Nordstrom: Credit Suisse's Department Store MVP?

Credit Suisse's Michael Exstein maintained a Neutral rating for Nordstrom, Inc. JWN, with a price target of $55. He believes the company is the best positioned to compete for emerging brands.

“We have compiled a proprietary list of "MVP" malls ("Most Valuable Properties") by looking at which malls contain a selection of high-end key complementary tenants. We think these "MVP" malls have high productivity and continue to drive traffic,” analyst Michael Exstein wrote.

Why Nordstrom Is Best Positioned

Nordstrom is a selective distribution point for emerging brands since 62 percent of its locations are in MVP. The company already has a leading position in offering emerging brands, distributing “6 of the key 33 "online-born" brands identified by the softlines team, including Bonobos and Baublebar,” Exstein commented.

Moreover, Nordstrom is a leader in other emerging brands that have “previously been primarily direct-to-consumer through their own stores/e-commerce sites, such as Topshop, Brooks Brothers, Brandy Melville, and Peek Kids,” the analyst mentioned.

A larger portion of business will be conducted in the ecommerce influenced environment. Exstein said, however, that most of retail would continue to be conducted in stores. He pointed out that a retailer may no longer be an attractive point of distribution solely based on its gross number of locations. Instead, selective distribution around MVP malls “could become the new paradigm.”