A rough fourth quarter at high-end department store operator Nordstrom (NYSE:JWN) sent the stock price down from 52-week highs. But ignoring myopic analyst estimates and whether a company meets or misses quarterly expectations, Nordstrom is a bona fide success story in upscale retailing. And with only 155 stores in 27 states, it has further room to run. Below is an overview of what to expect during tomorrow's first-quarter earnings release.

What analysts say:

  • Buy, sell, or waffle? Twenty-one analysts currently follow Nordstrom. Seven are bullish, and 14 are on the fence with hold ratings.
  • Revenues. Sales are a foregone conclusion as Nordstrom already released preliminary figures.
  • Earnings. Analysts project earnings are $0.56 per share, or 16.7% growth from last year's $0.48.

What management says:
On May 10, Nordstrom reported preliminary first-quarter sales of $1.95 billion, or 9.3% growth from last year's quarter. It also announced preliminary same-store sales growth of 9.5%, continuing an impressive run of comp improvements.

For the entire fiscal year, management expects 3%-4% comp growth, with an immaterial impact from a 53-week year in fiscal 2006. It is calling for higher comp growth during the third quarter (4%-5%), followed by the fourth (2%-3%), then second quarter (1%-2%).

What management does:
Consumers have been increasingly embracing high-end retailers such as Nordstrom, privately-held Neiman Marcus, Tiffany (NYSE:TIF), Coach (NYSE:COH), and Saks (NYSE:SKS). Fashion definitely pays as Nordstrom has been able to post some of the best margins in retailing.

Margins

10/05

1/06

4/06

7/06

10/06

2/07

Gross

38.9%

39.2%

39.5%

39.7%

40.2%

40.4%

Operating

11.5%

12.2%

12.4%

12.8%

13.3%

13.9%

Net

6.7%

7.1%

7.4%

7.6%

7.7%

7.9%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
 Couture shopping trends and better inventory management have allowed Nordstrom to leverage single-digit sales gains to 40% annual improvements in earnings over the past five years. Cash flow growth has been equally impressive, rising more than 30% each year over this time frame. Trends over the past couple of years are equally attractive, and sales growth is picking up; Nordstrom just announced plans to open a namesake store in Sarasota, Fla., and a Nordstrom Rack discount store in Dallas.

Nordstrom shows little sign of slowing, but investors can reasonably expect a period of disappointing same-store trends as upscale fashion is extremely hit-or-miss. Judging by preliminary first-quarter results, last quarter's comp miscue was a blip on the radar screen, but look for more insight tomorrow after the market close.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. The Fool has an ironclad disclosure policy. Feel free to email him with feedback or to discuss any companies mentioned.