Investors Hope Saks, Macy's and Nordstrom Are Back in Vogue

The retail recovery is still going in fits and starts, but investors are betting that one beaten-down sector really is coming back: upscale department stores.

Wall Street is expecting good news from Nordstrom (JWN), Saks (SKS) and Bloomingdale's parent Macy's (M), which are reporting fourth-quarter results within days of each other early next week. All have been forced to reduce costs to protect profits and rethink their merchandise to attract a more frugal customer, even among the wealthy.