Stores added in fiscal 2015
In fiscal 2015, Nordstrom (JWN) opened two full-line stores in the US and 27 off-price Nordstrom Rack stores. The company also opened two full-line stores in Canada, including its first international flagship full-line store in Vancouver, British Columbia.
The company ended fiscal 2015[1. Ended January 30, 2016] with 118 full-line stores in the US, three full-line stores in Canada, and 194 Nordstrom Rack stores in the US. The company also operates eight other stores in the US, including Trunk Club clubhouses, Jeffrey boutiques, and Last Chance.
Nordstrom Rack to be in focus
In fiscal 2016, Nordstrom plans to open three new full-line stores and 20 new Nordstrom Rack stores. The company also plans to relocate one full-line store and two Nordstrom Rack stores in fiscal 2016. The three new full-line stores include one full-line store in Austin, Texas, and two full-line stores in Toronto, Ontario.
Nordstrom constitutes 0.3% of the Consumer Discretionary Select Sector SPDR ETF (XLY).
Nordstrom continues to focus on the expansion of its off-price Rack stores. Most of the planned Rack stores are scheduled to be open in fall 2016. Off-price retailers like TJX Companies (TJX) and Ross Stores (ROST) have been performing better than department stores. Off-price retailers sell similar merchandise at deep discounts compared to department stores. Both TJX Companies and Ross Stores have an extensive store network, strong supplier relationships, and efficient inventory management. The US consumers, who continue to be cautious about their discretionary spending, are looking for bargains offered by off-price stores.
Aside from Nordstrom, other department stores looking for expansion in the off-price space include Macy’s (M) and Kohl’s (KSS). Macy’s opened its first off-price Macy’s Backstage store in 2015. The company revealed its expansion plans for Macy’s Backstage in November 2015. Kohl’s also made a debut in the off-price space in 2015 through its Off-Aisle by Kohl’s store in Cherry Hill, New Jersey.
Rack to go international
On February 16, Nordstrom announced its plan to open a Nordstrom Rack store at One Bloor in Toronto, Ontario, Canada. The 38,600-square-foot Nordstrom Rack store is scheduled to open in 2018. Aside from locations in the US, off-price retailer TJX Companies has a presence in Canada, Europe, and Australia. However, off-price retailers Ross Stores and Burlington Stores (BURL) lack an international presence.
We’ll discuss Nordstrom’s stock price movement and fiscal 2016 outlook in the next two parts of this series.