Nordstrom Executive Summary
In 1901, Nordstrom was originally founded as a retail store for shoes. The business emphasized exceptional service, selection quality, and value. After twenty-two years of success a second store was added. Eventually, Nordstrom became the largest independent shoe chain in the United States, including fashionable clothing and accessories for men, women, and children in its stores. As of the end of 2016, Nordstrom is one of the top luxury retailers and currently operates 323 stores in 29 states as well as two full-service stores in Canada. Additionally, a mobile app is also available to search the Nordstrom online store. This paper will explore the financial health of Nordstrom for 2014, as compared to the previous year of 2013, and also
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Nordstrom’s gross profit rates were both 36% in 2013 and 2014, which means for every dollar of net sales, Nordstrom has 36% in gross profit to pay its expenses in those years. Nordstrom therefore can reduce its selling price by 36% of original price without any loss. On the other hand, Macy’s has a higher gross profit rate in 2014, which is 40%. This means that Macy’s is more sufficient in covering its expenses than Nordstrom. From 2013 to 2014, Nordstrom’s earnings per share ratio increased by 2 cents. Accordingly, Nordstrom has a higher return on assets ratio than Macy’s; however, its earnings per share and gross profit rate are both lower than Macy’s. These results give reasons for Nordstrom to improve its profitability, because it does not have outstanding profitability ratio results. Using profitability ratios as our point of perspective, Nordstrom is not recommended for investors.
Current Ratio
Nordstrom
2014 = 5224/2800 = 1.87
2013 = 5228/2541 = 2.01
Macy’s
2014 = 8697/5536 = …show more content…
Nordstrom can liquidate $18 from cash by operations while Macy’s can only liquidate $17. As the difference in the ratios demonstrates, Nordstrom seems to be better in sustaining and maintaining its business, as opposed to Macy’s. Nordstrom does financially average in running its corporation after evaluating its overall performance based on its annual report and a comparison to its competitor Macy’s. However, despite being named a top luxury store, Nordstrom still shares a number of risk factors as indicated from its declining net income and increase in debt.
Although Nordstrom is much preferable to investors over Macy’s due to a better liquidity ratio, inventory turnover ratio, effective inventory control, and frequent sales, there is no denying that the debt-reliance of this retail company is still measurable high. Nordstrom does not have the adequate solvency needed to pay off its debt if an unfavorable situation was to occur and net loss was incurred instead. Thus, an investment into Nordstrom is not highly advised do to its declining overall financial
Nordstrom’s gross profit rates were both 36% in 2013 and 2014, which means for every dollar of net sales, Nordstrom has 36% in gross profit to pay its expenses in those years. Nordstrom therefore can reduce its selling price by 36% of original price without any loss. On the other hand, Macy’s has a higher gross profit rate in 2014, which is 40%. This means that Macy’s is more sufficient in covering its expenses than Nordstrom. From 2013 to 2014, Nordstrom’s earnings per share ratio increased by 2 cents. Accordingly, Nordstrom has a higher return on assets ratio than Macy’s; however, its earnings per share and gross profit rate are both lower than Macy’s. These results give reasons for Nordstrom to improve its profitability, because it does not have outstanding profitability ratio results. Using profitability ratios as our point of perspective, Nordstrom is not recommended for investors.
Current Ratio
Nordstrom
2014 = 5224/2800 = 1.87
2013 = 5228/2541 = 2.01
Macy’s
2014 = 8697/5536 = …show more content…
Nordstrom can liquidate $18 from cash by operations while Macy’s can only liquidate $17. As the difference in the ratios demonstrates, Nordstrom seems to be better in sustaining and maintaining its business, as opposed to Macy’s. Nordstrom does financially average in running its corporation after evaluating its overall performance based on its annual report and a comparison to its competitor Macy’s. However, despite being named a top luxury store, Nordstrom still shares a number of risk factors as indicated from its declining net income and increase in debt.
Although Nordstrom is much preferable to investors over Macy’s due to a better liquidity ratio, inventory turnover ratio, effective inventory control, and frequent sales, there is no denying that the debt-reliance of this retail company is still measurable high. Nordstrom does not have the adequate solvency needed to pay off its debt if an unfavorable situation was to occur and net loss was incurred instead. Thus, an investment into Nordstrom is not highly advised do to its declining overall financial