Nordstrom to buy HauteLook; 'Flash-sale' website; Company's unique move announced as it reports fourth-quarter profit.(Business)

Byline: Amy Martinez; Seattle Times business reporter

More and more, Nordstrom appears intent on making a name for itself as a technologically friendly retailer.

The latest evidence of that came Thursday when Seattle-based Nordstrom announced plans to buy HauteLook, a Los Angeles website with limited-time deals on designer merchandise, for $180 million in stock.

The deal, which is expected to become final in the next couple of months, marks the first time that a department-store chain has bought a "flash-sale" website.

Jamie Nordstrom, president of Nordstrom Direct, said HauteLook builds on the company's efforts to appeal to today's technologically savvy shoppers.

"If customers are telling us they want to use technology to shop, then we have to be competent at that," he said.

Privately held HauteLook is one of four major players in a fast-growing segment of the online fashion business. Along with Gilt Groupe, RueLaLa and ideeli, the four top "flash-sale" players were projected to generate $900 million in 2010, according to research firm eMarketer.

The deal includes an opportunity for HauteLook's owners to earn an additional $90 million in stock over the next three years, potentially putting the price tag at $270 million.

Nordstrom said HauteLook will operate as an independent subsidiary under current management and remain a separate brand.

Launched in 2007, HauteLook has more than 4 million members who sign up for daily e-mail alerts about limited-time deals on fashion, travel and local services throughout the U.S. and Canada.

Jennifer Black, a Lake Oswego, Ore., retail consultant, said HauteLook gives Nordstrom a quick entry into the online flash-sale marketplace.

"For Nordstrom to create their own entrance, it would require too much money and too much time," she said.

To some extent, HauteLook competes with Nordstrom's off-price Rack division by working with suppliers to offer surplus brand-name merchandise at deep discounts.

HauteLook attracted 3.1 million visits in the U.S. last month, making it the second-most popular flash-sale website behind electronics discounter Woot, according to ExperianHitwise.

Ken Stumphauzer, a retail analyst with Sterne Agee in New York, described the growth of flash-sale websites as "mind-boggling."

"It's in Nordstrom's interest to pre-emptively join that crowd," he said.

Nordstrom has been stepping up its online presence for more than a year. In 2009, it introduced a shared-inventory platform so that it could fill Internet orders with merchandise from a store when its Cedar Rapids, Iowa, warehouse was out of stock on a desired item.

Also, Nordstrom has been reaching out to customers on their smartphones and other handheld, Internet-connected devices, equipping its stores with Wi-Fi and testing mobile checkout.

Nordstrom revealed its plans to buy HauteLook while also releasing its fourth-quarter results after the close of regular trading Thursday.

The company posted a quarterly profit of $232 million, or $1.04 a share, for a 35 percent increase compared with a year ago. Quarterly sales rose 11 percent to $2.8 billion. Including credit-card revenue, fourth-quarter revenue totaled $2.92 billion.

"Our regular-priced selling is back to historical high levels," President Blake Nordstrom said.

Nordstrom stock closed down 22 cents at $46.48 in the regular trading session Thursday, then fell $1.45, or 3.1 percent, to $45.03 in after-hours trading, reflecting disappointment about a 2011 outlook that appeared conservative.

For the full fiscal year ended Jan. 29, Nordstrom made a profit of $613 million, or $2.75 a share, representing a 39 percent increase. It posted record annual sales of $9.31 billion, a year-over-year increase of nearly 13 percent.

Nordstrom predicts its full-year profit will come in between $2.95 and $3.10 a share. That assumes a 2 to 4 percent increase in sales at stores open more than a year, which would be down from an 8.1 percent growth rate in fiscal 2010.

Amy Martinez: 206-464-2923

CAPTION(S):

The Associated Press: Customers walk out of Nordstrom in the Canoga Park section of Los Angeles. Nordstrom is buying Los Angeles-based HauteLook website. (0415848998)

The Seattle Times: Another strong quarter for Nordstrom (GJS1QKATP)

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