Nordstrom, Inc. (NYSE:JWN) is one of the nation's largest upscale apparel and shoe retailers, with 237 U.S. stores located in 31 states. Nordstrom sells clothing, shoes, and accessories for men, women and children.
Stock Market Performance and Valuation
The stock price appreciated from $50.18 to $55.33 over the last year. This represents an increase of 10.3%, which is well above the average market return. Over the last three year horizon the stock appreciated by 66.4%. Considering past performance as an indicator of future performance, Nordstrom presents a lucrative investment opportunity.
The price to sales ratio and economic valuation of the company reflects investors' confidence in the company. The market recognizes the operational performance of the company but does not completely recognize the future growth opportunities for the company.
|Measure||Nordstrom||Dillard's (NYSE:DDS)||Macy's (NYSE:M)||The Gap (NYSE:GPS)|
Company performance vs. Competition
Nordstrom revenues grew by 12.4% over the last financial year. The EBITDA grew by an even more impressive 26%. The three year perspective also presents a similar picture with revenue and EBITDA growing by 8.3% and 14.4% respectively. Nordstrom has achieved this remarkable growth when the median revenue for the industry shrank by 1.65%. Last year publicly traded comparable companies like Macy's and Dillard's grew their revenue by 5.61% and 2.34%, respectively (source: Capital IQ).
Nordstrom has an efficient and effective operational model with high operating margins and an excellent inventory turnover. On a note of caution, Nordstrom needs to work on reducing its receivables and thereby bringing the days of sale outstanding under control.
The company is focused on expanding its geographic foot print. The company has targeted to open 16 new stores in fiscal 2012, consisting of 1 full-line store and 15 Nordstrom Rack stores. Additionally, the company has planned to add 24 new Rack stores in fiscal 2013 and intends to operate 230 Rack stores by the end of 2016. This drive to increase the profits by growing the top-line augers well as the company has an impressive operating margin of 10.73%. Nordstrom has a substantially lower number of retail outlets relative to its competitors, and there are more potential opportunities to grow the top-line than the bottom-line.
Nordstrom is a fundamentally strong company and presents an excellent investment opportunity. The company has a visionary management which has a strategic plan in place to help the investors realize a handsome return on their investment. Having said that, I would like to point out that Nordstrom is meant for investors with a longer investment horizon.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.