Wolverine World Wide Gets A Downgrade By This Analyst On Difficult Top-Line Trends, Nordstrom On Slowing Tailwinds

  • Piper Sandler analyst Abbie Zvejnieks downgraded Wolverine World Wide, Inc. WWW to Neutral from Overweight and reduced the price target from $23 to $13.
  • The analyst attributed the downgrade to the difficult topline growth trends in 2023. 
  • The analyst continues to be optimistic about the long-term impact of the corporate strategy review. However, in the near term, the company's balance sheet is unfavorable in the current environment, including the high debt leverage and the elevated inventory balance.
  • WWW's bank-defined leverage ratio is 3.4x, with net debt of $1.35 billion and liquidity of $400 million, which is the highest across the analyst's coverage.
  • The analyst is optimistic about the corporate strategy review but specified that these initiatives would take time, especially in the current uncertain consumer environment.
  • Piper Sandler analyst Edward Yruma downgraded Nordstrom, Inc. JWN from Overweight to Neutral and lowered the price target from $26 to $20.
  • The analyst noted that Nordstrom continues to struggle with execution, and tailwinds from W.O.T. (work, going "out", travel) framework should diminish in 2023.
  • The analyst noted that the company's sales performance was respectable relative to peers, driven in part by a return to office, travel, and supportive higher-income spending trends.
  • While the premium brands/retailers proved to be much more resilient in 2022, the analyst believes that some of these spending tailwinds may decrease in 2023, given the prospect of higher unemployment and continued pressure in asset markets.
  • Nordstrom just extended its semi-annual sale this year to Jan 9 vs. Jan 2 last year, and the promotions are likely to remain high within full-line in the near term. 
  • The company's valuation looks fair, but the analyst thinks earnings risk remains on the downside.
  • Price Action: WWW shares are trading lower by 6.10% at $10.85, and JWN shares are down 0.24% at $16.58 on the last check Thursday.
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