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Welcome to the November 2011 issue of Condor Monthly! We want to wish everyone a Happy Holiday season. We also feel it is important to mention a few administrative items with year-end quickly approaching:
From the Portfolio Manager Nordstrom, Inc.
Despite its strong performance, management remains cautious about expansion. The retailer plans to open at least 35 stores, in fiscal 2011 and 2012. Most of the new stores will be Nordstrom Rack units, largely due to the very high sales per square foot of these outlet stores. Given that Nordstrom is only about one eighth the size of Macy’s, the retailer has plenty of room for expansion. In our opinion, Nordstrom is well-positioned to benefit from the upcoming holiday season, as well as for growth in the long-term. Additionally, the stock is trading at an attractive valuation relative to its estimated earnings growth. Aided by its growing online shopping presence, Nordstrom is poised to emerge from the current economic downturn as one of the leading luxury retailers.
Financial Planning Corner How Can We Teach Our Children the Value of a Dollar?
Start teaching your children at a young age that money is earned by working and that you should spend less than you earn. To help them understand what it's like to get paid on a schedule, you may want to begin paying an allowance. Then help your children set goals for how they spend and save their allowance. It's important, however, to make sure that you stick to the payment schedule; otherwise your lessons about financial responsibility may be undermined. Experts differ on whether or not allowances should be tied to household chores. Although many people say children will learn more about personal responsibility if they are not paid for pitching in around the home, others feel it teaches them valuable lessons about working and earning. Instill the Saving Habit To reinforce your discussions about saving, you might also consider plotting a visual chart of their savings so they can easily monitor their financial progress. Most community banks will allow children to open first accounts with low minimum deposits. Some even have accounts especially marketed to kids to make the learning process fun. Make sure that your children receive an online or printed statement so they can see the progress of their savings efforts, as well as the interest that accrues. Borrowing and Compounding
As Benjamin Franklin once said, "An investment in knowledge always pays the best interest." So remember that answering your children's questions honestly and in terms they'll understand can help them begin life on sound financial footing. This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by FPA member Andrew Novick, CFP, Esq., VP of Client Service at Condor Capital, an investment management and financial planning firm located in NJ. |
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As the holidays are approaching, consumers around the country are once again on the hunt for the perfect presents for their loved ones. Due to the current economic climate, almost every consumer is conscious of their spending despite their financial situation. However, higher-end shoppers are less sensitive to prices and more often make purchases based on modern fashion trends and superior quality. In order to capitalize on this area of the market, Condor Capital has initiated a position in Nordstrom, Inc. (JWN) in our Large Growth Strategy. Nordstrom operates a chain of high-end department stores selling apparel, shoes, and accessories for women, men and children. There are more than 115 Nordstrom stores, more than 89 Nordstrom Rack stores, two Jeffrey boutiques and two clearance stores. Nordstrom also receives revenue from their private-label credit card.
In the department store world, Nordstrom is among the strongest names. Nordstrom has created a unique place in the luxury area, selling products that are high-end and high quality with exceptional service, yet constructing an environment that is not exclusive and intimidating. Nordstrom has also benefited from high sales per square foot and fast inventory turnover. Their unrivaled ability to properly and concisely manage inventory has allowed them to avoid discounting the prices of apparel items, which saw a rise in prices of 5% to 15% in the third quarter.
In an effort to diversify Nordstrom’s brand empire, the company has recently acquired the online flash-retailer, HauteLook. Like other flash-retailers, HauteLook runs private sales that offer deep discounts on high-end brands to their members for short time-frames, such as 36-48 hours. Given the current economic environment, struggling customers follow online retailers like these feverishly in order to get the biggest bang for their buck – in other words, the deepest discount on the highest regularly priced item they can find.
Techniques for teaching children the value of a dollar include an allowance, encouraging children to save a portion of their allowance, chipping in a percentage of savings as "interest," helping children to establish a bank account, and establishing a lending agreement, with interest, when children want to borrow money from you.
As your children get older and perhaps take on part-time jobs to earn more money, their savings will likely amass at a quicker rate. This is an ideal time to review the lesson of compounding, or the ability of earnings to build upon themselves over time. Explain how compounding can be more dramatic over time; the longer money is left alone, the greater the effect. This can lead into a discussion about investing and risk -- how certain investments with a greater ability to compound over time may also entail greater short-term risks.