Nordstrom (JWN - Free Report) opened its first Nordstrom Local store in New York today, expanding its store portfolio. The company previously had three Nordstrom Local shops open in Los Angeles, California. The new Local store debuted in Manhattan on the Upper East Side, and the company is planning on opening an additional Local store in the West Village neighborhood on September 27th.
The Nordstrom Local stores are unique because they are small in size, offer personal styling services and alterations, and are a hub for picking up online orders. Consumers can order items to be shipped to the local store for them to try on in person and purchase that day if they want to. These stores are the latest initiative to expand Nordstrom’s online presence and adapt to the conventional consumer needs. Co-President Erik Nordstrom expressed his optimism about engaging and serving consumers on their own terms and that Local stores are an attempt to see what resonates with today’s consumer.
Erik Nordstrom went on to state that people who visit a Nordstrom Local store spend 2.5X more than people who visit a regular Nordstrom location. He also stated that the consumers who use their alteration services spend 3X as much as the regular Nordstrom store consumer. The company is also hoping that their new Nordstrom Local stores will be able to lure in new customers through their services like shoe and handbag repair and gift wrapping.
Trouble in the Industry
Nordstrom has not been immune to the decline in sales that department retail stores have suffered. In the company’s previous earnings report, the company’s full-price stores fell 6.5% while its off-price store sales slipped by 1.9%. As a result, the department store giant slashed its financial guidance for the current fiscal year. Department stores as a whole have been facing immense pressure from brands who are opting to open their own stores rather than relying heavily on their wholesale partners. Macy’s (M - Free Report) and Kohl’s (KSS - Free Report) have also fallen victim to this trend and are both looking for ways to revitalize sales.
Nordstrom is also a company within an industry that imports heavily from China, making it highly susceptible to the ongoing trade war. Investors became more optimistic today as the US and China agreed to resume their talks in hopes of agreeing on a trade deal. Nordstrom is struggling to stimulate growth, and tariffs would only further complicate matters for the company. Furthermore, mixed macroeconomic signals do not bode well for the company. Nordstrom’s full-priced stores are already struggling to spark growth and a potential recession would be the last thing it needs right now.
Nordstrom is currently sitting at a Zacks Rank #3 (Hold) and has plummeted over 33% YTD. Q3 consensus estimates call for earnings to be on par with the year ago quarter and for sales to drop 2.76% to $3.64 billion. Looking ahead to their full fiscal year projections, estimates forecast earnings to stumble 5.92% and for revenue to fall 3.16% to $15.36 billion. The company is hoping their new Nordstrom Local stores can give them the kick start they need to start moving in the right direction. Tariffs and economic contractions continue to be headwinds for the company.
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