QUOTE AND NEWS
Forbes  Aug 12  Comment 
Earnings season surge erases the slide from last quarter, but there's not much reason to expect big upside from the likes of Macy's and Nordstrom.
Yahoo  Aug 12  Comment 
The department store topped Wall Street estimates in the second quarter, reporting earnings of 67 cents a share on revenue of $3.65 billion. Nordstrom also reported that its same-store sales dropped 1.2%, topping analysts’ forecast of 3.1%....
Clusterstock  Aug 12  Comment 
Nordstrom is moving even further into the discount space. Nordstrom's off-price Rack is thriving. But its full-line stores still may have a way to go. In its second quarter, total comparable sales fell 1.2%, beating expectations and sending...
Benzinga  Aug 12  Comment 
$52.73 - April 28 close $52.24 - April 29 high $52.09 - Intraday high as of 11:21 AM $51.55 - Current price as of 11:21 AM $50.26 - Intraday low as of 11:21 AM $47.56 - Thursday close If content like this is useful...
Forbes  Aug 12  Comment 
In early trading on Friday, shares of Nordstrom (JWN) topped the list of the day's best performing components of the S&P 500 index, trading up 7.1%. Year to date, Nordstrom registers a 2.2% gain.
Yahoo  Aug 12  Comment 
J.C. Penney (JCP) reported a narrower-than-expected loss for the second quarter, while revenue came in roughly in line with forecasts. Nordstrom (JWN) shares soared in early trading after the high-end department store chain delivered a beat on...
Benzinga  Aug 12  Comment 
Morgan Stanley’s Kimberly C. Greenberger believes Nordstrom, Inc. (NYSE: JWN) shares are at an unsustainable valuation, “given limited scope for EPS growth & margin recovery,” and that stock strength should be used as an opportunity to trim...
Forbes  Aug 12  Comment 
While sales trends were still negative in the second quarter for the three major retailers, there was more momentum providing an encouraging outlook for the rest of the year. Initiatives that should help future growth were detailed and consensus...
Benzinga  Aug 12  Comment 
  Some of the stocks that may grab investor focus today are: Wall Street expects J C Penney Company Inc (NYSE: JCP) to report a quarterly loss at $0.15 per share on revenue of $2.93 billion before the opening bell. J C Penney shares...




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Nordstrom (NYSE: JWN) sells apparel, shoes, cosmetics and accessories to customers who are typically between 25-54 years of age and generate a household income in excess of $100,000. The company positions itself as an "affordable luxury" retailer that operates all of its 100+ Nordstrom full-line department stores in the U.S. exclusively. The company also operates 70+ off-price Nordstrom Rack stores.

Near-luxury and discount retailers, like Nordstrom, are vulnerable to slowdowns in consumer spending on such merchandise, which typically exaggerates the peaks and valleys of the overall economy.

Company Overview

Based in Seattle, Washington, Nordstrom has developed its own niche in the retail industry as an "affordable luxury" retailer, positioned between mid-tier retailers such as the Macy's Inc. (M) stores and high-end, luxury retailers, including Saks Fifth Avenue and privately-held Neiman Marcus. The company sells high-quality apparel, shoes, cosmetics and accessories, targeting customers between 25-54 years of age with an average household income of $100,000.

Business Segments

The company operates through two principle branches:

Retail Stores, Direct, and Other (96% of net sales)

  • Retail Stores: Nordstrom primarily gets its revenues from sales of high-quality shoes, cosmetics and accessories. The company's stores sell merchandise in seven different categories:
  1. Women's Apparel: 34% of net sales
  2. Shoes: 22% of net sales
  3. Men's Apparel: 15% of net sales
  4. Women's Accessories: 12% of net sales
  5. Cosmetics: 11% of net sales
  6. Children's Apparel: 3% of net sales
  7. Other: 3% of net sales
  • Direct: Nordstrom also sells its merchandise through its e-commerce website Nordstrom.com and catalogs.
  • Other: This segment involves the product development and design team, Nordstrom Product Group and corporate center operations

Credit (4% of net sales)

  • Credit: In owning its own federal savings bank, Nordstrom offers a private label card, two co-branded Nordstrom VISA credit cards and a debit card for Nordstrom purchases. These give rise to a shopping-based loyalty program designed to create incentives for increased customer consumption.

Business Growth

FY 2010 (ended January 30, 2011)[1]

  • Net sales increased 12.7% to $9.3 billion.
  • Net income increased 39% to $441 million.

Trends and Forces

Near-Luxury Retailers Suffer in Sluggish Economy

Near-luxury retailers, like Nordstrom or even Abercrombie & Fitch, that depend on aspiring middle class customers -- customers that are affected by recessions and cut back on spending -- are the ones that suffer through tough economic times. As these consumers cut back on spending, Nordstrom feels the pinch on its bottom line.

Innovate Online Tools Allow Nordstrom To Gain Competitive Advantage In Rebounding Economy

New technology, such as RFID chips, has allowed companies to better manage their stores. Using this technology, Nordstrom has developed a way to better manage its inventory and to better serve its customers. Customers that go to the store's website are able to see what items are available at a specific store location, as well as items that are available in the company's warehouses. This system has made it much easier for customers to shop online, and has even allowed customers to find items online and then request to try them on at stores. The change in inventory management has allowed Nordstrom to better serve its customers, which has translated into higher sales.

Competition

Nordstrom's competitors in the mid-tier department store industry include Macy's Inc. (M), Dillard's (DDS) and J.C. Penney (JCP). These companies provide near-luxury full-price items but also have discount stores as well. Mid-tier department stores are the most affected by the economic downturn because they rely on aspiring middle income consumers to generate revenue-- middle income consumers typically cut back spending and look for discounts as a way to save money during tough economic times.

Nordstrom also competes with companies in the luxury retail industry which include Saks Fifth Avenue (SKS) and companies in the discount retail industry like Kohl's (KSS). Nordstrom occupies a positioning between discount and luxury department stores in terms of the price it sells its merchandise at.

References

  1. JWN 2010 10-K pg. 16
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