NORDSTROM INC. $57 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 195.5 million; Market cap: $11.1 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.1%; TSINetwork Rating: Average; www.nordstrom.com) mainly sells clothing, accessories and footwear. The company owns and operates 248 stores in 33 states.
In the second quarter of its 2014 fiscal year, which ended August 3, 2013, Nordstrom’s sales rose 6.3%, to $3.2 billion from $3.0 billion a year earlier. Samestore sales rose 4.2% on strong demand for men’s apparel, men’s shoes and children’s clothing. Online sales jumped 37%.
Earnings gained 17.9%, to $184 million from $156 million. Per-share earnings rose 24.0%, to $0.93 from $0.75, on fewer shares outstanding.
The company caters to wealthier shoppers, so it’s less vulnerable to the current consumer spending slowdown than other department stores. It has also brought in new strategies that are boosting its sales, such as equipping sales clerks with mobile devices that let them check inventory levels and cut checkout times.
Even so, Nordstrom feels its same-store sales growth will slow to 2% to 3% for all of fiscal 2014, down from its earlier prediction of 3% to 5%. The company also cut its earnings forecast to $3.60 to $3.70 a share from $3.65 to $3.80. The stock trades at a still-reasonable 15.6 times the midpoint of the new range. The $1.20 dividend yields 2.1%.
Nordstrom plans to open 14 new Nordstrom Rack stores in the next six months. These outlets sell clearance merchandise from Nordstrom’s regular stores. That helps it attract cost-conscious shoppers.
In addition, the company expects to open four new stores in Canada between 2014 and 2016; these will be its first outlets outside the U.S. However, Nordstrom already sells its goods to customers in other countries, including Canada, through its website.
Nordstrom is a buy.
