Nordstrom, Inc. (JWN)

If they sold an ETF for cocaine I'd buy it. Since they don't, I figure the way my mother and sister-in-law shop at Nordstrom rivals the behavior of a drug addict. I've been waiting for better prices, and I think they are here.

Nordstrom, Inc. is a fashion specialty retailer that offers a selection of apparel, shoes, cosmetics and accessories for women, men and children. The company offers its products through Full-Line Nordstrom stores, discount Nordstrom Rack stores, its Faconnable boutiques, and through catalogs and on the Internet.

In the past five years, the premium denim segment of the jeans market has become one of the hottest segments of the apparel industry. Premium-denim business is also one of the best-selling categories for Nordstrom and the company is dedicating huge swaths of floor space to jeans. Besides, Nordstrom is optimistic about its designer business and has recently opened a store in California that will sell renowned designer brands like Gucci and Valentino.

Regular price sales and updated casual wear have fetched good returns in terms of positive same store sales for the women’s apparel business that contributes about 35% to the topline. Gross margin improved in the third quarter primarily due to lower markdowns in women’s apparel and shoes. Same-store sales rise from Nordstrom Rack division perfectly aligns with the positive trends in the growing off-price sector. To expand its merchandise offerings, the company plans to roll out a music program in 2007 by selling CDs both in its stores and online. Furthermore, launching of a new merchandising system in the fourth quarter will bring better prospects.

The company has been one of the best performers amongst its peers in terms of return on equity. Inventory turnover ratio has constantly risen in the past three years. With such a positive outlook and a continuous positive trend in same-store sales, Nordstrom is set to rise high.

This stock is a buy even though they no longer have the best Investor Relations guy in the business working for them (in the interest of disclosure I'm talking about my dad.) Having originally been born and raised in Washington State I grew up in the cradle of Nordtsrom's. I remember learning about their philosophy of customer service when my dad worked there. The book "The Nordstrom Way" changed the way I think about business. Nordstrom didn't practice customer service, Nordstrom INVENTED it. Nordstrom has a loyal customer base because they do things that are not profitable in the short term because they know that return customers are their most valuable commodity. You can return anything to Nordstrom's they'll take it back, their employees don't need permission to say yes to a customer. They need permission to say no. At most retail stores the employee isn't invested in what his/her sales figures are. At Nordstrom's employees make comission and they make sales, some shoe salesmen make 6 figures. I've always thought that Washington State seems to produce some of the great companies and great stocks, maybe it's because I've noticed that people have a more customer-oriented approach then they do here in Michigan. That's why stocks such as Starbucks, Microsoft, Boeing, and Amazon just to name a few come to us from Seattle.
This stock was in the doldrums for years until Blake Nordtsrom was CEO and now it's been on a tear ever since. I don't think it will move significantly higher in the next few months because retail stocks might get hurt by fears of a recession but long term you can own it and profit from it.

VL

I've been watching Nordstrom stock for a while now. I currently do not have any retail exposure at all (which in the last year has turned out to be a great thing). However, I think that the time to jump into the retail sector is close at hand. I will admit that I'm torn between TGT and JWN. I think that because I currently live in Seattle, I almost have to pick the home town hero, though. Besides, their cash position is nothing to scoff at - and I happen to know that they are implementing cost cutting procedures and trying to get even leaner on stocked inventory. Therefore, I chose JWN to outperform the the mkt with in the next year or two.

After the dip in the market yesterday I finally decided to put some real money in this. I think it's a strong company and I think it will be going up.

Solid margins, solid same store, solid management.

I think they have a great store. High quality selection, nice stores. I was wating to buy on a dip, but never got one. Dosn't look like I'm going to get one either.

top tier retailer....steady lt growth, earnings...rising margins, roe, roa, incomes....

Nordstrom is not a bad company, but given the current state of the high-end retail environment it looks highly likely that the consumer is cutting back his spending on high priced items and Nordstrom is one of the first companies that will feel this pain. JWN recently reported lackluster same store sales and earnings estimates have been steadily dropping. At 5 times book value and with 1.5 billion in debt, I cant say much about the company other than I'd avoid it here. Technically as well its showing signs of losing all support until the $20s.

Nero

Sagetrade

Nordstrom is a luxury department store best known for its superior customer service. The company was incorporated in 1946 after being a shoe business staring in 1901 and is still run by many Nordstrom family members, with 25.6% of its stock owned by insiders. Nordstrom’s’ key selling point is the value of its brand name. Nordstrom stands for legendary customer service and never forgets its customer is #1. It’s been so successful catering to its shoppers, a book has been written about their successful strategy. For example, a personal shopper is available for each customer without a minimum purchase, a concierge will hold shopper’s bags and stores hold customer appreciation events. The customer service is so incredible, a rumor that an employee once allowed a customer to return a set of tires even though Nordstrom has never sold tires.

Other key characteristics that make Nordstrom a compelling investment idea:

• Has been growing its margins steadily over the years and boasts gross and net margins far better than direct rivals Niemen Marcus, Saks, Dillard’s and more economical department store competitors J.C. Penny and Macy’s
• Operates a perpetual inventory system that enables quick reactions to customer feedback from the sales floor to ensure they aren’t left with stale products on the floor
• Despite the slowing economy and inventory build-ups many retailers have faced, Nordstrom has decreased its inventory levels in the past two years even as sales have remained slightly positive.
• Management aims to keep low cash reserve on balance sheet to enhance shareholder return and has increased its dividend each year in the past six years and has been buying back shares for the last three years.
• Nordstrom has averaged a trailing P/E ratio of 22 since 2001 but due to the major consumer slowdown and current weakened economy, the stock has slid to selling at just 10.2 times the last 12 months earnings and now trades with a 2.2% dividend yield.

The company’s high end clientele restrains Nordstrom’s growth to wealthier areas. However, with just 157 stores all located here in the U.S., the company does have considerable opportunity to expand its stores base. Management anticipates growing its store count by 20% in the next five years. Nordstrom’s potential growth particularly lies in many areas in the U.S. that are being renovated where contractors desire an upscale department stores to lure customers into newly developed shopping centers.

With many investors terribly bearish on the consumer outlook in the near term, the company’s near 40% drop over the past year provides a great entry point for a long term investment when the economy rebounds.

With no sign of the economy getting any better, high priced merchandise will not wheather the storm. Most things in Nordstrom are over priced to begin with, but without alot of extra income people will most likely take their dollars to Walmart.

A little beaten down. Maybe time to get back in.

Nordstrom is doing terribly.

I have have a long term relationship with his stock and went through two stock splits with them. This current market cycle is only a "little bug"

this stock has been very good to me over the long haul (12 yrs - up 236% in that time.) Their service is amazing with quality stock. It's cheap right now imo.

This company is one of 62 listed on the BetterInvesting Growth Screen in January 2008. It met 4 criteria: it is projected by Value Line to double earnings in the next five years, has actually doubled earnings in the past 5 years, is selling at price-earnings multiples (P/E’s) that are 110 percent or less of Value Line’s projected earnings growth rate and has a safety rating of average or better. It was listed in the March 2008 BetterInvesting magazine.

This is one company that understands customer service and has taken it to a different level. They do have exposure to California and that will hurt their typical consumer. That said, with around 109 full service stores (plus 50 Rack stores) they've got plenty of room for expansion. I expect this well capitalized, well run company to expand during this downturn. When things do recover I expect they will lead the way. In the meantime, take the dividend and just sit back and wait. In 3 years you'll be happy you bought at this price.

boiseidfool's tip on BetterInvesting 5/26/08 Growth Screen in January 2008.