Ahead Of The Bell: Nordstrom Rises On Upgrade

NEW YORK (AP) — Lean inventories, contained costs and improving sales should propel profit growth at Nordstrom Inc., said a Deutsche Bank analyst Monday, upgrading the high-end department store to the firm's highest investment rating.

Shares rose $1.30, or 4.1 percent, to $33.08 in premarket trading.

Nordstrom has cut prices to offset sliding sales, while offering high-quality merchandise, since last fall, said analyst Bill Dreher in a note to investors. The strategy is resonating with the chain's core customers, he said.

He also said Nordstrom is taking market share. He expects sales at stores open at least a year to have grown 8 percent in October. In the second quarter, that measure declined 12.3 percent and has been moderating since then.

Same-store sales exclude newly opened locations that are more likely to have robust early growth and skew overall results.

Many retailers report monthly sales results on Thursday.

Higher sales, coupled with lean inventories and reduced costs, will contribute to "meaningful" earnings per share growth, Dreher said. He upgraded Nordstrom to "Buy" from "Hold" and set a $45 price target on the shares.