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Nordstrom (NYSE:JWN) has continued to see strong performance this year. The company has seen eight quarters of positive same-store sales with online sales outperforming the company's other businesses. The company has seen strength in the shoes and accessories businesses. These two categories were the best performing for the quarter. The company has also started to see growth in the men's business. This trend should continue in the holiday season.

I expect to see Nordstrom outperform going into the holiday season. Consumer spending is expected to increase two to six percent this year, this should bode well for retailers.

Here are more points I like about the Nordstrom story:

  • Total sales increased 14.2%, while same-store sales in the third quarter were up 7.9%. Nordstrom same-store sales, which include results from the company's full-line and direct businesses, were up 8.5% with the South and Midwest the top-performing regions.
  • The Nordstrom Rack, which had a total sales increase of 23.6% along with a same-store sales gain of 6.8% for the quarter. This is now 4 consecutive quarters of same-store sales increases at the Rack.
  • Over the past 11 months Nordstrom has opened 20 Racks. About 3 years ago, the company significantly accelerated its growth plans for the Rack to increase market share and gain new customers. I expect this growth to be a strong driver for the company going forward.
  • The company plans to improve its online shopping presence. This could have a big impact on the company. Nordstrom's online business is its fastest growing segment and further enhancements should improve sales. These improvements include providing a better shopping experience for customers on mobile devices. The company has also launched a free shipping and free returns online promotion which has improved sales.

I'm bullish on Nordstrom and view pullbacks as buying opportunities. I expect the company to benefit this holiday season as well as continue its growth over the next few years. The Nordstrom Racks business allows the company to access mid-income consumers. This is a whole new segment that Nordstrom's was unable to access in its other businesses. Nordstrom Racks and its online business will be the big driver for the company going forward. The company should see strong earnings growth as it expands its Racks business. Consumers will be looking for bargains this holiday season and Racks will be a big beneficiary of that. I will stay bullish on Nordstrom until I see any slow down in those two segments.

Source: Strong Holiday Season Should Benefit Nordstrom's Stock Price