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Nordstrom Rack A Demonstration Of Retail's Perseverance Amid Department Store Chaos

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Nordstrom Rack A Demonstration Of Retail's Perseverance Amid Department Store Chaos

Nordstrom, Inc. (NYSE: JWN) shares were left reeling despite a first quarter that saw a beat on both the top and bottom lines.

The department store, often viewed as one of the strongest company’s in a struggling retail environment, fell over 11 percent on Thursday.

While comp sales fell 2.8 percent at the company’s flagship stores, a bright spot for Nordstrom was at its discount retail store Nordstrom Rack, which saw an impressive 8.7 net sales increase and a 2.3 increase in comps. Online sales made up 24 percent of total sales in the quarter.

The figures in Nordstrom Rack's growth represents a bigger consumer shift into discount retailers, a trend seen for the past several quarters. Currently, the company operates nearly twice as many Nordstrom Rack stores compared to full-line stores.

Department Store Performance YTD

  • Macy’s Inc (NYSE: M): -32.92 percent.
  • Nordstrom: -12.21 percent.
  • TJX Companies Inc (NYSE: TJX): +4.37 percent.
  • J C Penney Company Inc (NYSE: JCP): -42.3 percent.
  • Sears Holdings Corp (NASDAQ: SHLD): +2.8 percent.
  • Ross Stores, Inc. (NASDAQ: ROST): -1.31 percent.
  • Burlington Stores Inc (NYSE: BURL): +20.38 percent.

U.S. Retail Spending Increases Amid Brick & Mortar Downfall

While brick-and-mortar traffic has been the weakest since the 1970s, “The company owns the best house on a block,” according to analysts at Gordon Haskett.

The decline of traditional department stores does not necessarily gauge the overall health of the retail industry, these brands have just been some of the most affected by the rise of e-commerce spending.

According to a report from Bloomberg, the U.S. retail industry is actually growing.

“The retail industry does go on, even if its biggest players change,” wrote Bloomberg reporter Shelly Banjo.

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Image Credit: By Phillip Pessar from Miami, USA (Nordstrom Rack) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

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