OREANDA-NEWS. Fitch Ratings does not expect any rating implications from Nordstrom, Inc.'s (Nordstrom) announcement that it has closed its credit card transaction. Fitch downgraded Nordstrom's Long-Term Issuer Default Rating (IDR) to 'BBB+' from 'A-' in March 2015, which incorporated the expectation that proceeds from the transaction would be used primarily towards share buybacks, rather than paying down significant debt that Fitch had previously allocated to the credit card business.

Post the transaction, total retail adjusted debt/EBITDAR will increase to the low-2.0x range, versus 1.5x, which stripped out credit card related debt and income. The 1.5x leverage assumed the company's credit card receivables were financed using a mix of 80% debt and 20% equity, which translated into \\$1.8 billion in credit card-related debt based on Nordstrom's 2014 year-end receivables. Implicit in this assumption was that if Nordstrom ever sold its receivables portfolio, it would pay down debt both directly secured by credit card receivables as well as allocated unsecured corporate debt to a level consistent with Fitch's assumption.

Nordstrom recently announced it would use net proceeds of \\$1.8 billion, after \\$325 million in debt reduction and transaction costs, to fund a \\$900 million special dividend and an additional \\$900 million of share buybacks. Therefore, Fitch expects consolidated leverage to remain in the low to mid-2.0x range.

Nordstrom 's performance continues to be strong relative to Fitch-rated department stores with 1H'15 revenue growth of 9.2% and continued positive comps in the mid-single digit range.

Fitch expects Nordstrom's comps to grow in the low single digits and overall top line to grow 6% to 7% annually over the next 24 months, primarily driven by continued growth in its online sales and Nordstrom Rack (Rack) business. Fitch expects full-line stores comps to be flat to modestly negative; overall Rack sales to grow in the mid to high teens with comps growth in the low single-digit range, and online revenue to grow in the mid-teens.

Fitch expects retail-only EBITDA margin to decline modestly from 12.9% in 2014, due to Nordstrom's increased investments to support online sales growth, and other business initiatives, including its entry into Canada.

Fitch currently rates Nordstrom as follows:

--Long-term Issuer Default Rating (IDR) 'BBB+';
--\\$800 million bank credit facility 'BBB+';
--Senior unsecured notes 'BBB+'.
--Short-term IDR 'F2';
--Commercial paper 'F2'.

The Rating Outlook is Stable.