Nordstrom Inc. (JWN), one of the largest fashion specialty retailers in the U.S., intends to further expand its Rack concept by opening a new store in Manchester, Missouri. The store that is scheduled to open in fall 2012 will include a wide selection of apparels, accessories and shoes of the Nordstrom Rack store.
Nordstrom Rack store is an off-price retail format of Nordstrom that sells the company's off-season and clearance goods from its mall stores and Nordstrom.com, at a discount of 50-60% from original Nordstrom prices. Rack also showcases apparel, accessories and shoes, which are specially purchased for Nordstrom Rack at 30-70% lesser than original prices. The Rack concept is specifically designed for customers who are appreciative of the brand but cannot afford it due to its higher pricing.
The new store, spanning 35,000 square-feet, will be a neighbor of a Weekends Only store. The store will be on the eastern side of Manchester Highlands, a regional shopping center, which includes Costco Wholesale Corporation (COST), Wal-Mart Stores Inc. (WMT), Best Buy Co. Inc. (BBY), Bed Bath & Beyond Inc. (BBBY), PetSmart Inc. (PETM), Ulta and Bassett Furniture. Saint Louis-based Pace Properties, L.L.C. will develop and own the building where the new Nordstrom Rack store is expected to open.
The store will be the company's second Nordstrom Rack store in the greater Saint Louis area. The company also operates a full-line store at West County Center and will open another full-line store at Saint Louis Galleria mall on September 23, 2011.
Our Take
We believe that the Rack stores provide a viable option for consumers with less disposable income to buy branded products at affordable prices.
Store Update
At present, the Seattle-based company, Nordstrom, operates a network of 219 stores located in 30 states, of which 116 are full-line stores, 99 Nordstrom Racks, two Jeffrey boutiques, one treasure&bond store and one clearance store.
Nordstrom, which competes with Gap Inc. (GPS) and Abercrombie & Fitch Co. (ANF), currently, holds a Zacks #2 Rank, implying a short-term 'Buy' rating on the stock. Besides, the company retains a long-term 'Neutral' recommendation on the stock.
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