International Expansion and Consumer Incentives Signal Long Play in Nordstrom

By Andrew Keene  FEB 21, 2013 2:07 PM

Though the stock has underperformed the market thus far in 2013, we should see solid gains throughout the year if bullish forecasts hold true.

 


Nordstrom (NYSE:JWN), the Seattle-based upscale department store and retail icon, is expected to report earnings per share of $1.34 on revenue of $3.69 billion.
 
In January, Nordstrom reported a revenue increase of 11.4% for stores open one year or longer, which was nearly double analysts expectations of 6%. The affluent clientele that compose Nordstrom's customer base tend to be less impacted by higher payroll taxes and more impacted by equity performance. Though the stock has underperformed the market thus far in 2013, we should see solid gains throughout the year if bullish forecasts hold true.
 
Nordstrom has also set its sights further north, partnering with Canadian retail developer Cadillac Fairview to open stores in Ottawa, Vancouver, Calgary, and Toronto. The company is also working to launch stores in Britain under the Topshop and Topman brands.
 
The company is growing its Web business as well, offering free shipping on all purchases made online, whereas previously customers had to spend $200 or more to qualify.
 
In recent quarters, the stock has remained relatively unchanged on earnings. I like this trade because I make money if the stock stays relatively flat.
 
My Trade: Sell 55-52.5 bull put spread
Risk: $150 per 1 lot
Reward: $100 per 1 lot
Breakeven: $54.00

No positions in stocks mentioned.