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Nordstrom Shares on Bargain Rack?

We've placed our fair value estimate for the department store under review after a weak third quarter, but we think the sell-off has created an interesting entry point for long-term investors.

We are putting shares of

Third-quarter comp sales grew only 1%, a significant deceleration from six straight quarters of mid-single-digit comp increases. This resulted in 7% overall sales growth. Weakness was across geographies, formats, and products leading us to believe that the subpar traffic levels were a result of an overarching weaker consumer, not company-specific factors. In our opinion, management reacted quickly to this weakness, immediately using markdowns to clear excess merchandise and finished the quarter with inventory growth roughly in line with revenue growth. Although we expect top-line weakness to continue, we think the company will benefit on a market share basis as it will have less discounting and more capacity for newness in its products.

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