One of the leading fashion specialty retailers in the United States, Nordstrom Inc. (JWN), once again reported robust sales and comparable store sales (comps) results for the four-week period ended May 26, 2012.
Nordstrom’s comparable store sales grew 5.3% for the month of May compared with the four-week period ended May 28, 2011. During the reported period, comparable store sales at Nordstrom’s two business segments – Nordstrom full-line and Nordstrom Rack – increased 6.2% and 5.2%, respectively, compared with the year-ago period. Total retail sales climbed 9.3% to $870 million from $796 million reported in May last year.
Year-to-date, Nordstrom’s total retail sales climbed 12.6% to $3,405 million, primarily driven by a 7.7% increase in comparable store sales. During the period, the company’s comparable sales grew 8.5% at Nordstrom full-line stores, while Nordstrom Rack stores registered a growth of 6.4% in comparable sales.
One of Nordstrom’s competitors, Gap Inc. (GPS) registered a 2% growth in same-store sales for the month of May, while net sales came in at $1.10 billion, up 4% compared with the prior-year period.
During May, Nordstrom inaugurated two Nordstrom Rack stores, one each at Commons in Temecula, California and the other at Willow Grove Park in Willow Grove, Pa. As of May 26, 2012, Nordstrom operated 117 Nordstrom full-line and 114 Nordstrom Rack and other stores, thus bringing the total store count to 231.
Nordstrom’s latest store openings signify the company’s commitment to expand its store network with the aim to drive top-line growth. The company’s focus on store expansion was also evident from the opening of four new Nordstrom Rack stores in the month of March and three new Nordstorm Rack stores in the month of April 2012.
In fiscal 2011, Nordstrom added 18 new stores, contributing significantly to a 12.7% year-over-year growth in fiscal 2011 net sales. Moreover, Nordstrom plans to continue its store expansion strategy in fiscal 2012 targeting to open a total of 16 new stores, comprising 1 full-line store and 15 Rack stores.
Nordstrom also announced its intention to open a new 47,000 square foot Nordstrom Rack store in a building next to Sunvalley Shopping Center during spring 2013. Sunvalley Shopping Center is just five miles away from Nordstrom’s store in Walnut Creek and is occupied by large retailers such as Macy’s Inc. (M), J. C. Penney Company Inc. (JCP) and Sears Holdings Corporation (SHLD).
Nordstrom remains focused on expanding its store network to drive top-line growth. Moreover, we believe Nordstrom’s recently acquired HauteLook Inc., an online private sale leader, will help the company in building its multi-channel retail format. The acquisition will facilitate Nordstrom to increase its direct business capabilities, implement an enterprise-wide inventory management system, direct sales to online customers and enhance customer service. However, sluggish discretionary spending environment, intense competition and exposure to seasonal fluctuations keep us on the sidelines.
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’.Read the Full Research Report on M
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