Retail Roundup: Nordstrom

 | Nov 01, 2012 | 2:15 PM EDT
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This morning, Nordstrom (JWN) continued its wicked ways by reporting same-store sales rose 9.8%. The company said demand for women's, men's and children's apparel in October was very strong. Analysts had expected October's same-store sales to cool down to 6% after a scorching back-to-school season. But Nordstrom wasn't having any of that. If you recall, same-store sales in August rose 21% and 4.5% in September. Although August sales were pushed higher by the timing of its annual anniversary sale, Nordstrom's keeps finding ways to win. Same-store sales for the entire third quarter rose 10.7% and total sales rose 13.8% to $2.71 billion.

Year to date, same-store sales are up 7.7% and total sales rose 11.4% to $8.17 billion. 

Holy cow, what happened to the recession?

Nordstrom operates a total of 238 stores in 31 states. But what is really driving sales is the company's push into designer discount. Nordstrom's Rack is the single biggest driver of sales growth. The Rack, which is like a classy TJ Max, is taking market share, especially at higher price points, where the other fashion discounters top out. Where else can a woman get a $750 pair of shoes for $400? Not at TJ Max or Marshalls. The company operates 117 Rack stores and is adding stores at a furious pace. So far, the company has managed to keep The Rack and Nordstrom from cannibalizing each other's sales.

The other interesting part of Nordstrom, which isn't included in the same store figures, is HauteLook. HauteLook, acquired in 2011, is the companies delve into online members-only flash sales. Members are sent daily emails that include deeply discounted, quality items, which are on sale for a limited time and a limited quantity. Nordstrom has been able to use its merchandising skills to create a feeding frenzy around handbags, shoes and cosmetics. Although the company doesn't break out sales from its direct-to-consumer ecommerce channel, sales are growing 60%.

With JWN shares up about 32% year-to-date, it hasn't paid to be pessimistic on the consumer. Although, retail sales may be temporarily disrupted by Hurricane Sandy, the holidays are right around the corner and the American shopper is out in force. Hurricane or not, she will not be denied! I wouldn't bet against a well-run retailer like Nordstrom.  In fact, it's easy to see Nordstrom reach 18 or 19 times the consensus estimate of $3.44. If I am right, that would get the stock to the mid $60s by January.

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