Nordstrom (JWN)

High end retailers like Nordstrom are suffering through the economic downturn because consumers just aren't spending money on discretionary goods. Nordstrom reported that its Q2 2009 earnings were down 26.6% compared to a year ago, showing that the company is indeed suffering. However, not all hope is lost for the company. Comparable store sales for the company's off-line discount store Nordstrom Rack actually increased for the quarter, indicating that consumers are looking for a bargain. In Q3 2009, Nordstrom plans to open six Nordstrom Rack stores.

Nordstrom (JWN) announced after the close 1st quarter EPS of 54 cents a share on a 6.5% same store sales decline. Net income declined by 24%.

After a long string of impressive same store sales increases, Nordstrom’s same store sales turned negative in the Jan08 quarter and were just crushed this quarter (Nordstrom Same Store Sales Chart). Their forecast for the current quarter (Jul08) is for -5% to -7% same store sales (JWN Earnings Release).

The fourth quarter of Nordstrom's fiscal year depends upon holiday shopping, which contributes more revenue and profit to Nordstrom's annual figures than any other quarter. A weak holiday season can seriously hurt Nordstrom's end-of-year results, which seems more likely as Nordstrom's sales already lagged in the thid quarter.

A number of Nordstrom's customers are aspirational middle-class consumers who buy merchandise from Nordstrom to try to acquire the upper-class, luxury image invoked by the brands at Nordstrom. These middle-class consumers are more prone to losing disposable income in economic downturns and, in turn, cut back on their spending at high-priced stores such as Nordstrom.