Customer Satisfaction Index. Now this survey that's done broadly considered to be the #1 retailer. It's the most popular and most recommended luxury retailer by the Luxury Institute. Consumer Reports, that most people -- many people are familiar with, considered the Nordstrom website to be one of the very best. The Fortune Magazine, which is a very important magazine in the business world, has rated Nordstrom one of the most admired companies. So that probably takes into account a lot of the financial results that I spoke to. But it also says that Nordstrom is one of the best places to work. So it's that rare combination of success as a business and success as a good employer.
So for 112 years, this company has existed and I would argue that the last 12 years have been particularly successful. And I think we are well placed to continue to grow and to have increased market share. So all of this has happened by making the customer the #1 priority, at the same time, we made our team the #1 priority.
So with that, I would like you to hear from Blake about 2012.
Blake W. Nordstrom
Thank you. All right. Thank you, Rick. Boy, you've covered a lot there. I do want to take a moment and just briefly make reference and comment on a couple of key facts about the year.
We had a 12.1% increase for 2012 on a comparable store basis, stores have been open longer than a year. That was a 7.3% increase. Rick talked about the -- how many years it took for this company to go from first day sales of $12.50 to $1 billion. All of these are roots or in the shoe business. And when you see a $1 billion, it's hard to fathom each customer and each item to get to that number. But for the last 3 years, we've exceeded an additional $1 billion each year, and this last year is a reacord year for your company, $11.8 billion in sales.
It also culminated in an all-time best in earnings. We have, every January, a leadership meeting with our top, roughly, 200 people. On this last January here in Seattle, we asked our folks to describe our strategy and our focus on the customer, and what was needed for this next year and going forward and so a lot of words were used. But #1 and most importantly, the customer was on top. And as shareholders of this company, if you ever hear we're moving that down in terms of priority, sell your stock, get out of here because it doesn't work unless we're focused on the customer. And when we say that, we are not in any way, shape or form, trying to convey that we're the experts on customer service. We're humbly aware that we have many opportunities. But this business works when we're focused on 1 customer, 1 item, 1 transaction at a time. It's that great merchandise that helps to find great service regardless of channel. And so those are the things that we're committed to and really focused on.
When I think about, and our team thinks about, kind of our plan going forward, again, the customer is at everything we do. It is the filtering lens of how we apply our time, energy and capital, the shareholders' money. And again, if we do this right, the customer, in essence, is voting with their dollars, why they want to shop with us versus all the terrific choices that are out there. In addition to that plan, and you've heard us over the last couple of years, say that we aspire to be a leader online. And so we want to be as well thought of or well known as we are in our stores in -- with our e-commerce business. We have a terrific team within the Direct to vision, and the results are bearing that out. But there is an area of business that's really fluid, it's changing fast, and the customer, again, has some great choices. We're excited about those prospects.
Being in the fashion business, it's about being current, it's about being relevant and it's about change. And so the values and the principles of this business don't change. But the tools and, again, the products and how we service the customer is dictated by the customer. It's both a challenging and a fun part of this business.
So with that, I'd like to ask Pete to come on up and he's going to introduce our Partners in Excellence Award winners.
Peter E. Nordstrom
Good morning. It's my privilege to introduce to you our Partners in Excellence Award winners. A few years back, we decided that we wanted to be as equally well known for product as we were for service. And as Blake talked about, it's not replacing service as the top goal, but it's elevating how important product is to us. We recognized very clearly, a long time ago, that we don't have Gateway products. I mean, you really just aren't going to get to where you want to go. Customers don't view that as good service if you don't have what they want.
So in 1992, we established an award to recognize and appreciate our top vendor partners. Because as we talked about, good service starts with a great product. And this is really reserved for those partners who truly go above and beyond. We have literally thousands of vendors, and you might think that makes it a particularly difficult choice. And I guess, in some ways, that's true. But the 2 people you're going to meet today and their companies -- there's -- it made it an easy choice for us because what they do is so rare and really so extraordinary.
Interestingly, they've got a lot in common. So I'm going to tell you a little bit about that. Both of them are shoe legends, from the way we look at them. Blake, Erik, myself were shoe salespeople and managers and buyers and, in fact, we knew both these guys way back when we were young buyers. If there was -- I guess, there was a Shoe Hall of Fame. But they would certainly be in that, these guys, for sure. It's not -- we're going to anoint them with such today. They both have had bid success with previous companies. They both now run autonomous companies, and they also have their wives involved as executive partners with them in their business. So part of what the criteria are in identifying these excellent companies is quality is super important, value, service, partnership, business ethics, fashion, results, and in supporting, our multiple channels of Rack to Direct and the full-line stores. And the thing that really stands out, again, about these recipients is while these are important criteria for us, the way we run the business, it's equally important to them and it really shows through. And the results get you part of the way there, but there are some of these qualitative aspects that really separate them from everyone else.
So I want to start by introducing our first recipient, and that is Sam Edelman. I'm going to tell you a little bit about Sam. Back in the '80s, as I have mentioned, Blake -- or you can stand here, okay.
Blake, Erik and myself bought shoes from Sam. He worked with the Esprit Company, and they were widely successful then. And as such, we were always kind of desperate to be getting more shoes from you and did a lot of begging and what have you. And it was frustrating, we couldn't always get what we want. But clearly, Sam is a super talented guy, and that's gone on for a long time. He has had success with multiple companies but started his own company here nearly about a decade ago. And what Sam's been good at through the generations, he's really great at seeing trends and developing them and developing really trend-right product for our customers. Currently, it's the #2 volume brand in women's shoes. They have a top item here that sold 140,000 -- over 140,000 pairs since launching in September of '11. That's really impressive. The sales growth has been great. They've nearly doubled sales growth with us since 2010. In 2012 alone, sales grew by 67%. And since 2010, we've seen more than 130% growth at the Rack and 150% growth at Direct online. And it's just such a privilege to be able to recognize and honor you today and thank you for the great support you've given us over the years. Our customers love your product. Thanks very much, Sam.
Thank you very much. Usually, I ad-lib, but they tell me it had to be 2 minutes exactly. So I rehearsed about today. In baseball, if you don't hit the ball in 3 times at bat, you're out. This has been my third opportunity with Nordstrom and, happily, our biggest home run.
When I came back out of retirement, my first visit was to Seattle. I arrived on a cane, the result of a bad accident and 2 years of not being able to walk. They had a footwear that was waiting on the street to help me with my bags. I don't know who told them I was crippled at the time or if it was just his way of welcoming me back. But it meant so much to me that it's something that I think of every single day. I vowed to build this business with total integrity. I've never veered from that direction. I remember many years ago we had a small issue arise and someone called me, a little nervous and maybe a little upset. I kept saying yes every 2 or 3 minutes. And finally, she said, "Why do you keep saying yes?" I responded, "Because there's one word that I would never use in my relationship with Nordstrom, and that is no." We laughed. And to this day, we welcome every opportunity with a yes and work through every problem with a yes. Fortunately, after 35 years in this business, I know how to make almost every problem go away.
Before I thank Nordstrom and the family and everybody else for my -- for this award, I want to thank my team. Without them, I could never have manifested my vision. My team, first and foremost, is Libby, who allows me to dream and then helps me make that dream happen. I'm privileged to have as my boss, Diane Sullivan, CEO of Brown Shoe company, who gives we the creative freedom and lack of worry from the back office, not to mention she never says no to Sam. Susan Tellish [ph] who's the first person in 30 years, actually 35, I've trusted with sales, and she's led our team to record-breaking results with integrity. Lastly, to one of my best, best friends who's not here today. It's his wife's 60th birthday, and he promised to take her to Paris. But he was with us and met all the directors last night. That's John Doohan [ph]. John [ph] is my cofounder and the only person in the world I would trust with the Nordstrom account. His undying loyalty to my vision and to me as a man is something that I carry with me every single day.
Let me finish and talk a little bit quickly about my relationship with this fabulous store. You guys have always appreciated the talent that Libby and I bring to your floors. You've given us every chance. I'll never forget Libby sitting in the bathroom in 1984 in a hotel room, counting the orders you gave us for us 3. Five years later, the same seat, counting the same orders for Sam and Libby. It's a privilege to be here today. I respect the standards upon which you do business. And I'm proud to be a proactive disciple of your spirit. Thank you very much.
Peter E. Nordstrom
Next, it's my honor to introduce you to Vince Camuto. Come up, Vin.
Peter E. Nordstrom
Congratulations. Tell you a little bit about Vince. He was very, very successful years back when you talk about previous lives that we intersected with. When he was 9 Nine West, the company we just did a ton of business with. And Vince has been a very talented shoe man always when we've been working with them. We've started partnering in 2005 with his own brand, and that has gone obviously very, very well. It started out as shoes, but we've grown into having women's sportswear as well, which has been probably one of the biggest growth parts of the business and something that's gone extremely well for us. Aside from running this business that Vince has that he got his own name on it, he also designs and source the shoes for a lot of our other brands that we work with, notably like Tory Burch, for example. This is one of our very fastest-growing brands. It's one of the top 20 brands in our company. They're #5 largest brand in women's shoes and #6 in women's apparel. And so while they're rooted in shoes, I think the lessons learned there and Vince's dedication to the customer has enabled them to expand to multiple product categories. And that's rare and difficult to do, and he has done that really well. Again, it's just -- it's such an honor to be able to recognize Sam and yourself. These are true legends in the business. And you look at what our results have been over the last few years from 2010, '11, we had an increase of 343% with these guys. In 2012, 148%. Again, we're just -- we're indebted to your passion and commitment to the customer and really appreciate your partnership, Vince Camuto.
Thank you. First, I'd like to say thank you for having us. We really truly appreciate it. My congratulations to the board, to Nordstrom family. It's great to be part of it. And on behalf of all our people behind us, some of them are in the audience today, from Arielle Shout [ph], who does the ready-to-wear; and Alex DelCielo, who's our President; Louise Camuto who's our Creative Director; Ed Ferrell who's the Group President of the Vince brand. These guys work. We have the same work ethic that Nordstrom has. We have the same mentality. We have the vision. We are parallel as far as that's concerned. We look to make the best things for the consumer. And during the PAs, we learn an awful lot. We see your customer in the stores. They love Nordstrom. Hopefully, they'll love us as much. And I want to say again thank you for giving us the opportunity. We love being a part of it. We respect Nordstrom. There is no other company like Nordstrom. Thank you very much.
Peter E. Nordstrom
You [indiscernible]. Okay, I'd like to introduce my brother, Erik.
Erik B. Nordstrom
If you've you been to these meetings before, I get the, I think, the best assignment. I get to talk about our customers. And sitting here today -- I guess it is appropriate at these annual meetings that we do some looking back. And indeed, this is an enduring company. Your company has been around a long time, and I think it's clear to anyone who's been around here for a while that the main reason for that is this unwavering commitment to the customer. Rick talked about it. Blake talked about it. Our Partners in Excellence exhibit that. It is what drives this company. And it must be. And it's something that we look and take credit for. This culture of service, this legacy of focusing on the customer certainly predated any of us, and we're the very fortunate recipients of a pretty positive reputation with the customer. It's something that we don't take for granted, it's something that we value and it's something that tops our list each and every day. Our team of 60,000 people work on this, and I assure you that commitment remains as strong as it's ever been.
We talk about the subject of service. There's lots -- obviously lots of elements to it. And a lot of aspects of service are changing with society today. Some elements are not changing. But the aspects around having that great individual who deals directly with their customer, right in front of their customer, is vital to our business. That moment is really the key test for us. Do we hire the right person? Do we empower them to use their best judgment to really take care of their customer? Are we supporting them in their efforts to do that? And when that happens, that's what leads to our reputation. That's what most leads to our success.
With social media these days, the customer's voice is stronger than ever. And I'll tell you, we spend a lot of time listening to our customers. Anyone in a management job in this company spends a lot of time listening to our customers. Traditionally, we're store managers, we get a lot of letters, respond to a lot of letters each and every day. We don't get so much pen-and-paper letters anymore but certainly lots of emails. But more powerfully is social media. The customer's voice is out there for all to hear that, and that's a great thing for us. We've always believed that, first and foremost, we should invest in the customer experience. And if we do that well, the customer will do the advertising for us. Social media amplifies that many times over. Be it Facebook, Twitter, Yelp, what have you, the customer's voice is out there, and we spend a lot of time listening to the customer.
So there's a few comments I want to share with you, that we all pulled all these from social media. So bear with me here.
First one. "'If everyone treated each other like Nordstrom employees treat their customers, the world would be a better place,' this coming from my 16-year-old son after a trip to your downtown Chicago store. Thank you for your excellent customer service."
Next one. "Thanks to your wonderful sales associate, Meagan [ph] at Park Meadows in Colorado for helping me find an evening dress. I hate shopping and felt so overwhelmed. She scooped me up, picked up 8 dresses for me to choose from and made my business so pleasant. I left the store with the first dress she picked and a new pair of earrings." Again, this is posted on Facebook for all to see.
Next one, and it's also from Facebook. "Two weeks ago, I was boarding a flight to San Francisco in the morning for all-day meetings. Before even sitting down on the plane, I spilled a latte all over my suit. Since I was just up for a meeting for 1 day, I did not have an extra outfit. I tried to wash it out to no avail. These were important meetings, and I could not show up this way. Well, upon arriving in San Francisco, my hotel concierge arranged with the local Nordstrom that the store manager would facilitate access prior to the store opening. It was Charna Greenstein meeting me on the street and bringing me in through the employee entrance. They took me throughout the store and helped me find a satisfactory solution. They also took my suit and had their tailor do their best to remove the stains. Within 1 hour, I was back to my meetings and on with my day. Nordstrom's staff was amazing. What a team. I cannot recommend the store enough."
And lastly, "Amazing store. My mom passed away. I was in charge of the memorial. There was much to do, and I also needed an outfit. I couldn't hardly think straight, ran into Nordstrom, told them I needed something appropriate. Could they put me together? I was wondering, accomplishing nothing. They did the entire outfit. I will never forget their professionalism and thoughtfulness. Truly amazing store. Thank you, Nordstrom, star employee."
So these comments, these moments, these words from the customer are very powerful for us in defining our reputation with the customer. And again, these are all comments that are out there in social media for all to see.
All those comments go to really our legacy of service, which is that, that individual really caring about the customer across from them. That hasn't changed. So we need to focus on that as much never -- as ever. But in addition to that, great individual providing personal service.
The customer is looking for service in other ways. Service capabilities, things that go beyond what an individual can do by themselves, really the capabilities of a company, our company, to take care of them. That's a fast-changing part of our business, but it's one that we must excel at. If we are to be a leader in customer service, and I assure you that is our ambition, we need to have great individuals taking care of customers, but we also need to have service capabilities of -- at the company that are leading in taking care of customers.
So I'll to share a few comments that highlight this, once again all from social media. It says, "Oh Nordstrom, I would write you a love poem if it wasn't -- if I wasn't too busy looking at your site 24/7. You probably have all of my -- even semi-disposable income. You always have what I want, and your customer service is unparalleled. And hello, free shipping on every order? That alone just shows how divine you are." Free shipping, it's something we've installed about 18 months ago. It's been an important driver of our business.
Next one. "I feel I need to share with the world that our nearest Nordstrom Rack now has roaming cashiers. You just walk up to anyone of them when you're done shopping and pay and walk out. This is the future stuff right here, people. Game changer."
It says a little bit about mobile POS, mobile point of sale, or these handheld devices where we can check out the customer on their term. It's been a big point of difference and a big part of our service offering.
Next one. "I just placed order through a live chat with Kerry [ph]. Service like hers is what keeps me coming back to Nordstrom. She was very helpful and bent over backwards to make sure I got the perfect dress. Kerry [ph] was amazing. Thanks again, Nordstrom, for another wonderful experience." Having live chat available 24/7. And however the customer wants to interact with us, we have to be there.
Let's see. Last -- try 2 more. These are from Yelp. "My dependency on Nordstrom has almost reached embarrassing limits. I buy everything here. They have unprecedented exceptional return policies that borderline ridiculous. You can return anything that you've purchased here and never need a receipt. Anything you buy from their website can be returned in-store, which has led to many stupid purchases that only went back to their inventory. This is a good and bad thing because: one, it feeds my indecisiveness; two, ruined shopping at other stores; and three, I get the funds [ph] back if I ever am too satisfied." Having that capability to not only sell online but to -- for a customer to return in-store with their online purchases is, again, a very important aspect of our service and a point of difference to many.
Last one. "Any gift ideas I have for others or for myself, I can usually find at Nordstrom. If I cannot find it myself, a sales associate will probably be able to dig something out in the back that I imagine to be a 10-acre plot of land with magical elves working around the clock that they use to store all of the goods I want. It's like a women's Disneyland, filled with materialistic goods that satisfy even the deepest wounds." I'm not sure what wounds she had, but we're happy to help.
And I think we've talked about it before for -- one of the very important service offerings we can provide is to connect wherever a customer is with our company, be it any one of our stores or online, with wherever the merchandise they want as our company. Certainly, our first goal is to have it right where they want it. But if it's a customer in Seattle and we're out of exactly their size, what they want here, that we can -- our folks can find it immediately at any one of our other stores and we can send it to them for free. If a customer is online, we have the ability to fill online orders from our stores. These points of difference are very important. So I want to use those examples to get across to you, number one, our commitment to the customer is unwavering. I believe it's stronger today than when I started selling shoes. And I'm not sure if it was stronger when these guys were selling shoes, but I'll say it's at least as strong. And that is the battleground for us. So we need to win with the customer. That's top our list. It takes our most attention. It's what we're investing in going forward, both in taking care of the customer one person at a time but also with our service capabilities. Thank you.
Blake W. Nordstrom
Now with that, we'd like to open it up for any questions you might have. And so together with the team, we'll do our best to answer your questions. And we have a few folks with microphones. So if you've got a question, let us know what you got. Yes, sir?
I know you're interested in the customer, but I think there are some areas where there are more customers. In Latin America, Brazil is growing. And there may be some opportunities in Mexico. I hope you'll consider -- you have considered the Canadian connection, which I think is very good.
Blake W. Nordstrom
Thank you. Again, as I've mentioned earlier, up until very -- not too long ago, we weren't entertaining kind of international growth. And being right by the border here in Canada, that certainly seemed like an opportunity. We have over 15,000 credit cardholders across the border in Canada, and it seemed like a great opportunity. There are some nuances and differences about it, and so we're working hard on that. And we think if we do that right, it might open some doors to maybe some of the opportunities you're talking about. But when you think about online and the opportunities internationally to expand that business, certainly here, domestically, if you're not in Manhattan, which is the #1 place for retail, it's a very diverse community and diverse customer base, that's an opportunity. We've made that commitment. So if you flash forward to 2020, we should be in a position of strength that we could start asking some of those kinds of questions and looking at that. Right now, we're really focused on Canada and the many opportunities we have here. Thank you for your support. What else? Yes?
Talk a little bit about the -- excuse me, first of all, you guys have a done a terrific job in the last few years, and I wanted to thank all your efforts for that.
Blake W. Nordstrom
Can you talk a little bit about the potential on the Rack side? Obviously, T.J.Maxx and Ross [ph] have put up terrific numbers in the last 25 years, really. And I assume that's part of what you already know about that business and where you see it going.
Blake W. Nordstrom
They just announced their numbers a couple of days ago for the month or the quarter, and they were once again in the 5% to 8% range. So they're doing terrific. And our Rack team compares and competes with those folks, and we watch that very closely. Our Rack is pretty unique, though. There aren't many other entities out there that do exactly what we do. And if you haven't been to one of our Racks right across the street here at Westlake Center, we opened just over a year ago, where we're going with the Rack and it's a very successful part of our business. We've had elements of clearance. And it really started in the basement next door when we put together 3 buildings in 1973 and put in a basement our Rack. At the time, the experts said, "How can you have your flagship store and all your full-price merchandise upstairs and half price downstairs? Aren't you going to hurt the businesses?" And we believe there's a synergy between the 2 and the facts bear that out. And our best racks are by our best full-line stores. And when this store moved here that day, this store had over a 20% increase. It's just a win back and forth. It enables us to attract new customers, in some cases new employees to Nordstrom. It certainly gives us an opportunity for our folks in their career paths to be managers and store managers. It enables us to clear the merchandise, the clearance, the things that I'm selling at the end of the season quickly and efficiently so we can create open-to-buy in the full-line stores to bring in new merchandise. And so Lily Thomas [ph], who is the President of our Rack division -- and we've been accelerating the growth, and it was announced we aspire to have 230 stores by 2016. We watch that very closely. It's important that there's integrity in their pricing. Now if we have a comparison that it shows it really was at $100 and now today it's at $50, there are some retailers that kind of play that high roll game and we don't do that. We want to make sure that there's a real value there. So our Rack business is contributing in so many ways, and we see some tremendous growth opportunities. They have a very short lead time. We really need 12 to 18 months by the time we look at the site, get the building open, and get the doors open. And so if there were to be some change in that in any way, shape or form from the customer, we could dial that back. But right now, it's an important part of our growth story. So thank you.
Anything else? Yes?
Is the stock the highest it's ever been?
Blake W. Nordstrom
As I know, I think today or yesterday, it was like $60.29, and I think that is a record high. So I guess the timing for this meeting bears the opposite. Based on all of you, it's a low price. We can't control that. And it's going to do its thing and it's kind of interesting. But -- so we are excited about the tremendous opportunities we have right now. So thank you.
Anything else before we conclude?
Okay. So with that, I'd like to ask Rick to come back up to conclude the meeting. Thank you.
Thank you all for being here. I'd like to join in thanking you, Vince. Congratulations. And Sam, congratulations to you.
We have the preliminary results of the voting, and we have 91% of the votes counted. And all proposals have passed. So that's all good news.
So thank you all for being here. The meeting is officially adjourned. Have a nice day.
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