NORDSTROM INC. $34 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 216.9 million; Market cap: $7.4 billion; WSSF Rating: Average) operates 105 fullservice department stores, as well as 54 smaller stores that sell shoes and clearance merchandise.

Nordstrom prefers to focus on affluent shoppers. These customers are less likely to cut spending in the face of rising fuel costs. However, about a third of Nordstrom’s stores are in California, and falling home prices have hurt its overall sales.

In Nordstrom’s first fiscal quarter ended May 3, 2008, sales fell 2.6%, to $1.9 billion from $1.95 billion a year earlier. Same-store sales dropped 6.5%. Earnings fell 24.2%, to $119 million from $157 million, due to costly markdown sales. However, pershare earnings declined just 10.0%, to $0.54 from $0.60, on fewer shares outstanding.

Nordstrom’s strong attention to customer service should help it overcome the current slump. For example, salespeople often call customers to inform them of special sales or new merchandise. That helps build customer loyalty, and encourages repeat visits.

The stock trades at 12.1 times its projected earnings of $2.80 a share, and at 0.9 times its sales of $37 a share. The $0.64 dividend yields 1.9%.

Nordstrom is a buy.