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Nordstrom Inc JWN

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Narrow-Moat Nordstrom’s Holiday Sales Were in Line With Our Low Expectations; Shares Fully Valued

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Narrow-moat Nordstrom experienced a 22% sales decline for 2020 holiday season as COVID-19 continued to impact its business. While a poor result on an absolute basis, this result suggests that the retailer is likely to report fourth-quarter sales close to our forecast of a 21.5% net sales drop. Nordstrom has many stores in urban areas and tourist cities that are suffering from restrictions and low customer traffic. Moreover, the firm closed 16 full-line stores in the past year, a full-line store base reduction of about 14%. More positively, e-commerce has picked up some of the slack of low store sales, having reached 55% of 2020 holiday sales (34% last year) on 23% growth, matching our fourth-quarter forecast.

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Company Profile

Business Description

Nordstrom is a fashion retailer that operates approximately 100 department stores in the U.S. and Canada and approximately 250 outlet stores under the names Nordstrom Rack and Last Chance. The company also operates e-commerce sites. Nordstrom’s largest merchandise categories are women’s apparel (31% of sales) and shoes (24% of sales). Nordstrom, which traces its history to a shoe store opened in Seattle in 1901, continues to be partially owned and managed by members of the Nordstrom family.

1617 Sixth Avenue
Seattle, WA, 98101
T +1 206 628-2111
Sector Consumer Cyclical
Industry Department Stores
Most Recent Earnings Oct 31, 2020
Fiscal Year End Feb 1, 2021
Stock Type Distressed
Employees 68,000