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NORDSTROM, INC.

(JWN)
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For U.S. stores it is ugly out there: in more ways than one

11/27/2013 | 10:05am EDT
File photo of a discounted price seen at the Wal-Mart Supercenter in the Porter Ranch section of Los Angeles

CHATHAM, N.J./LOS ANGELES/WHITE PLAINS, New York (Reuters) - The 2013 holiday shopping season may end up being remembered for its ugly sweaters and, for many retailers, even uglier discounts.

With growing online competition, weak consumer confidence and no fashion must-haves, most U.S. retailers will have to offer both big discounts and stellar service to get consumers to spend freely, according to analysts who joined Reuters reporters on visits to stores in New York, New Jersey, California and Illinois ahead of the holiday season.

"People are being a lot more selective in where they spend their money," said Wedbush analyst Gabriella Santaniello while touring the Westfield Topanga mall in Canoga Park, California.

To be sure, with online sales increasing, store visits provide only part of the picture. Still, a trip to the mall with a trained expert provides vital clues ahead of the holiday season, which usually accounts for almost half of retailers' profits.

The battle for the consumer dollar is particularly intense in a year when taxes have risen, unemployment has remained stubbornly high, and confidence has taken a hit from the recent government shutdown and uncertainty over the introduction of President Barack Obama's healthcare reforms.

Offsetting those negatives has been the wealth impact of a rise in home prices and a rallying stock market, although that is more likely to help the luxury end of retailing.

Most industry forecasts show sales growing modestly overall, with online retailers taking a bigger slice of the pie and electronics stealing share from apparel.

ComScore, an analytics firm, this week said it expected e-commerce sales, including those made on mobile devices, to rise 16 percent this holiday season.

SEASON OF SWEATERS AND XBOXES?

In a sign of intense competition, there has been unprecedented price-cutting from giant discount chain Wal-Mart Stores Inc, earlier-than-usual deals from online goliath Amazon.com Inc, and price-match promises from Best Buy Co Inc, Target Corp and others even before the season's unofficial kickoff on Thanksgiving Day.

Wedbush's Santaniello is betting on Urban Outfitters Inc, American Eagle Outfitters Inc, and other purveyors of trendy sweaters featuring cutesy animals, phrases such as "totes amaze" (slang for totally amazing) in curly cursive, and "fair isle" patterns.

"This is going to be a Christmas of ugly sweaters," she said, eyeing an Urban Outfitters tan sweater with a pair of foxes knitted into the pattern of the garment, a technique known as intarsia. "That's the hip thing now; bad sweaters are so cool" among 20- and 30-year olds.

New must-have gadgets such as Sony Corp's PlayStation 4, Microsoft Corp's Xbox One gaming consoles and Apple Inc's latest iPhones and iPads could take a bite out of other holiday gift purchases and hurt some apparel chains, according to analysts.

"There's a limited wallet, and there's going to be a lot of competition from outside the apparel space, which means teens are going to be spending much less money on clothes," said Bridget Weishaar, a retail analyst with Morningstar.

A visit to a Best Buy store in Chatham, New Jersey, gave RBC Capital Markets analyst Scot Ciccarelli a reason to recommend the retailer's stock to investors this holiday.

At least four sales associates offered to help Ciccarelli within 20 minutes of entering the store, a huge improvement from last year, he said.

"The simple fact that people are asking you, 'Can I help?' and are nice and friendly is the big difference," Ciccarelli said, showering praise on Best Buy's new management team for investing more in training its sales associates. The retailer's share price has more than tripled since last holiday season as results have improved.

Wendy Liebmann, CEO of WSL Strategic Retail, expects teen apparel chains to offer bigger discounts closer to Christmas because fashions are "banal" and interchangeable this year, and their customers have been trained to wait for the best deals.

TALE OF TWO DEPARTMENT STORES

Craig Johnson, president of consulting firm Customer Growth Partners, praised Nordstrom Inc's selection of jeans and shoes, but said he expected the department store chain to have just an "OK" season because even wealthy shoppers are holding back and looking for sales.

During a visit to its store in Westchester Mall, in White Plains, New York, he said he was impressed by new in-store signs that can be seen from afar and clearly tell shoppers where they can find "power" brands like Theory, Vince and Burberry Brit, which are especially popular with upscale shoppers.

Macy's has not raised its annual sales forecast, but Liebmann expects it to have a solid holiday season because of a good selection of products and because it is well ahead of some rivals in integrating stores and e-commerce, which includes filling online orders from stores.

Liebmann found the level of discounting at Macy's flagship Manhattan store muted, which she said would give it room later in the season to cut prices without going down to alarming levels.

"This is just the beginning, but they're not giving it away yet," said Liebmann, pointing to deals such as 25 percent off on Calvin Klein men's shirts.

At department store chain J.C. Penney Co Inc, analysts had mixed views about overstuffed racks of clothing. Some saw them as a sign of weakness, but others said the company was trying to prove to shoppers that it had overcome recent troubles that included under-stocking of some store brands.

"What one may misconstrue as clutter is merely a strategic effort to meet high customer demand," said Penney spokeswoman Daphne Avila.

(Reporting by Dhanya Skariachan in New Jersey, Lisa Baertlein in Los Angeles, Phil Wahba in New York and Nivedita Bhattacharjee in Chicago; Editing by Jilian Mincer, Christian Plumb and Ken Wills)

By Dhanya Skariachan, Lisa Baertlein and Phil Wahba


ę Reuters 2013
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AMERICAN EAGLE OUTFITTERS, INC. 3.37% 27.61 Delayed Quote.33.08%
APPLE INC. 0.67% 146.83 Delayed Quote.10.66%
BEST BUY CO., INC. -0.59% 106.17 Delayed Quote.7.02%
BEST INC. 13.02% 1.91 Delayed Quote.-6.37%
EXPRESS, INC. 2.46% 5.41 Delayed Quote.494.51%
GIFT INC. 5.96% 2985 End-of-day quote.68.83%
LETS HOLDINGS GROUP CO., LTD. 0.31% 6.52 End-of-day quote.-16.20%
MICROSOFT CORPORATION 0.33% 299.56 Delayed Quote.34.68%
NORDSTROM, INC. 3.40% 29.46 Delayed Quote.-8.72%
OLD COPPER COMPANY -1.31% 0.121 End-of-day quote.-17.97%
RISE, INC. 0.00% 25 End-of-day quote.4.17%
SEARS HOLDINGS CORPORATION 14.95% 0.2299 Delayed Quote.1.05%
SONY GROUP CORPORATION 0.16% 12360 End-of-day quote.20.18%
SPACE CO.,LTD. 0.72% 982 End-of-day quote.24.46%
TARGET CORPORATION 0.37% 242.67 Delayed Quote.37.47%
TEAM, INC. 0.56% 3.59 Delayed Quote.-67.06%
THE GAP, INC. 2.37% 24.19 Delayed Quote.19.81%
THE TJX COMPANIES, INC. 1.68% 70.7 Delayed Quote.3.53%
UNIBAIL-RODAMCO-WESTFIELD SE 0.15% 66.54 Real-time Quote.2.83%
URBAN OUTFITTERS, INC. 0.95% 32.91 Delayed Quote.28.55%
WALMART INC. 0.06% 142.77 Delayed Quote.-0.96%
WPP PLC -0.36% 994.8 Delayed Quote.24.63%
ZUMIEZ INC. 1.90% 41.88 Delayed Quote.13.87%
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Analyst Recommendations on NORDSTROM, INC.
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Financials (USD)
Sales 2022 14 583 M - -
Net income 2022 192 M - -
Net Debt 2022 1 813 M - -
P/E ratio 2022 24,7x
Yield 2022 2,83%
Capitalization 4 682 M 4 682 M -
EV / Sales 2022 0,45x
EV / Sales 2023 0,42x
Nbr of Employees 62 000
Free-Float 70,4%
Chart NORDSTROM, INC.
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Nordstrom, Inc. Technical Analysis Chart | JWN | US6556641008 | MarketScreener
Technical analysis trends NORDSTROM, INC.
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Income Statement Evolution
Consensus
Sell
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Mean consensus HOLD
Number of Analysts 22
Last Close Price 29,46 $
Average target price 34,36 $
Spread / Average Target 16,6%
EPS Revisions
Managers and Directors
Erik B. Nordstrom Chief Executive Officer & Director
Peter E. Nordstrom President, Director & Chief Brand Officer
Anne L. Bramman Chief Financial Officer
Brad D. Smith Chairman
Edmond Mesrobian Chief Technology Officer
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