By Geoffrey Seiler, BullMarket.com

Nordstrom (JWN) is truly at the forefront of the evolving retail marketplace with the way it has embraced a multi-channel approach (department store, website with free shipping, off-price concept, and flash sale website HauteLook).

In addition, the company has built up its technology, distribution, and fulfillment infrastructure. In the near term, its investment spending will be a drag on the bottom line, but it is a long-term positive.

Meanwhile, the company's department store continues to be a destination spot that helps drive mall traffic; its Rack concept has solid expansion opportunities; and it is still benefiting from the pickup in spending of more affluent customers.

Despite its investment spending, Nordstrom is still poised to grow EPS by 10% or more in 2012.

On an apples-to-apples basis, it would be an impressive 14% or more (with core EPS -- excluding HauteLook for both periods and the top end of its additional CapEx spending guidance taxed at a 39% rate -- moving from about $3.37 to $3.83).

Goldman Sachs upgraded Nordstrom, taking the stock from "neutral" to "buy." Analyst Adrianne Shapira upped her target from $54 to $65.

Shapira notes, "We believe Nordstrom's on-going investments should power improving productivity and returns, which should drive EPS and multiple expansion as it increasingly pulls away from its traditional department store peers.

The analyst continues, "This sets the stage for a 2013 EBIT inflection point that should see growth resume in the double-digit range. We expect near-term results to provide evidence that investments are successfully driving share gains that should see better flow through as investment spend wanes. Therefore, we see its EPS and multiple biased to the upside."

We also think that guidance is likely conservative. As a result, we are going to up our target from $57 to $62, while keeping our "Buy" rating.

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