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Nordstrom Expands Store Network, Opens Outlet at Tacoma Mall

Zacks Equity Research

Nordstrom, Inc. JWN unveiled its plan to open first Nordstrom Rack store in Tacoma, Washington at Tacoma Mall. The store will be inaugurated in fall 2020 at the time of festive season. This new store location will be part of outdoor shopping and entertainment destination, which includes retailers namely, ULTA Beauty ULTA, Gap GPS and LUSH Cosmetics. The company has been operating a full line store in Tacoma since 1966.

The company has been persistently focusing on the store-expansion strategy as part of its efforts to grow market share. It remains keen on prioritizing its investments in the top North American markets. The opening of new stores is not only expected to attract customers but also boost the company’s top line via synergies across other channels.

Moreover, Nordstrom has been progressing well with expansion in Canada. Overall, the company envisions $1 billion sales opportunity from its expansion in Canada by 2020, including six planned full-line stores and 15 Rack stores.

Apart from these, the company’s significant progress on its customer-based strategy places it well to reach the revenue target of $20 billion by 2020. This strategy focuses on three factors — leveraging its brand strength, providing excellent services and offering compelling products to its customers.

Notably, Nordstrom is making amendments to its operating model in response to the constant slowdown in mall traffic resulting from customers’ shift to online shopping. It is focused on boosting e-commerce and digitization, enhancing supply-chain channels and improving marketing efforts. In second-quarter fiscal 2019, digital sales improved 4%, representing about 30% of sales growth.

Nordstrom, which shares space with Macy's M, remains on track to reach its target of EBIT margin of 6.3-6.5% by fiscal 2020.  The company had earlier said that it expects to accomplish savings at the high end of $150-$200 million by fiscal 2019 associated with efficiency initiatives. We believe these efforts will help Nordstrom to deliver sustainable growth over the long term.

Price Performance

Although, this Zacks Rank #3 (Hold) company has declined 0.5% in the past three months, it has outperformed the industry’s decline of 11.2%. We note that shares of the company have increased around 11% in the past one month.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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