High-end department store chain Nordstrom
This non-reaction is in part because Nordstrom is working from an easy comparison; a year ago, investors thought that the financial world was ending, and consumers that normally frequented Saks
Management has done a great job of righting its ship. In 2009, the company broadened its price range of the goods that its sells in order to keep customers coming in the door, and it avoided major mark-downs by responding to the downturn faster than its competitors. However, its recovery is now in the past. The company is particularly cautious on the second half of 2010.
Looking forward, the company offers a cautious but positive outlook for the coming year, predicting same-store sales will increase by 2% to 4%, and that earnings per share will fall between $2.35 to $2.55, putting forward P/E at around 15.
I don't think that makes Nordstrom cheap. From a top-down standpoint, the high-end retail market is not what it used to be. As industry execs have noted, retailers and manufacturers of luxury goods do not expect a quick return to the good old days of 2007, when Nordstrom had a share price approaching $60.
And consulting group Bain & Co., in its periodic report on luxury items, recently forecast that luxury goods sales would not return to "normal" until 2011 or 2012, at the earliest. Taking this into consideration, Goldman Sachs
I have to agree that the easy money has been made with Nordstrom. Until U.S. unemployment rates fall or American consumers somehow de-leverage, Nordstrom will see only modest improvements.
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