Nordstrom to Open 1st Store on East Coast

Ending months of speculation about its plans to expand to the East Coast, Nordstrom Inc. announced Monday that it will open a store at a large mall in McLean, Va., a fast-growing Washington suburb.

This will mark the Seattle-based retailer’s first foray beyond the West, where it operates 44 specialty retail stores in California, Washington, Oregon, Alaska, Utah and Montana. With the $27.5-million, 200,000-square-foot store in Tysons Corner Regional Shopping Center, scheduled to open in late 1987, the company is poised to take its blend of upscale merchandising and customer service nationwide.

In the well-heeled Washington suburbs, it will compete with Bloomingdale’s, Saks Fifth Avenue, I. Magnin and Woodward & Lothrop, stores that also put a heavy emphasis on fashion apparel.

Nordstrom, which was founded as a Seattle shoe store in 1901, also reported Monday that sales for the year ended Jan. 31 rose 36% to $1.3 billion from $958.7 million the year before. Earnings for the year were $50.1 million, up 23% from the year before.

Quarterly Net Up 4%

For the fourth quarter, net income rose 4% to $18.7 million on sales of $435.8 million, a 34% increase. Much of the improvement in sales has come from the opening of new stores.

Analysts expressed disappointment at Nordstrom’s per-share results, which rose to $2.61 from $2.18 for the year and were flat at 96 cents for the quarter. Jeffrey Atkin, with the investment firm of Cable Howse & Ragen in Seattle, had been estimating that annual results would be higher by as much as 20 cents per share.

“The company has been pushing all year to operate with some lower markups to offer better value,” with the result that gross margins were far worse than expected, he said.

However, analysts noted that Nordstrom’s expansion into the East Coast bodes well for the retailer’s growth plans, even though the company will have to devote time to making its name a household word.

“The Eastern retailers, if they have any weak areas, had better look out, because Nordstrom is a sharp merchandiser,” said Sarah A. Stack, analyst with Bateman Eichler, Hill Richards in Los Angeles. “(Nordstrom) will be a threat to every retailer who hopes to capture” the upper end of the market.

The company also announced an increase in its dividend to 13 cents from 11 cents, payable March 14 to shareholders of record March 3, and plans for a 2-for-1 stock split in June.

In over-the-counter trading Monday, Nordstrom shares fell $1.75 to $51.75.