Nordstrom shares may rise to new highs-Barron's

NEW YORK, Sept 16 Sun Sep 16, 2012 10:34pm IST

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NEW YORK, Sept 16 (Reuters) - Shares of U.S. high-end retailer Nordstrom could hit new heights, spurred by double-digit growth of its online business and its popular lower-priced Rack chain, Barron's financial weekly said on Sunday.

The Seattle-based company's stock including dividend could return another 15 percent in the next 12 months and rise to $75 in two years, Barron's said.

On Friday, Nordstrom's shares closed at $57.56, near their all-time high, after rising 26 percent in the past year.

"Thanks to a wave of hefty investments, Nordstrom is becoming a leader in e-commerce, and it's about to embark on an even more aggressive strategy for its 39-year-old Nordstrom Rack discount chain," the weekly paper said.

Nordstrom's Internet sales have grown three consecutive quarters at a more than 35-percent clip, exceeding the forecast growth of 12 percent for the industry, Barron's said, citing figures from Forrester Research.

Online business accounted for 10 percent of Nordstrom's overall sales and was expected to total $11.9 billion in the fiscal year ending in January, the paper said.

To be sure, increased investment on technology for its Internet venture has eroded its operating profits. The operating profit margins fell almost 2 percentage points in the July quarter to a three-year low, Barron's said.

Nordstrom plans to invest $1 billion, or a third of capital expenditures, into e-commerce over the next five years, it said.

Another source of growth for Nordstrom has come from the Rack, whose 113 stores made up 20 percent of total sales through the first half of the year.

Nordstrom's plans to operate at least 230 Rack outlets by 2016, Barron's said.

Separately, it is expected to open a flagship store in New York City in 2018.

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