Yahoo Finance Nordstrom (JWN) on Track With Aggressive Store Expansion Efforts
Nordstrom, Inc. JWN disclosed plans to open stores as part of its expansion efforts. The company intends to open four Nordstrom Rack stores in California in 2024 and one in 2025. These stores will be located in Davis, Elk Grove, Gilroy, Oceanside and San Mateo, CA. Following the openings, JWN will boast 68 Nordstrom Rack stores, 23 Nordstrom stores, five Nordstrom Locals and one asos Nordstrom in California.
JWN announced the opening of additional stores in Jacksonville Beach, FL; Macedonia, OH; Snellville, GA, and Wheaton, IL, during spring 2024. For all these stores, customers will have benefits like pick-up online orders and make returns.
JWN opened 20 Rack stores in fiscal 2022. Rack stores continue to be the largest source of customer acquisition, accounting for more than 40% of newly acquired customers in 2022. Consequently, management expects to drive greater engagement and higher profitability at nordstromrack.com.
To improve customers' shopping experiences, Nordstrom Rank is an important driver of the closer-to-you strategy. Notably, the strategy aims to link stores and services to expedite deliveries, expanding online offerings, and add cheaper merchandise at its Rack off-price stores. Increased focus on distribution capabilities, along with improved connectivity of physical and digital inventory, is likely to contribute to Nordstrom Rack sales by $2 billion in the long term.
As part of the strategy, Nordstrom earlier issued a long-term outlook. It predicted revenue growth in the low-single digits on an annual basis, with operating income likely to outpace revenues in the long term. The EBIT margin is expected to be more than 6%, with the annual operating cash flow anticipated to be more than $1 billion. Capital expenditure is likely to be 3-4% of sales.
The company has been focusing on better assortment, increased brand awareness and introducing more premium brands at Rack. Driven by these factors, it expects to optimize the Rack product mix by mid-2023.
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This Zacks Rank #3 (Hold) stock has gained 1.2% year to date against the industry’s decline of 2.8%.
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