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How Housing May Help Nordstrom Earnings

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Department stores may report weak revenue growth in the first quarter, but Nordstrom (JWN) may be somewhat protected from wider problems that have impeded other stores' sales, according to one analyst.

Rising home values, especially on the west coast, have encouraged spending at Nordstrom stores, according to Liz Dunn, retail Analyst at Macquarie Capital. Nearly 27 percent of Nordstrom stores are located in California, and Nordstrom shoppers are more likely to own their homes, Dunn said. As their home values rise, shoppers are more optimistic, Dunn said on "Big Data Download."

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"Year over year, home prices are up about 10 percent, but in California they're up over 17 percent. So with Nordstrom's heavier concentration of stores in California, that gives them a little bit of a benefit," Dunn said.

What's more, a cooler-than-average spring has hit retailers with stores in the Northeast and Midwest, affecting apparel sales since shoppers can be reluctant to buy warm-weather clothes when they're still wearing winter coats. But since Nordstrom stores are more concentrated on the west coast, the company's sales have been less affected by cold spring weather.

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Dunn also says the annual incomes of Nordstrom shoppers have shielded companies from weakened consumer sentiment. Those shoppers on average have annual household incomes of between $100,000 and $450,000, high enough to spend a lot but low enough to not feel as burdened by taxes as some upper-income earners, Dunn said.

Dunn said she expects Nordstrom to report same-store sales growth of about 5 percent in the first quarter vs. growth in the single digits for other department stores. But department stores are still facing competitive pressure.

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"I'm not that favorable on the department store sector. I think it's been a sector that's been losing share to other sectors or other forms of retail for some time," including mass discount retailers and online retailers, Dunn said.

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