Nordstrom, Inc. (NYSE:JWN)

CAPS Rating: 4 out of 5

The Company operates as a Full-Line stores. It's a fashion specialty retailer offering apparel, shoes, cosmetics and accessories for women, men and children.

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Member Avatar TCTgoose (80.40) Submitted: 12/17/2014 1:16:18 AM : Outperform Start Price: $75.00 JWN Score: -1.27

Customer focus

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Member Avatar Turbofish (58.07) Submitted: 12/5/2014 11:50:18 AM : Outperform Start Price: $73.98 JWN Score: +3.07

Expect a killer holiday season followed by steady growth

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Member Avatar asdfk123 (73.21) Submitted: 11/24/2014 2:04:55 AM : Outperform Start Price: $74.87 JWN Score: +3.29

Nordstroms primary customers are affluent baby boomers. Even with affluent baby boomers being the primary customer base, the firm is making substantial investments in the future to broaden its audience. These investments include massive expansion of Rack stores and technology investments, through direct investments and acquisitions, to various e-business platforms. The only concern with these new investments will be the firms ability to broaden appeal to a younger cost conscious audience.

Nordstrom currently has a capital structure of roughly 77% debt and 23% equity. The capital structure of 77% debt fuels high levels of return on equity. Return on equity has averaged approximately 33.63% over the last ten years. Leverage levels are not a major concern due to the fact Nordstrom has an interest coverage ratio of 8.6. A ten year trend analysis demonstrates Nordstrom is growing net income at a faster clip than top line revenue at 6.45% and 5.81% respectively.

Nordstroms top competitor is Macys. Nordstrom sports a slightly better net profit margin of 5.85% versus Macys 5.32%. Even though Macys appears to have a slightly higher operating profit, it is offset by higher depreciation, administrative, and interest expenses. Nordstroms inventory turn is much higher than Macys while its payables turn is much lower. Nordstrom sports a negative cash conversion cycle, which is likely a result of customers willing to pre-pay for items 6 months in advance coupled with Nordstroms ability to purchase merchandise from suppliers on credit.

Overall, Nordstrom appears to be slightly better managed than Macys. Nordstrom benefits from founder family involvement, strong insider ownership by executives, reasonable compensation, a strong firm reputation, and is a fortune top 100 best company. Its top competitor edges Nordstrom with a more tenured CEO with much more experience in the industry.

There are six major risks associated with an investment in Nordstrom: strategic execution, employee turnover, information security, economic downturns, fashion trends, and catastrophic events. The risk with the highest impact on the register is the firms ability to keep up with constantly changing fashion trends. The primary sources of this risk are consumer behavior and management of the supply chain and merchandising. Nordstrom has a long history of meeting customers fashion needs and wants. Overall, when evaluating risk, firm risk is low.

When evaluating the competitive forces that shape industry strategy, it appears Nordstrom has to compete with slightly less intensity than rivals due to its strong leadership in customer service, and the fact that its services, such as loyalty programs, are differentiated from peers. The strong differentiation increases barriers to entry due to an organizational culture that is focused on customer service and a strong talent management program.

A discounted cash flow analysis places Nordstrom present value of future operations at or around 14.4B. This assumption assumes top line growth of 8.87% years 2015-2017, 8% years 2018-2019, and 7%, 6%, 5%, 4%, 3%, in years 2020-2024 with an assumed long-term sustainable growth rate of 2% per year after 2024. With 190M shares outstanding, this gives the firm a share price of approximately $75.58.

Even though Nordstrom stock is not cheap, the firm is fairly priced given its prospects for the future. Nordstrom will be an exciting company to watch over the next 5-10 years!

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Member Avatar Staka (96.91) Submitted: 11/23/2014 3:16:24 AM : Outperform Start Price: $74.87 JWN Score: +3.29

Positive:
- They are where the money is.
- Shops and the web site are well done and a pleasure to use.

Negative:
- Somewhat elevated valuation but who cares these days.

Category: BVm

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Member Avatar SmoothHughes (89.46) Submitted: 9/30/2014 12:57:28 PM : Outperform Start Price: $68.18 JWN Score: +8.46

World class customer service at a reasonable price. This company is Built to Last.

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Member Avatar dsciola (< 20) Submitted: 9/25/2014 1:47:37 AM : Underperform Start Price: $68.72 JWN Score: -8.44

Well, with my big mouth on the MFSA board, the Chief called me out, so hear I stand :)

In the interest of full disclosure...I love Nordy's...I shop there a bunch...

I simply cannot see this company creating value by expanding its RACK offerings. The Rack is the discount brand, it's the poor-man's Nordy's. Folks will let you know when they get something from Nordy's, not when it's from the RACK. The RACK in my mind will just lower JWN's margins and dilute the brand...and it goes without saying how vital branding is in retail. I've been looking at this company and the stock for a while...considering HQ and the flagship store is within walking distance of my office...and every time I look at it I keep thinking it's slowly losing it's edge.

Dom

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Member Avatar JackR (53.20) Submitted: 9/19/2014 2:54:47 PM : Outperform Start Price: $69.18 JWN Score: +8.72

SA new pick

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Member Avatar Dividends500 (87.81) Submitted: 5/16/2014 4:25:18 PM : Outperform Start Price: $57.45 JWN Score: +19.28

Dividends500 tracks the 200 strongest dividends in the S&P 500. To qualify as a strong dividend, the company must meet two simple requirements:

- A payout ratio below 50%
- An increasing dividend from the prior year

Because there are more than 200 dividend paying companies in the S&P 500 that meet these requirements, the qualifying companies with the largest dividend yields were chosen.

Dividends500 intends to test this FactSet article, which highlights these strong dividend paying companies and their outperformance versus the S&P 500 as a whole (Page 12).

http://www.factset.com/websitefiles/PDFs/dividend/dividend_12.16.13

If you have questions or see something you think is inaccurate feel free to let me know.

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Member Avatar CashRulez (84.03) Submitted: 5/1/2014 1:50:15 PM : Outperform Start Price: $41.81 JWN Score: +29.78

A brick and mortars retailer that will win because of their culture of service to the customer. They have unique offerings and it doesn't hurt that my local store's mens section is next to women's shoes. The eye candy alone will have me returning again and again.

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Member Avatar Chichos (< 20) Submitted: 8/22/2013 4:17:59 PM : Outperform Start Price: $55.56 JWN Score: +14.77

Excellent growth prospects, strong brand awareness, up market positioning. Will sell if growth does not materialize in next two years as long term debt burden will begin to weich down company.

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Member Avatar phiballinger (56.79) Submitted: 8/22/2013 9:37:11 AM : Outperform Start Price: $55.04 JWN Score: +15.24

For long term investors this stock is a buy on a pullback. It has a loyal customer base and good long term growth. Last quarters miss is a long term buying opportunity.

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Member Avatar DCUDFlyer (37.28) Submitted: 8/22/2013 8:42:23 AM : Underperform Start Price: $55.11 JWN Score: -14.65

Great store and great company. Love the selection and the customer service is very solid (though they get a bit too much hype in my opinion)

Dog of a stock. Significant underperform YTD (+6%) vs SPY (+15%). Yield (2%) and PE (15) both very average. I don't see retail spending taking off anytime soon and its a volatile sector anyways.

IMO, there are better options out there.

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Member Avatar TMFGemHunter (86.09) Submitted: 8/19/2013 8:21:59 PM : Outperform Start Price: $54.81 JWN Score: +15.53

Nordstrom has a very reasonable valuation today considering its growth prospects. The company is planning to double the number of Nordstrom Rack outlets in just 4 years, while also entering the Canadian market starting in 2014 and opening a Manhattan flagship store in 2018. Management has cautioned that the ongoing expansion will cap margins near present-day levels for the next few years, but further down the road I expect significant margin expansion and corresponding profit growth.

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Member Avatar paek813 (99.69) Submitted: 6/26/2013 7:53:09 PM : Outperform Start Price: $57.92 JWN Score: +4.92

S&P 4 STAR

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Member Avatar TMFTycoon (63.09) Submitted: 4/17/2013 2:07:25 PM : Outperform Start Price: $47.08 JWN Score: -4.24

Nordstrom is doing everything right. It's got an excellent management team led by a family member, it's covering bricks-and-mortar and Internet sales, its iPad app is cutting edge and popular, it's experimenting with design and distribution partnerships on independent ventures, and best of all, its customer service is so outstanding that I overhear people talking about it in airports, at restaurants, and online. Did I mention their selection is fantastic, too?

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Member Avatar 2trpop (92.69) Submitted: 12/11/2012 9:27:13 AM : Outperform Start Price: $50.50 JWN Score: +8.32

fstg experiment

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Member Avatar FoolWithFive (99.55) Submitted: 10/5/2012 2:12:56 PM : Outperform Start Price: $54.34 JWN Score: +0.91

Its a best of breed store.

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Member Avatar beefangusbeef (20.27) Submitted: 8/16/2012 3:11:23 PM : Outperform Start Price: $53.94 JWN Score: -2.37

I'm long on this. It might not be cheap now, but it's a great run company that people love to work at. How many retail companies do you know that people actually enjoy working for? After working for half a dozen through school I can tell you it's a rarity. On top of that clothing is one of the few areas that is still better to buy in a store over online.

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Member Avatar carl257 (58.25) Submitted: 7/5/2012 8:52:40 AM : Outperform Start Price: $48.63 JWN Score: +7.70

best of breed by far.

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Member Avatar EmotionalTrader (32.51) Submitted: 6/19/2012 7:17:27 PM : Outperform Start Price: $48.59 JWN Score: +6.50

A department store that doesn't also sell power drills. Seems like a good idea.

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