Nordstrom's Lost Weekend: Bitter Weather to Kibosh Christmas Shopping

Times are tough for upscale department stores and Nordstrom (JWN) is no exception.

Despite these tough times, JWN -- like JC Penney (JCP) and Gap (GPS) -- posted less terrible than expected sales in November and this led to a short-lived rally in the sector. As I noted last week, the less miserable than expected sales in the apparel sector was largely driven by favorable external tailwinds – specifically, sustained cold weather across most of the eastern US and the impact of the precipitous drop in gas prices. It was great … while it lasted.

In December, as gas prices plateau and the weather is no longer providing an incremental push on sales, the benefits (less bad than expected) of the favorable external environment have vanished. Weather for the balance of the holiday season represents downside only risk as the favorable weather dividend was largely distributed in November.

This weekend the forecast calls for bitter cold and snow in the major Pacific Northwest population centers – major markets for Nordstrom.

These conditions during the holiday shopping season typically result in significant and non-recoverable traffic/sales decreases. The Seattle/Portland metro areas represent about 12% of the JWN full-line store fleet. In this depressed consumer environment – where lost sales cannot be made up in other regions – it’s very hard to recover from a weather-related (weekend!) hit like this.

This does not bode well for JWN December sales.

Disclosure: no positions

Comments

[Stephen Ros...:]

My thoughts exactly. Don't forget the Northeast which lost power to over a million homes.

2008 Dec 14 06:35 AM