Nordstrom Rack plans to open 2 new Long Island stores

Nordstrom Inc., struggling to stay profitable with its luxury stores, is expanding its better-performing off-price chain, Nordstrom Rack.  

The company plans to open two more Nordstrom Rack stores on Long Island, in Lake Grove and Holbrook. 

The existing 280 Racks nationwide include three on Long Island — at The Gallery at Westbury Plaza, Manhasset Center and one that opened at Gardiner Manor Mall in Bay Shore in June. 

Nordstrom has opened 23 Racks this year in multiple states. The openings are part of the company's goal to open 20 to 25 stores annually, as changing consumers tastes fuel demand for the discount stores, and full-price and luxury department stores continue to lose their allure, particularly those in shopping malls.

Nordstrom “is barely profitable this year. … This is a business model that doesn’t really work anymore,” said David Swartz, senior equity analyst at Morningstar Research Services LLC, a financial services firm in Chicago.  

Nordstrom's companywide net earnings in the fiscal third quarter, which ended Nov. 2, were $46 million, compared to $67 million in the same period last year.

The company closed 16 Nordstrom stores in 2020, during the COVID-19 pandemic.

Thirteen Nordstrom and Rack stores in Canada were closed last year.

 The only full-price Nordstrom on Long Island is at the Roosevelt Field mall in Uniondale.

In Lake Grove, a 25,160-square-foot Rack has been proposed for a portion of a former Bed Bath & Beyond space at 2045 Smith Haven Plaza, but building and planning department approvals are still needed, said Bob Schwartz, the village's planning board chairman.

It is unclear when the Lake Grove store would open. The owner of the property, C&B Realty in Manhasset, and Seattle-based Nordstrom Inc., did not respond to Newsday’s requests for comment.

The Rack planned for Holbrook would be a 26,780-square-foot anchor in the redevelopment of The Shops at SunVet, formerly SunVet Mall.  Newsday reported in October that the developer said the store would open by spring 2026, but Nordstrom said in its earnings report in November that the store will instead open in fall 2025.

'A solid return'

Founded in 1901 as a shoe store in Seattle, Nordstrom Inc. sells merchandise online and at its 381 stores in the U.S., including 93 Nordstrom stores and two clearance stores. The company has struggled for years for several reasons, including its weakening grip on luxury brands, many of which now sell their merchandise directly to consumers at their own stores or online, Swartz said.

Nordstrom stores are larger and more expensive to operate than Racks, which are the biggest source of new customers for the company. In the third fiscal quarter, net sales increased 1.3% at full-price Nordstrom stores and 4% at stores open at least a year. Net sales for Racks increased 10.6%, while growing 3.9% at stores open at least one year.

“New Rack stores continue to be a great investment for us as they deliver a solid return on capital while attracting new customers,” Nordstrom Chief Executive Officer Erik Nordstrom told analysts during a Nov. 26 earnings call.  

It is possible that Nordstrom could go private. The company announced in September that the Nordstrom family, which owns about 33% of the company, and El Puerto de Liverpool, a Mexican retailer that owns 10%, had bid $3.8 billion for the chain. 

The deal, if approved, would give the Nordstrom family 51% ownership, a majority stake, in the company. Going private would remove some of the pressure on management to improve Nordstrom’s financial picture, Swartz said.

“It’s easier to do a turnaround when you don’t have to answer to public shareholders,” he said.

By Tory N. Parrish

tory.parrish@newsday.comToryParrish1

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.