Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Nordstrom, Inc. (JWN): Risky and Exciting Retail Investments

Page 1 of 2

Nordstrom, Inc. (NYSE:JWN)s expansion plans indicate that the company is confident in its future potential. Most retailers are closing stores, not opening new ones. Nordstrom’s decision is a good sign, but risks exist. Perhaps another retailer offers a better opportunity.

Canadian expansion

Nordstrom, Inc. (NYSE:JWN)

Nordstrom crosses the Northern border in 2014 with a location at Chinook Centre in Calgary. It will follow that up in 2015 with locations at Pacific Centre in Vancouver and Rideau Centre in Ottawa. All of these locations formerly belonged to Sears Holdings Corporation (NASDAQ:SHLD). Since all of the aforementioned malls are high-end, Nordstrom will have more potential than Sears. Two new locations will open in 2016 — Sherway Gardens in Toronto and Toronto’s Yorkdale Shopping Centre.

Nordstrom, Inc. (NYSE:JWN) and Hudson Bay’s Lord & Taylor have competed for many years in the United States. Hudson Bay CEO, Richard Baker, doesn’t seem thrilled with Nordstrom’s expansion plans into Canadian territory, commenting:  “Hudson Bay is a promotional retailer and every day there is a different kind of exciting promotion going on, and that is what drives our business. Nordstrom is a full-price retailer with a sale twice a year.”

Nordstrom, Inc. (NYSE:JWN) actually offers five sales per year, but his point is obvious — Nordstrom isn’t the place to go if you’re looking for value. However, that’s not the case in July, when Nordstrom celebrates its Anniversary Sale. During this time, you can purchase fall items for tremendous discounts, earn double points on your Nordstrom card if you shop on the weekend, and set up appointments with sales associates.

Nordstrom, Inc. (NYSE:JWN)’s strategy with the Anniversary Sale is to get former shoppers back into the store as well as to attract new ones. While the sale might not lead to great margins, these shoppers are likely to browse higher-margin items. A new shopper might also be impressed with what he or she sees and return to the store at a later date.

This is how Nordstrom competes on the promotional front. By keeping sales sporadic, it makes them special events that shoppers can get excited about. You can look at it at as a supply and demand situation: Fewer sales equals increased demand for sales.

In the United States, Nordstrom, Inc. (NYSE:JWN) plans on opening 14 more stores this year and 30 stores in 2014. Currently, 240 Nordstrom stores can be found in 31 states. Nordstrom operates 34 stores in California, but the second-most popular state for Nordstrom is Texas with only 10 stores. Therefore, domestic growth potential is good.

Nordstrom’s recent performance

Nordstrom, Inc. (NYSE:JWN) is well known for its exemplary customer service. In the employee handbook, it simply reads: “Trust Your Judgment.” This demonstrates the company’s trust in its employees, which leads to an excellent working environment and company culture. This positive attitude is contagious, and it spreads to the customers. This, of course, leads to strong sales.

Same-store sales increased 2.7% year-over-year in the first quarter, but expansions, promotions, and spending on e-commerce and technology led to increased costs. These costs are short-term negatives, and they shouldn’t play a role in your investment decision.

Full-year guidance disappointed with sales growth expectations moving from a range of 4.5% to 6.5% to a range of 4% to 6% and same-store sales going from between 3.5% and 5.5% to between 3% and 5%. However, Nordstrom reiterated EPS guidance at $3.65 to $3.80.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!