Nordstrom Will Likely Disappoint You, Bulls

Piper Jaffray’s Neely J.N. Tamminga downgraded the rating for Nordstrom, Inc JWN from Overweight to Neutral, with a price target of $62. The analyst said that the company is likely to report lower-than-expected results for the next two quarters.

The company’s shares have appreciated 19 percent year-to-date, versus a near 0 percent change in the S&P.

Nordstrom To Disappoint

Nordstrom is set to become a leader in the retailing landscape and perform well over the long term, but is likely to disappoint investors with regard to its earnings for FQ1 and FQ2, analyst Neely Tamminga mentioned.

The analyst believes that the issues negatively impacting Nordstrom’s sales trends are not seasonal, but several and include stock market volatility, decline in international tourism, election uncertainty and weather. “Three of the four issues haven't subsided, and the fourth--weather--is likely to switch back to a headwind in the upcoming Easter- build week.”

Nordstrom’s anniversary sale is shifting in 2016 to spill over into FQ3 and this is expected to shift the comparable store sales of about 200-300 bps out of F2Q into F3Q.

“Too, the shift will likely exacerbate the negative de-leverage effect for FQ1 and somewhat FQ2 as the company laps heavier store pre-opening and higher fulfillment costs without last year's credit revenues to aid since the sale of the receivables,” Tamminga commented.