We are encouraged by Nordstrom's better-than-expected
second-quarter fiscal 2014 results. The company's customer strategy
continued to flourish reflecting growth across channels, along with
efficient inventory and expense management. Moreover, we believe
that the company's store expansion initiatives and entry into the
Canadian market will boost its top-line in the long run. However,
the company's projections for fiscal 2014 reflect higher costs
across the board due to the ongoing investments, which will likely
weigh on its margins in the short run. Moreover, we are cautious
about the company's growth prospects due to the soft economic
recovery, intense competition and exposure to seasonal
fluctuations. Hence, we retain our long-term Neutral recommendation
on the stock.
Nordstrom Inc. is a leading fashion specialty retailer in the
U.S., offering high-quality apparel, shoes, cosmetics and
accessories for men, women and kids. The company offers both
branded and private label merchandise, which are positioned in the
upscale segment of the industry and targeted towards the aspiring
middle class. The company has two segments: Retail and Credit Card.
The Retail segment offers a selection of brand name and private
label merchandise. The segment includes Nordstrom branded full-line
stores and website, off-price Nordstrom Rack stores, and other
retail channels including HauteLook and Jeffrey boutiques. The
Credit Card segment operates Nordstrom private label and co-branded
VISA credit cards.
As of Aug 2, 2014, the Seattle-based company operated a network
of 271 stores located in 36 states, of which 117 are full-line
stores, 151 are Nordstrom Racks, 2 Jeffrey boutiques and 1
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