Market Overview

KeyBanc Downgrades Nordstrom, Urban Outfitters, Says E-Commerce Pressures Are Only Increasing

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KeyBanc Downgrades Nordstrom, Urban Outfitters, Says E-Commerce Pressures Are Only Increasing

The growth of online retailers and subscription boxes means success for traditional retail stores like Nordstrom (NYSE: JWN) and Urban Outfitters (NYSE: URBN) will be harder fought, according to KeyBanc Capital Markets. 

The Analyst

Analyst Edward Yruma downgraded both Nordstrom and Urban Outfitters from Overweight to Sector Weight.

The Thesis

“Despite sizable e-comm investments, a continued push by Amazon.com, Inc. (NASDAQ: AMZN) into apparel and the data-focused approach of Stitch Fix Inc (NASDAQ: SFIX) necessitate continued investments,” Yruma said in a Monday note. (See the analyst's track record here.) 

Online sales and subscriptions make shopping much less stressful and laborious for consumers, and online retail can be specifically marketed for those with busy schedules, Yruma said. In addition to convenience, certain brands offer a personalized look for the consumer, acting essentially as a personal stylist.

Traditional retail stores are in some ways unable to compete with e-commerce, despite the stability of retail leaders such as Nordstrom and Urban Outfitters, the analyst said.

“Performance at URBN accelerated demonstrably ... and the company should continue to benefit from a favorable fashion cycle," Yruma said. "Comp comparisons will get increasingly difficult in the second half and earnings growth will need to be driven by gross margin expansion." 

Price Action

Nordstrom shares were trading down 2.65 percent at $52 late in Tuesday's session, while Urban Outfitters was trading down 0.24 percent at $45.69. 

Related Links:

Forrester Research Analyst: Yes, There Is Still Growth In Physical Retail

Analyst: Investors Should Continue Buying Urban Outfitters After 'Impressive' Q1

Public domain photo via Wikimedia. 

Latest Ratings for JWN

DateFirmActionFromTo
Nov 2019Initiates Coverage OnEqual-Weight
Oct 2019DowngradesNeutralSell
Oct 2019MaintainsNeutral

View More Analyst Ratings for JWN
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Posted-In: Edward Yruma KeyBanc Capital MarketsAnalyst Color Downgrades Analyst Ratings Best of Benzinga

 

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