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Nordstrom Inc. (JWN - Analyst Report) has decided to shutter its 33,000 square feet Rack store at Long Beach City Place in Long Beach, Calif. After enjoying nearly 12 years of patronage from the customers of Long Beach, this store will cease to operate from late Jan 2014, due to the expiry of the lease of this store.

However, Nordstrom highlighted that their patrons will receive continued services from the three nearby Nordstrom Rack stores located at Lakewood, South Bay and Edinger. Moreover, the company hinted that it looks forward to a comeback with a more promising location to provide better service.

Further, the company indicated that its employees at the City Place store will be absorbed into the three nearby Rack stores based on their eligibility and potential. However, for employees unwilling to take up jobs in these stores, the company has offered a severance package.

Nordstrom’s Rack stores generally offer merchandise from Nordstrom stores and Nordstrom.com at a significantly reduced price to customers. Products at these stores are sold with discounts of roughly 50% to 60% from the original Nordstrom tags. Nordstrom Rack also carries a vast assortment of branded apparel, accessories and shoes that are available at Nordstrom stores, and are offered to customers at a discount of about 30% – 70%.

Nordstrom offers a broad array of over 500 brands, targeted toward the whole family, through a strong nationwide network of more than 240 stores situated across 31 states. Nordstrom through its globally recognized brands caters primarily to the upscale segment, enabling it to generate high margin revenue. The company also appeals to its consumers by offering a more inclusive selection of quality merchandise, which further distinguishes it from other mall-based department store retailers.

We believe Nordstrom’s sustained focus on expanding its store network along with enhancing online sales and consumer retention strategies will boost its top line and profitability. Nordstrom is poised to continue its store expansion strategy in the years ahead, targeting to double the number of Rack stores to more than 230 by 2016, with roughly 24 openings in 2013 and more than 30 in 2014. Currently, the company is left with 14 more Rack openings over the rest of 2013.

As of Jun 17, 2013, Nordstrom operated 248 stores, including 117 Nordstrom full-line stores, 127 Nordstrom Racks, 2 Jeffrey boutiques, 1 treasure&bond store and 1 clearance store.

Nordstrom currently maintains a Zacks Rank #4 (Sell). Other stocks that are performing well in the retail-apparel/shoe sector include Fossil Group Inc. (FOSL - Analyst Report), Stein Mart Inc. and Gap Inc. (GPS - Analyst Report), all of which carry a Zacks Rank #2 (Buy).

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