Nordstrom Incorporation is a company based in the United States. The company operates a chain of retail stores where the company sells clothing and apparel products. The company operates over 350 stores in the United States and Canada. The company was founded in 1901.
Why You Should Not?
- Nordstrom is a great reopening play in an investor’s portfolio. The company continues to see higher demand for its products as people go back out again. This (along with higher incomes) is what caused Nordstrom to report good results. This will benefit the company’s recovery and will also benefit investors.
Why You Should?
- The company faces tough competition in the clothing and retail industry. Some of these competitors include Amazon, Walmart, Lululemon, Nike, GAP, and many others. This competition might hurt the company and its investors in the future.
- The COVID-19 pandemic reduced the demand for clothes and apparel as people stayed indoors and saw a drop in incomes. The pandemic also caused the company to shut down some of its stores and also saw some supply chain issues. This hurt the company’s results in the short to mid-term and also hurt the company’s long-term growth. This also hurt investors.
- Nordstrom relies on sales from its brick-and-mortar stores in malls and other shopping centers. Malls have been on a downturn even before this pandemic happened. Because of the company’s strong reliance on sales from these stores, the company might see its sales fall in the long term. This hurts investors in the company as well.
- The company has been late to develop its e-commerce platform. This caused the company to report slower sales growth over the past couple of financial years as people (especially younger consumers) shifted to online shopping. A weak e-commerce development also caused the company to get passed by competition like Amazon, Walmart, Target, and many others.
- Nordstrom is also a non-essential retailer as they sell products that are non-essential to maintain a high quality of life. This will cause the company to get crushed during a recessionary time when people are not purchasing expensive clothing and apparel. This would also hurt investors in the company.
- In my opinion, there are better retail stocks to invest in due to the reasons mentioned above. I would recommend researching companies like Nike, Lululemon, Amazon, Walmart, and Target, The last 3 are recession-proof investments and also sell good quality clothes. The former 2 are great investments due to solid e-commerce and it is unlikely they will go bankrupt during a downturn.
I do not think that Nordstrom is a great long-term investment due to tough competition, negative impacts from the pandemic, its reliance on brick-and-mortar store sales, weak e-commerce development, its position as a non-essential retailer, as well as better retail stocks to invest in. However, the company is a decent reopening play in an investor’s portfolio.