Nordstrom, Inc. (JWN Quick QuoteJWN - Free Report) appears encouraging on the back of the successful execution of its strategic initiatives and strong fundamentals. The company is undertaking efforts to drive efficiency and improve customer experience via faster order fulfillment. It is focused on its long-term strategy, which builds on its market strategy to capitalize on its digital-first platform to serve customers better, gain market share and deliver profitable growth.

Buoyed by such endeavors, the apparel retailer’s shares have increased 31.9% in the past three months, surpassing the industry’s 20.6% growth. Impressively, analysts seem optimistic about the stock. The Zacks Consensus Estimate for fiscal 2023 earnings per share (EPS) is currently pegged at $2.06, showing an increase of 21.9% year over year.

Deeper Analysis

The company remains focused on improving the Nordstrom Rack banner. Rack banner also remains on track to increase productivity throughout its network, reduce transportation costs and reduce delivery times and enhance services via faster delivery. The company continues focusing on introducing more premium brands at Rack, better assortment and increased brand awareness.

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During the third quarter of fiscal 2023, Nordstrom opened 11 Rack stores and one early in the final quarter, bringing the total to 19 stores.  The timing shift of the Anniversary Sale had impacted positively on Nordstrom banner, contributing about 300 basis points to the quarterly sales. Going ahead, it intends to roll out to more markets.

The company is focused on three areas — winning in the most important markets, expanding the reach of Nordstrom Rack and enhancing its digital capabilities. Also, it remains focused on the closer-to-you strategy, which aims to link stores and services to expedite deliveries, expand online offerings and add cheaper merchandise at its Rack off-price stores to improve customers' shopping experiences. Increased focus on distribution capabilities and improved connectivity of physical and digital inventory are likely to contribute to Nordstrom Rack sales by roughly $2 billion in the long term.

As part of the strategy, Nordstrom issued a long-term outlook earlier. Management had projected revenues to grow low single-digits on an annual basis, with operating income likely to outpace revenues in the long term. EBIT margin is expected to be more than 6%, with annual operating cash flow anticipated to be more than $1 billion.

Given all the positives, Nordstrom is well-placed for growth in 2024. A Value Score of B for this current Zacks Rank #3 (Hold) company further speaks volumes.

Eye These Solid Picks

We have highlighted three other top-ranked stocks, namely Abercrombie & Fitch (ANF Quick QuoteANF - Free Report) , Gap and Hibbett .

Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 13.3% from the year-ago reported figure. ANF delivered an earnings surprise of 713% in the last reported quarter.

Gap, a fashion retailer of apparel and accessories, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 137.9%, on average.

The Zacks Consensus Estimate for Gap’s current financial-year EPS suggests growth of 387.5%, from the year-ago reported figure.

Hibbett, the key sporting goods retailer, currently sports a Zacks Rank of 1. HIBB delivered an earnings surprise of 24.2% in the trailing four quarters.

The Zacks Consensus Estimate for Hibbett’s current financial-year sales suggests growth of 1.7% from the year-ago reported figure.