Judging by recent trends, department stores such as Macy's (NYSE:M) and Sears Holdings (NASDAQ:SHLD) are struggling to grow top-line sales. Even almighty Wal-Mart (NYSE:WMT) is hurting here at home and in certain international markets. Perhaps they should look to tap more snob appeal, which is a key reason Nordstrom (NYSE:JWN) is posting some of the best numbers in the industry. Its second-quarter results, to be reported tomorrow, should be no exception; here's what to expect.

What analysts say:

  • Buy, sell, or waffle? Twenty-one analysts follow Nordstrom. Ten are bullish, while the rest have a hold rating on the stock.
  • Revenue. Analysts on average expect $2.4 billion in second-quarter sales, or about 6% more than last year's second-quarter sales amount.
  • Earnings. Analysts project quarterly earnings of $0.70, for 5% growth over last year's quarter.

What management says:
Back when Nordstrom released first-quarter results, it projected second-quarter same-store sales growth of 1% to 2% and earnings of $0.62 to $0.65, including $0.08 in adjustments from a sales timing shift, receivables transaction, and settlement with MasterCard (NYSE:MA) and Visa last year. For the full year, management is calling for 3% to 4% comps growth and earnings of $2.81 to $2.90, which includes a number of similar adjustments.

What management does:
Nordstrom is only getting stronger because margins are steadily improving. Better yet, annual sales growth recently hit double digits, and earnings and cash flow continue to be impressive. The stellar performance has resulted in a return on invested capital better than 20% as of late, which is as high as Nordstrom has ever posted.

Margins

1/06

4/06

7/06

10/06

2/07

5/07

Gross

39.2%

39.5%

39.7%

40.2%

40.4%

40.5%

Operating

12.2%

12.6%

12.8%

13.3%

13.9%

14.0%

Net

7.1%

7.4%

7.6%

7.7%

7.9%

8.1%
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:
I'm usually wary of hopping on board a company that is firing on all cylinders, but the market malaise has sent Nordstrom shares back toward their 52-week lows. On a forward P/E basis, that puts the stock at a reasonable 16. For comparison purposes, high-end archrival Saks (NYSE:SKS) is trading at close to 40 times forward expectations, meaning Nordstrom is trading closer to middle-market peers such as Sears and Kohl's (NYSE:KSS), with Kohl's also set to report results tomorrow. Barring a near-term fashion faux pas, Nordstrom is definitely worth trying on for size.

For more related Foolishness:

Wal-Mart and MasterCard are Inside Value recommendations. What is Wall Street overlooking now? Take a free 30-day trial to learn more.

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