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Nordstrom Inc. (JWN - Analyst Report), a leading Seattle-based fashion specialty retailer, has decided to move to a larger space within the Ward Centers in Honolulu. The company will move from the current 34,000 square feet Nordstrom Rack store at Ward Center to a two-level 45,000 square feet store in Phase Two of Ward Village Shops within Ward Centers.

The Ward Village Shops development is intended to bring new life to the Ward Center, which is located in the heart of the Kaka'ako district and close to Waikiki. The new Nordstrom Rack store will face the Auahi Street, connecting to the seventh level parking deck, which houses over 700 stalls. Dallas, Texas-based The Howard Hughes Corporation is the owner of the Ward Center in Honolulu.

Nordstrom first stepped into Honolulu in 1966 by opening shoe departments in Liberty House locations all over the island. Currently, the company has a full-line store, covering an area of 200,000 square feet, at Ala Moana Center, near its current Rack store location.

Nordstrom Rack stores generally offer merchandises that are in vogue from Nordstrom stores and at a significantly reduced price to customers. Products at these stores are sold at a discount 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% to 70%.

Nordstrom’s latest store openings signify the company’s commitment to expand its store network with the aim of driving top-line growth. As of September 25, 2012, Nordstrom operated 117 Nordstrom full-line stores, 113 Nordstrom Rack, 2 Jeffrey boutiques, 1 treasure&bond store and 1 clearance store, thus bringing the total store count to 234.

Moreover, the company has targeted to open 16 new stores in fiscal 2012 consisting of 1 full-line store and 15 Nordstrom Rack Stores. The company has also planned to add 24 new Rack stores in fiscal 2013 and intends to operate 230 Rack stores by the end of 2016.

Amidst these positive factors, Nordstrom faces intense competition from other well-established players in the specialty retail sector such as The Gap Inc. (GPS - Analyst Report), Limited Brands Inc. and Abercrombie & Fitch Co. (ANF - Analyst Report). Competitive pressure within the retail space may force the company to reduce its sales price, bringing down its margins.

Nordstrom currently maintains a Zacks #3 Rank, which translates into a short-term Neutral rating. However, our long-term recommendation on the stock remains Neutral.

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