Nordstrom's August Sales Up - Analyst Blog

Nordstrom Inc. (JWN), one of the leading players in the highly fragmented specialty retail sector, reported total sales of $615.0 million for the month of August 2010, up 13.6% from $160.2 million in the year-ago period. The company’s comparable store sales grew 6.3% for the month, ahead of the Street forecast of 5.9%.
 
In the month of August, Multi-channel same-store sales jumped 7.5%, driven by the jewelry, dresses and women’s shoes categories. Full-line comparable store sales recorded a growth of 7.8%, driven by strong performances in the Midwest, Mid-Atlantic and the South. However, overall comparable store sales growth was partially offset by a 4.2% decline in Nordstrom Rack same-store sales.
 
Nordstrom’s year-to-date total revenue rose 14.3% year over year to 5.02 billion and same-store sales upped 9.5% compared with the same period in fiscal 2009. Multi-channel same-store sales spiked up 11.1% and Full-line comparable store sales were up 9.5%, but Rack same-store sales dropped 0.1% year over year.
 
In August, Nordstrom’s peer group also witnessed impressive comparable-stores sales results. Kohl's Corporation (KSS), Macy’s Inc. (M) and J.C.Penney Company Inc. (JCP) recorded a respective 4.5%, 4.3% and 2.3% increase in comparable-stores sales results for the reported month.
 
In the reported month, Nordstrom has opened two Rack Stores in Virginia and one full-line store in Santa Monica, CA .
 
In the month start of September, Nordstrom has opened one Rack store in North Carolina, and still the opening of 6 Rack stores across California, Florida, Illinois, and Missouri in the third quarter of the fiscal year 2010 remains in the pipeline.
 
Headquartered in Seattle, Washington, Nordstrom offers a wide array of over 500 brands. Moreover, management’s focus toward expanding the store network, coupled with a flexible variable costs-based business model, bodes well for the future operating performance. However, sluggish discretionary spending environment, intense competition from other established players and exposure to seasonal fluctuations undermine the company’s future growth prospect; thereby leaving limited space for above-market performance of the company.
 
Accordingly, we have a Zacks Rank of #3 (short-term Hold recommendation) on the stock. We also reiterate our long-term Neutral rating.

 
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