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Nordstrom Boosting Profit, Dividend After Recession

By: Investor's Business Daily
Posted: 7/5/2013 5:28:00 PM
Referenced Stocks: JWN;M;SKS

Shares of Nordstrom ( JWN ) have recovered steadily from the 2008-09 recession, and the high-end retailer has increased its dividend steadily in recent years.

The stock is up 16% this year and 20% over the past year, in line with the S&P 500. It's trying to break out of a base-on-base pattern .

Nordstrom operates more than 240 stores in 31 states and plans to open 20 more in 2013-14. It carries brands targeting wealthy customers, resulting in high margins.

"We believe Nordstrom's sustained focus on expanding its store network along with enhancing online sales and consumer retention strategies will boost its top line and profitability," Zacks Equity Research said in a note June 18.

Profit for the quarter ending in July is expected to rise 17% to 88 cents a share, up from the prior quarter's 4% increase. Revenue is seen rising 10% after the prior quarter's 5% gain.

On an annual basis, profit has risen for four straight years after declining sharply in recession-wracked 2009. Profit is expected to climb 6% to $3.79 a share for the fiscal year ending in January. The three-year Earnings Stability Factor is 6 on a scale of 0 to 99, with 0 being most stable.

Nordstrom's pretax margin was 9.8% last year, best in the eight-member Retail-Department Stores industry group, which includesMacy's ( M ) and Saks ( SKS ).

Cash flow per share has easily outpaced earnings per share over the years. That's enabled the company to boost its dividend for four straight years after holding it steady through the 2008-09 recession. The latest dividend hike came in February, an 11% increase to 30 cents a share.

The annualized dividend is $1.20 a share, equal to a 2% yield.