Nordstrom’s Same-Store Sales Growth Is Strongest in the Sector
What Do Recent Retail Indicators Say about the Retail Sector?
Recent performance
Department stores are retail stores offering a wide range of consumer goods for customers of all ages. Their importance in the retail industry is immense, so Wall Street always has an eye on the organic growth of sales in this sub-sector. An increase in traffic at these stores indicates that consumers are more willing to spend on discretionary items.
In their recent earnings releases, large department stores like Macy’s (M) and Kohl’s (KSS) have disappointed Wall Street with their below average same-store sales growth. Nordstrom offered relief to department store investors when it was able to beat the consensus by a respectable margin. Same-store sales for Macy’s (M) fell by 1.5%, whereas Kohl’s (KSS) same-store sales fell by 1.3% in the recent quarter.
Nordstrom (JWN) on the other hand stood out with an increase of 4.9% in same-store sales. Nordstrom was able to achieve this growth by substantially reducing its price per basket of goods and by introducing discounts and offers that lured in customers. Consumers have become very price conscious and are favoring products that are offered at competitive prices.
In the chart above, we can see how the three departmental stores have fared recently. Nordstrom (JWN) increased its earnings while the other two companies saw their stock falling due to falling organic growth of the companies.
Nordstrom (JWN), Kohl’s (KSS), and Macy’s (M) are part of the SPDR S&P Retail ETF (XRT) with weights of 1.01%, 1.14%, and 1.07%, respectively. Sears (SHLD) is another department store that is part of the XRT ETF.
Browse this series on Market Realist: