Nordstrom Reports Weaker Than Expected Holiday Sales: 4 Analysts Weigh In

Zinger Key Points
  • The retailer said net sales for the nine-week Christmas period that concluded on Dec. 31 were down 3.5% from the same time last year.
  • Net sales fell 7.6% for its off-price banner, Nordstrom Rack, and 1.7% for its namesake banner.

Nordstrom Inc JWN reported weaker-than-expected holiday sales on Thursday, leading the company to lower guidance for the fourth quarter and full fiscal year 2022, which ends in late January.

The BMO Capital Markets Analyst: Simeon Siegel at BMO gave Nordstrom a Market Perform rating, and lowered the price target to $20.

Siegel noted Nordstrom has been below guidance throughout the year and a miss in the fourth quarter was expected by analysts at BMO. However, the reduction in sales, coupled with cleaner inventory, may have been better than feared. Siegel says BMO remains sidelined due to lack of visibility but believes the valuation reflects these questions and protects the downside.

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The Bank of America Analyst: Lorraine Hutchinson at BofA Global Research reiterated an Underperform rating on Nordstrom, and lowered its price target from $15 to $14.

Hutchinson notes that guidance has been lowered twice since March and that the holiday sales decline of ~3.5% was driven by product, rather than income.

The analyst expects management to speak to ongoing challenges, but believes the path to long-term 6%+ margins remains unchanged.

The KeyBanc Capital Markets Analyst: KeyBanc’s Noah Zatzkin lowered its price target for Nordstrom from $30 to $22, but left its Overweight rating unchanged.

Zatzkin notes that gross margins for the full fiscal year 2022 are now estimated at ~34.5%, which is almost flat to the two-year 34.6% calculated for FY20+FY21. This consistency is among the best in retail and worth monitoring.

The analyst said that while the firm is disappointed in softer-than-expected holiday results, KeyBanc thinks revised guidance should help further reset expectations into 2023 and believe clean inventory will position Nordstrom well relative to peers entering the year.

See Also: Nordstrom Has Analysts Bullish As GenZ, Millennials Refresh Their Closets

The Telsey Advisory Group Analyst: Dana Telsey reduced its price target for Nordstrom from $25 to $17, and dealt a market perform rating on the stock.

Telsey noted that Nordstrom’s results should not have come as a surprise, as the company warned back in May that FY22 EBIT margin should end up 3.4%, which is just slightly above the high end of Thursday’s stated range.

Additionally, Telsey said management expects FY22 inventory to be flat to 2019, indicating a clean positioning into FY23.

Read next: Why This Costco Analyst Expects Strong December Sales Figures

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