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UPDATE 1-Nordstrom opens Rack in NYC, eyed full-line store

NEW YORK, May 10 (Reuters) - Nordstrom Inc will open an off-price Rack store in Manhattan on Tuesday, but the upscale retailer's president said he would have preferred its first presence in New York City to have been a full-service Nordstrom store. "Ideally, we'd be talking to you today about a full-line store and yet we haven't had any ability to find a location there," Blake Nordstrom told reporters on Monday on a preview of the store. "This opportunity was so terrific that we couldn't pass up on it." The store's opening comes at a time when Nordstrom and key rivals such as Saks Inc and Neiman Marcus Group Inc are ramping up expansion of their profitable off-price stores and Macy's Inc's Bloomingdale's chain gets ready to open its first outlets. In Nordstrom's case, the sales growth of Rack stores has bested the full-line stores, which themselves have stolen market share from Macy's and Saks since the downturn. Sales at stores open at least a year, or same-store sales, at its Rack stores were up 2.5 percent in 2009, during the worst of the U.S. consumer spending slump, compared with a 7.2 percent decline for the full line stores Last year, Nordstrom opened 13 Rack stores in 2009 and plans to open a total of 17 in 2010, outpacing the planned openings of three Nordstrom stores. Blake Nordstrom said there is no ceiling on how many Rack stores the retailer could open, but the company's growth would nonetheless stem from its Nordstrom stores. "We are not relying on the Racks to drive our total company's growth, it is a full-line strategy- that's the heart and soul of our business and the Rack complements it," Nordstrom said. The Rack stores get merchandise directly from manufacturers, but also serve as outlets to clear merchandise from the full-line Nordstrom stores. They carry such well known brands as Marc Jacobs and Rebecca Minkoff. The Rack in Manhattan brings the total number of locations to 76.

Nordstrom also operates 114 full-line stores. The Rack store, located in the basement of the former Virgin Megastore in Manhattan's Union Square, will be slightly smaller than the chain's average at about 32,000 square-feet. (Reporting by Phil Wahba; editing by Andre Grenon) Keywords: NORDSTROM/ (phil.wahba@thomsonreuters.com; +1 646 223 6128; Reuters Messaging: phil.wahba.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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