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Leading fashion retailer, Nordstrom Inc. (JWN - Analyst Report) seems to be on an expansion spree, as the company announces its plans to open two more Nordstrom Rack stores, one in Cleveland, Ohio; and the other in downtown Chicago, Illinois.
Nordstrom’s new Rack store towards the west side of Cleveland, positioned at the Promenade in Crocker Park, will be the company’s second Rack store in Cleveland. Enclosing a store space of about 34,000 square feet, the new store will replace the Borders Books space at Crocker Park. A lifestyle center, the Crocker Park, is owned by Stark Enterprises and already houses leading retailers and restaurant chains like Bed Bath & Beyond Inc. (BBBY - Analyst Report), H&M, Trader Joe's, Victoria's Secret and The Cheesecake Factory Inc. (CAKE - Analyst Report).
The company currently operates a full-line store in the Beachwood Place and a Nordstrom Rack at Legacy Village in the east side of Cleveland. The company’s Crocker Park store scheduled to open to public in fall 2013, will be the company’s inaugural store in the west side of Cleveland.
Nordstrom’s second announcement marks the opening of the company’s third Rack store in downtown Chicago, where it already operates stores at the Chicago Avenue and State Street. Located a few miles from these stores, the company’s new two-level Rack store at Collection Anex in Chicago's Lincoln Park neighborhood will be spread over an area of 40,000 square feet. The new store will be located right across the street from Whole Foods Market Inc. (WFM - Analyst Report) and adjoining to The North Avenue Collection, which houses top brands like Banana Republic, J.Crew and Victoria's Secret. Nordstrom’s new Chicago showroom is expected to begin operations in spring 2014.
Additionally, the company has four full-line stores in business in the greater Chicago region including the store on Michigan Avenue.
Nordstrom’s Rack stores generally offer merchandise that are in trend 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% 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 October 9, 2012, Nordstrom operated 117 Nordstrom full-line stores, 116 Nordstrom Racks, 2 Jeffrey boutiques, 1 treasure&bond store and 1 clearance store, thus bringing the total store count to 237.
Moreover, the company has targeted to open 16 new stores in fiscal 2012 consisting of 1 full-line store and 15 Nordstrom Rack Stores. Additionally, the company has planned to add 24 new Rack stores in fiscal 2013 and intends to operate 230 Rack stores by the end of 2016.
Nordstrom currently maintains a Zacks #2 Rank, which translates into a short-term Buy rating. However, our long-term recommendation on the stock remains Neutral.