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NEW YORK (

TheStreet

) -- Is luxury -- the once high-flying market now reduced to a pauper -- poised for a revival? Investors' first hint could come from

Nordstrom's

(JWN) - Get Nordstrom, Inc. Report

second-quarter earnings, due out before the bell on Thursday.

Still, the high-end department store could be strained, as the company encountered "a more competitive promotional environment and responded with deeper markdowns compared with last year," Stifel Nicolaus analyst Richard Jaffe wrote in a recent note.

Jaffe notes that although Nordstrom is offering discounts, its competitors' promotions are simply more compelling, making driving sales, in his estimation, a challenge.

Analysts are expecting Nordstrom to earn 48 cents a share on revenue of $2.14 billion. Last year the company posted a profit of $143 million, or 65 cents a share, on revenue of $2.29 billion.

Last week the company said July same-store sales dropped 6.9%, beating analysts' forecast of an 11.1% decline.

Luxury retailers have been hit hard by the recession as consumers, even on the high-end, turn away from branded merchandise and look to private labels.

This has helped department stores like

Kohl's

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(KSS) - Get Kohl's Corporation Report

, which is expected to be one of the winners in the second-quarter due to its compelling private label and exclusive merchandise.

Looking ahead to Nordstrom's earnings, investors are eager to know what categories still remain challenged and if consumers are more optimistic in their spending as the stock market rallies. Presumably, they will also be curious to see how Nordstrom Rack, the company's discount chain, is performing.

Shares of Nordstrom closed on Tuesday at $29.40 and have been trading between $6.61 and $37 during the 52-week period.

Macy's

(M) - Get Macy's Inc Report

posted a 90% plunge in its second-quarter earnings on Wednesday, but upped its full-year outlook.

Kohl's and

J.C. Penney

(JCP) - Get J. C. Penney Company, Inc. Report

are among the other department stores reporting earnings results this week.

-- Reported by Jeanine Poggi in New York.

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