Nordstrom: More Evidence That High-End Retail Leads the Way, Recovery or Not

| About: Nordstrom Inc. (JWN)

On the heels of Polo Ralph Lauren's (NYSE:RL) blowout quarterly report, upscale retailer Nordstrom (NYSE:JWN) blew the doors off the place in its Q2 report after the bell Thursday.

The impressive part of Nordstrom's report goes beyond the fact that the company beat estimates for the quarter. Lending support to the notion that the U.S. debt downgrade, an uncertain economy and the attendant market crisis wll not not faze high-end consumers, the company raised the upper end of its full-year guidance.

Here's an update to a chart I published a couple of weeks ago highlighting some of the luxury retailers I like going forward:

Stock Friday, July 1 close Friday, July 8 close Friday, July 15 close Friday, July 22 close Thursday, Aug 11, after hours
Saks (NYSE:SKS) $11.41 $11.56 $10.99 $11.37 $8.70
Coach (NYSE:COH) $65.99 $66.82 $65.48 $66.80 $53.01
Nordstrom (JWN) $48.24 $50.25 $50.44 $51.50 $43.90
Click to enlarge

Admittedly, that's an ugly price trend. I publish results when they're glowing as well as when they do not look so hot. The bottom line here is that my long-term thesis remains intact: High-end consumers will lead the way, whether the broad U.S. economy gets back on track or not.

If you have not gotten in already - and you share my sentiment - these and other upscale names trade as relative bargains. When the dust settles, and even if it does not, the wealthy will continue to spend. The massive income inequality that exists in this country is starting to really show itself in places like high-end retail.

Sadly, the structural problems that have produced this inequality are so deep-seated, so historically-rooted that the debates I recall having about them in political science, philosophy, sociology and urban studies classes years ago have proven fruitless. Nothing will come of the same debates that undoubtedly rage throughout academia today.

There's no way we're solving two of the key problems responsible for this divide - education and immigration - anytime soon. And, within a capitalist framework, there's no need for a solution. This is how many political philosophers and others predicted it would play out.

At day's end, we'll continue the futile struggle between what will come out of the rich-poor divide - an uprising of the masses in the streets versus a government that touts empty opportunity and an unattainable American dream for many. Rhetoric pertaining to the latter tends to stave off the former on any grand scale. Let's face it, London was a blip. Business as usual will resume.

As investors, we have to put this stuff aside regardless of our personal and political feelings. Go where the story takes you. In my opinion, it should take you to companies that provide quality products and services to truly high-end and credit card-toting aspirational consumers.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in RL, JWN, SKS, COH over the next 72 hours.