Q. Please give me your assessment of shares of Nordstrom Inc. — PV, via the Internet

A. Luxury shoppers seem to be coming back, but this upscale apparel retailer known for customer service isn't about to get carried away.

Jewellery, dresses and women's shoes are the company's top performers this year. It also opened its first Nordstrom Rack clearance store in downtown Manhattan.

More important, however, has been its emphasis during the economic downturn on the improvement of its information technology, purchasing and inventory systems to assure strong management in all economic climates.

Cyclical trends are unavoidable for all retailers, yet Nordstrom's strong balance sheet and cautious plans for expansion place it in a better position than many competitors.

Less discounting and more popular merchandise on its shelves are its long-range intentions.

Shares of Nordstrom are down four percent this year following a gain of 187 percent last year. Profits in its fiscal quarter ending in May were up 44 percent to $115 million, though that was below analyst estimates. The retailer raised its expectations for the full year.

Nordstrom operates 114 full-line stores and 76 Rack outlets, with sales gains less robust at the Rack than the full-line stores this year. It also has an e-commerce Nordstrom Direct division which has posted strong gains, as well as catalog sales.

Less attractive in the eyes of analysts is the fact that Nordstrom owns its own private-label credit card operation, which opens it to greater risk. Though delinquencies in that division are improving, they remain above the historical average.

The consensus analyst opinion on Nordstrom stock is currently "buy," according to Thomson Reuters, consisting of eight "strong buys", six "buys", 10 "holds" and one "underperform".

On one hand, Nordstrom faces tough competitors in a cyclical field that is dependent on fashion trends. On the other, it is a trusted brand with plenty of room to grow.

Nordstrom represents a lot more than just the name on its buildings. Blake Nordstrom is the president and brothers Peter and Erik are executive vice-presidents. These fourth-generation family members regained leadership of the faltering chain in 2000 and their results since have been excellent.

Earnings are expected to increase 33 percent for its fiscal year ending in January and 16 percent the following year, according to Thomson Reuters. The five-year annualised growth forecast of 12 percent is in line with overall estimates for the apparel store industry.

Q. Do you feel that MFS Value Fund is worth holding in my retirement account? — MK, via the Internet

A. It has a deserved reputation of seeking out top-quality stocks and maintaining low volatility. Both are commendable goals - so long as investors don't expect its value approach to regularly turn in spectacular returns, as well.

The $14.5 billion MFS Value Fund is up nine percent this year to rank in the lower one-fifth of large value funds. Its three-year annualised decline of eight percent is in the top one-fifth of its peers.

"This fund's consistent approach adds up to a nice long-term performance record, though that approach that helped it in 2008 hasn't helped it in the market since then," observed Bridget Hughes, analyst with Morningstar Inc., who advises patience by its investors.

"Yet, thanks to its dependable managers and staff of analysts, you don't have to worry about it making big sector bets that lead to volatility."

Financial services represent nearly one-fourth of portfolio holdings, with other concentrations in industrial materials, consumer goods and healthcare. Top stock holdings were recently Lockheed Martin, AT&T, Philip Morris International, Bank of New York Mellon, JP Morgan Chase, Metropolitan Life Insurance, Goldman Sachs Group, Johnson & Johnson, Northrop Grumman and United Technologies.

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 North Central Avenue, Suite 302, Phoenix, Ariz. 85004-1248, or by e-mail at andrewinv@aol.com

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