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Ben Gabbe / Getty Images for Nordstrom
After a wave of stellar retail earnings reports,
Nordstrom’s
second-quarter fiscal results were not enough to win Wall Street. A JPMorgan analyst said the backdrop may not be much better for the retailer.
Shares of Nordstrom (marker: JWN) fell 18%, to $ 31.18, on Wednesday’s trading. The S&P 500 index rose 0.2%. The move wiped out everything except Nordstrom’s 1% year-over-year profit.
While earnings and sales exceeded expectations, JPMorgan analyst Matthew Boss downgraded its rating of the stock to Neutral’s Underweight after Tuesday night’s report. Boss set a December 2022 price target of $ 34. Its previous target was a December 2021 target of $ 39.
Boss pointed to a strong context for Nordstrom’s main customer with $ 100,000 or more in family income, which includes a personal savings rate for average teens, a debt-to-service ratio of at least 40 years and wealth creation. of U.S. households worth more than $ 12 trillion by 2020 — combined with a relatively low amount of promotional activity that still produces disappointing results compared to department store peers. Despite this positive development, which may be “as good as it gets,” according to Boss, Nordstorm’s sales were still lower than in the second quarter of 2019.
BMO Capital Markets analyst Simeon Siegel noted the 2019 comparison for the stock reaction. He wrote that the company’s anniversary sale only surpassed 1% the comparable sale of fiscal year 2019. He thinks the company has made progress in its investment efforts, but believes the shares already reflect these efforts. Siegel has a Market Performance rating and a $ 28 target.
Lorraine Hutchinson, an analyst at BofA Securities, expects the company’s profit recovery to continue to lag behind its peers. It maintained a lower-than-performance rating, but raised its price target from $ 22 to $ 19. He said the valuation reflects: “the company’s weak sales and limited margin expansion potential.
“While Nordstrom and Rack sales improved sequentially, both remained below F19 levels,” he wrote, “a stark contrast to most other retailers that positively meet pre-sales levels. pandemic “.
Write to Connor Smith at [email protected]