Window-shopping retail stocks this week has been almost as fun as a trip to the mall. Watching the variations among some of the biggies in retail has been an interesting examination of the economic recovery and what's working for shoppers and the retailers that seek to attract them. As has been a strong trend, luxury retailers have done particularly well, and it looks like Nordstrom
Last night, Nordstrom reported that earnings zoomed 153%, with its first-quarter numbers at $68.7 million, or $0.48 per share. Overall, the retailer's sales increased 16.6% to $1.5 billion, with same-store sales up an impressive 13.2%, much higher than the 4% to 6% increase the company had anticipated.
It's a big difference from last year, when the retailer reported a soft selling environment and cutthroat competition. In the first quarter the year before that, Nordstrom reported a loss.
So, Nordstrom is looking like a turnaround story. As has been the case with many retailers over the last several weeks, sales at Nordy's were brisk enough that it didn't have to slash the prices on too much merchandise. That helped gross profit increase by 320 basis points.
While Nordstrom is known for excellent customer service to increase shopping loyalty -- spurring one reader to write in that "Nordstrom does it better than anyone else" compared with other shopping venues that we've examined over recent weeks -- there are other things at work here as well. The retailer has grabbed hold of technology to get a better handle on inventories, as well as trends.
Knowing what works is a powerful advantage. In other words, Nordstrom was able to know the popularity of sizes and colors, what items were more sluggish and needed markdowns, and what items were flying off the racks and needed to be reordered to meet demand.
While there's been a slew of exciting retail earnings reports recently -- Saks
Nordstrom shares gained nearly 6% in recent trading. With a forward P/E of 16, Nordstrom still comes across as a pricier bet than Federated. However, Nordstrom, with its technological improvements and its continued focus on customer service, may bear a watchful eye.
Alyce Lomax does not own shares of any of the companies mentioned.