Nordstrom Inc. (JWN: 37.73 0.00 0.00%), one of the largest fashion specialty retailers in the U.S., is expanding to Annapolis and West Covina through Nordstrom Rack store by joining the Annapolis Harbour Center in Annapolis and the Westfield West Covina mall in West Covina, California.Nordstrom Rack store is an off-price retail format of Nordstrom, which sells Nordstrom’s own off-season and clearance goods from its mall stores and Nordstrom.com at 50-60% off original Nordstrom prices. Rack also showcases apparel, accessories and shoes that are specially purchased for Nordstrom Rack with a feature of 30-70% off original prices.
Rack has been specially designed for customers who appreciate the brand but cannot afford its steep prices.
Annapolis Harbour Center Store
The entry into Annapolis Harbour Center is expected to roll out in spring 2011. The store, which will be the tenant of a 32,230 square-foot area of the center, will join the floor with 28 other retailers. Rack will share the location with Office Depot Inc. (ODP: 5.05 0.00 0.00%), which is situated just next to it. The store will also face direct competition in the mall with AnnTaylor Stores Corp’s (ANN: 19.28 0.00 0.00%) off-price retailer Anne Taylor Loft. Roughly 70 people are expected to be employed at the store.
Westfield West Covina Mall Store
The store at Westfield West Covina mall is expected to be operational in the fall of 2011. It will stretch for an area of about 36,500 square feet and will be located on the upper level of the mall.
Nordstrom is already operational with 17 Nordstrom stores and 12 Racks in the greater Los Angeles Orange County area and plans to open four new Racks and one full-line Nordstrom store in the area through 2011.
Same Store Sales Trend at Rack Stores
The retailer was generating positive results at Rack stores until March, with positive same store sales (comps) of 2.3% in February and 4.7% in March. However, it turned negative in April and May at -1.8% and -1.1%, respectively.
But full-line stores helped to mitigate this softness by delivering positive comps of 6.5% and 3.9% in April and May, respectively. We believe that with the economy on the verge of a recovery, customers’ pockets may warrant higher prices at full-line stores.
Our TakeWe believe that Rack provides good opportunity for bargain hunters who look for valuable brands at lower prices. Also, middle class customers who cannot afford to pay prices at full-line stores can go to the Rack stores. However, the quality and level of service may pose a possible hindrance to shopping at these discounted stores.
Store Update
Nordstrom accessories and apparels are available in 114 full-line stores, 76 Nordstrom Racks, two Jeffrey boutiques and one clearance store in 28 states in U.S.
| Analysts' Targets | |
| Jesup & Lamont | $51 |
| Buy | |
| Thursday, April 15, 2010 | |
| McAdams, Wright & Ragen | $42 |
| Buy | |
| Tuesday, February 23, 2010 | |
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