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Nordstrom Expands Store Base

Zacks Equity Research

With its store expansion strategy in full swing, Nordstrom Inc. (JWN) announced its plans to open two Nordstrom Rack stores in Brentwood, Tenn. and Houston, Texas.
Located at Brentwood Place Shopping Center in Brentwood, the 36,000 square foot Nordstrom Rack store is scheduled to open by fall 2014. Situated on Franklin Road, the shopping center is within 6 miles of Nordstrom’s first full-line store in Nashville at The Mall at Green Hills. Marking the company’s first Rack location in the State of Tennessee, the new Brentwood store will join a host of retailers and restaurant chains including The Kroger Co. (KR), T.J.Maxx and HomeGoods -- retail chains operated by The TJX Companies Inc. (TJX), Office Depot Inc. (ODP) and Golfsmith. Brentwood Place is a property of Baker Storey McDonald Properties and serves the population in South Nashville and the neighboring suburbs.

The second Nordstrom Rack store will be located at Village Plaza at Bunker Hill in Houston, situated at Interstate 10 and Bunker Hill Road. The store will likely open doors in spring 2014. The 30,357 square feet Rack store coming up in the property of Fidelis Realty Partners, in joint venture with Weingarten Realty Investors, will mark the company’s third Rack location in Houston over the last four years.

The new Rack store will share business space with a vibrant group of grocers, retailers, restaurants and services including H-E-B Grocery Stores, Academy Sports + Outdoors – a unit of Kohlberg Kravis Roberts & Co L.P. (KKR), Toys"R"Us and PetSmart Inc. (PETM).

Nordstrom first stepped in Houston in 2003 with the opening of a full-line store at The Galleria, while its second full-line store is slated to open to public at The Woodlands Mall on Sep 5, 2014. The company’s first Rack store in the area was inaugurated in 2010 at The Center at Post Oak.

Nordstrom’s Rack stores generally offer merchandise from Nordstrom stores, Nordstrom.com and special collections from many of the renowned brands offered at Nordstrom at a significantly reduced price to customers. A vast assortment of branded apparel, accessories and shoes that are available at Nordstrom stores are offered to customers at a discount of about 30%–70%.

Nordstrom’s latest store openings signify the company’s commitment to strengthen its network with the aim of driving top-line growth. Nordstrom’s focus on store expansion is evident from the series of Rack store openings since the beginning of fiscal 2013. As of Nov 20, 2013, Nordstrom operated 261 stores, including 117 Nordstrom full-line stores, 141 Nordstrom Racks, 2 Jeffrey boutiques and 1 clearance outlet.

Nordstrom targets to double the number of Rack stores to more than 230 by 2016. The company has successfully achieved its Rack stores target for 2013 by opening 24 stores, including 2 relocations. Moreover, the company targets to open about 30 Rack stores in 2014.

Seattle-based Nordstrom currently carries a Zacks Rank #3 (Hold).

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