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Macy’s vs. Nordstrom: Which Department Store Stock is a Better Investment? By StockNews

© Reuters. Macy’s vs. Nordstrom: Which Department Store Stock is a Better Investment?

Increasing consumer spending and rising foot traffic in stores should drive up department store sales in the coming quarters. Therefore, Macy’s (NYSE:) and Nordstrom (NYSE:) should benefit. But which of these stocks is a better buy now? Let’s find out.Macy’s, Inc. (M) and Nordstrom, Inc. (JWN) are two popular department stores. M is an omnichannel retail organization that operates stores, websites, and mobile applications, selling a range of apparel, cosmetics, accessories, home furnishings, and other consumer goods. As of January 30, 2021, M operated 727 store locations. It operates in Dubai, UAE, and Kuwait under license agreements. JWN, in comparison, is a fashion retailer that provides apparel, shoes, beauty, accessories, and home goods. It offers a range of brand name and private label merchandise through multiple retail channels, discount stores, boutiques, catalogs, and the internet. As of March 02, 2021, it operated 358 stores in the United States and Canada.

As pandemic-related restrictions eased this year with a strong vaccination drive, department stores witnessed rising foot traffic. As a result, most department stores reported impressive earnings results for the second quarter. However, the resurgence of COVID-19 cases might slow down the increase in foot traffic in the near term. Also, e-commerce giant Amazon.com, Inc.’s (NASDAQ:) decision to add department stores to its list of business ventures will likely increase competition in the department stores space.

On a positive note, the inelastic demand for consumer goods and the practice of passing on higher costs due to inflation to customers should buoy the industry. The global department stores & other general merchandise stores market is expected to grow at a 6% CAGR to $2.18 trillion by 2025. Therefore, both M and JWN should perform well.

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