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Here's Why You Should Retain Nordstrom (JWN) in Your Portfolio

Nordstrom, Inc. JWN has been making efforts to drive efficiency in its business and enrich the customer experience. The company is making improvements in the Nordstrom Rack banner, driven by an increase in its strategic brand penetration. It is also redefining its flagship brand with a style-driven and top-quality assortment to give it a trendy look.

This Zacks Rank #3 (Hold) company’s shares have gained 54.3%, outperforming the industry’s 25.9% growth. Its VGM Score of A further speaks volumes.

What’s More?

Nordstrom’s Rack banner also remains on track to increase productivity throughout its network, reduce transportation costs and delivery times, and enhance services via faster delivery. The company continues to focus on introducing more premium brands at Rack, better assortment and increased brand awareness.

During the fourth quarter of fiscal 2023, the company witnessed impressive sales growth as Rack comparable-store sales rose in high single digits. Also, the Rack digital business improved in traffic and conversion. During fiscal 2023, it introduced 19 stores and intends to open 22 outlets in fiscal 2024. Going ahead, it further intends to roll out to more markets.


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Zacks Investment Research

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Additionally, Nordstrom is making efforts to enhance the customer experience through faster delivery. The company delivered more than 50 basis points of improvement in variable supply-chain expense savings for the sixth straight time in the fiscal fourth quarter. This supply-chain optimization work began in early 2022 and has delivered significant customer benefits and operational efficiencies. Going ahead, JWN continues to seek additional efficiencies in flow and improved productivity through inventory-management initiatives.

The company is focused on three areas, which include winning in the most important markets, expanding the reach of Nordstrom Rack and enhancing its digital capabilities. Also, it remains focused on the closer-to-you strategy, which aims to link stores and services to expedite deliveries, expand online offerings and add cheaper merchandise at its Rack off-price stores.

Increased focus on distribution capabilities and improved connectivity of physical and digital inventory are likely to contribute to Nordstrom Rack sales by roughly $2 billion in the long term. As part of the strategy, Nordstrom earlier issued a long-term outlook. It predicted revenues to grow low single-digits on an annual basis, with operating income likely to outpace revenues in the long term. EBIT margin is expected to be more than 6%, with annual operating cash flow anticipated to be more than $1 billion.

On a concluding note, Nordstrom looks well-poised for growth on the aforesaid strengths.

Key Picks

We have highlighted three better-ranked stocks, namely Gap GPS, American Eagle AEO and Deckers DECK.

Gap, a leading apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). GPS delivered an earnings surprise of 180.9% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Gap’s financial-year sales suggests growth of 1.7% from the year-ago reported figure.

American Eagle, a leading casual apparel retailer, currently carries a Zacks Rank #2 (Buy). AEO delivered an earnings surprise of 22% in the last reported quarter.

The consensus estimate for American Eagle’s current financial-year sales suggests growth of 3.4% from the year-ago reported figure.

Deckers, a footwear and accessories dealer, currently carries a Zacks Rank of 2. DECK delivered an earnings surprise of 32.1% in the trailing four quarters.

The Zacks Consensus Estimate for Deckers’ current financial-year sales suggests growth of 15.8% from the year-ago reported figure.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report

Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report

Nordstrom, Inc. (JWN) : Free Stock Analysis Report

The Gap, Inc. (GPS) : Free Stock Analysis Report

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