Nordstrom Inc. (JWN)

Michael Dietrich11/2/11

Business Summary

• Retailer that offers apparel, shoes, cosmetics, and accessories for men and women.

• 222 stores. 117 full line stores, 101 Nordstrom Racks, 2 Jeffrey boutiques, 1 treasure and bond store, and 1 clearance store.

• 90% revenue comes from its retail stores, the other from website, catalog, and private label credit card.

Key Statistics

• Recent Price: $50.52 Div.& Yield: .92 (1.80%)

• Fair Value: $43.00• Consider Buy: $25.80• Consider Sell: $66.70• Market Cap: $10.69B• P/E (ttm): 16.71• EPS (ttm): 3.01

Key Statistics Cont.

1 Year Chart

5 Year Comparative Chart

Stock ChecklistCriteria Requirements: Company Industry Good / BadSolvency and Financial Leverage Ratios: 3.69 Current Ratio > 1 1.85 2 goodDebt Ratio < Industry Average 139.89 29.19 badEfficiency Ratios: Total Asset Turnover > Industry Average 1.36 1.36 goodInventory Turnover > Industry Average 5.62 5.05 goodProfitability Ratios: Net Profit Margin > Industry Average 6.38 7.21 badReturn on Asset (ROA) > Industry Average 9.87 12.01 badReturn on Equity (ROE) > Industry Average 35.06 19.88 goodGrowth Ratio (5 years): Historical EPS Growth > Industry Average 6.77 11.36 badHistorical Revenue Growth > Industry Average 4.66 11.72 badProjected EPS Growth >10%* and > industry Average 6.77 11.36 badOther Informative Data:

P/E 16.64 22.17 P/B 5.37 4.29 PEG 1.2 N/A Fair Value Estimate Current Price (10/17/2011) Purchase Price Dividend $0.76 Dividend Yield >2%** 1.83% 2.16

SWOT (Strengths)

• They have managed inventory levels during the economic downturn

• Added an IT department• Online sales continue to grow

SWOT(Weakness)

• Credit card business adds an element of risk for the company

• Sells mainly discretionary goods, exposed to economic swings

SWOT(Opportunities)

• 122 stores domestically so still room for expansion

• Mobile check out devices

SWOT(Threats)

• High competition• Saks offers affordable luxury items• Macy’s upgrading its merchandise assortment• Consumer Spending (cyclical)

Wall St. Recommendations

Morningstar Recommendations

• Buy: 12• Outperform:2• Hold: 5• Underperform: 0• Sell: 1