Nordstrom Inc. (JWN) reported comparable store sales (comps) up 0.9% for the four-week period ended July 28, 2012. Comps at Nordstrom’s two business segments – Nordstrom full-line and Nordstrom Rack – increased 1.3% and 9.7%, respectively, compared with the year-ago period. Total retail sales climbed 1.1% to $1,004 million from $993 million reported in July last year.
Nordstrom’s total retail sales for the second quarter grew 7.4% to $2,918 million driven by a 4.5% increase in comparable store sales. During the quarter, the company’s comparable store sales at Nordstrom full-line and Nordstrom Rack segments increased 4.9% and 7.7%, respectively.
Nordstrom’s July as well as second quarter comps were impacted compared to last year mainly due to the partial shift of the company’s Anniversary sale event into August. The company’s Anniversary sale for this year began a week later in July, causing the shifting of one week of the event into August.
Peer Performance
One of Nordstrom’s competitors, Gap Inc. (GPS) registered a 10% rise comparable store sales for the month of July, while net sales came in at $1.06 billion, up 12% compared with the prior-year period.
Store Expansion Plans Progress
On the last day of July, Nordstrom announced plans to open a new Nordstrom Rack store in California. Located at the One Eleven Towne Center in Palm Desert, the store will enclose an area of 34,000 square feet. The company expects the store to be operational by spring 2014. It will mark the company’s first store in the greater Coachella Valley.
Nordstrom’s Rack stores generally offer merchandise from Nordstrom stores and Nordstrom.com at a significantly reduced price to customers. Products at these stores are sold with discounts of roughly 50% to 60% from the original Nordstrom tags. Nordstrom Rack also carries a vast assortment of branded apparel, accessories and shoes that are available at Nordstrom stores, and are offered to customers with a discount of about 30% to 70%.
Nordstrom’s latest store openings signify the company’s commitment to expand its store network with the aim to drive its top-line growth. As of August 2, 2012, Nordstrom operated 117 Nordstrom full-line stores, 110 Nordstrom Rack, 2 Jeffrey boutiques, 1 treasure&bond store and 1 clearance store, thus bringing the total store count to 231.
Our Recommendation
Based in Seattle, Washington, Nordstrom Inc. offers high quality apparel, shoes, cosmetics and accessories for men, women and kids. The company offers both branded and private label merchandise, as well as a private label card, two Nordstrom VISA credit cards and debit cards for Nordstrom purchases.
Nordstrom maintains a Zacks #3 Rank, which translates into a short-term Hold rating. Our long-term recommendation on the stock remains Neutral.
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