Nordstrom, Inc’s JWN revenue recovery journey is likely to be prolonged and cost inflation is expected to exert margin pressure, according to Morgan Stanley.
The Nordstrom Analyst: Kimberly Greenberger downgraded the rating for Nordstrom from Equal-Weight to Underweight, while reducing the price target from $36 to $27.
The Nordstrom Thesis: Despite the 18% decline in Nordstrom’s stock following the release of second-quarter results, there seems to be a further downside, Greenberger said in the downgrade note.
“JWN's sales underperformance is even more noticeable at the Rack division, which declined — 8% vs.2Q19, due to supply chain disruption and inventory shortages,” the analyst noted. She added that other off-price retailers facing the same challenges “were able to grow revenue in the low-20's% range vs. 2019.”
“JWN's relative underperformance in the midst of an extremely favorable macro backdrop leaves us cautious. As such, we do not see a clear path back to 2019 profitability and remain skeptical about longer-term growth,” Greenberger added.
JWN Price Action: Shares of Nordstrom had declined by 8.45% to $28.51 at market close Thursday.
Photo: Courtesy Nordstrom
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