On Tuesday, Citi maintained its Neutral rating and a $20.00 price target on Nordstrom (NYSE:JWN) stock. The firm's analysis suggests that Nordstrom's second-quarter earnings per share (EPS) might fall short of market expectations.
Analysts project an EPS of $0.67, which is slightly below the consensus of $0.70. This forecast is based on an anticipated sales increase of 3.3%, marginally lower than the consensus estimate of a 3.5% rise.
Citi's analysis indicates that e-commerce traffic to Nordstrom's website slowed down during the second quarter. Additionally, data from Placer points to July as the weakest month for in-store foot traffic in the quarter.
These trends are seen as indicators of a less than stellar performance during Nordstrom's Anniversary Sale, which occurred from July 15 to August 4, 2024, compared to the previous year's sale from July 17 to August 6, 2023.
Despite these observations, Citi expects Nordstrom management to reaffirm its full-year 2024 EPS guidance of $1.65 to $2.05, aligning with the consensus of $1.78. However, if the Anniversary Sale did not meet expectations, management might adopt a more cautious tone regarding future performance.
Citi's commentary reflects concerns that a disappointing Anniversary Sale and a potentially cautious outlook from management could negatively impact investor sentiment towards Nordstrom's stock. This sentiment is noted as already being very negative, and the firm suggests that any further negative developments could potentially drive the stock price lower.
In other recent news, Nordstrom Inc . (NYSE:JWN) has experienced a series of notable developments. The company's revenue saw a 5% year-over-year increase, significantly contributed by Nordstrom Rack with a 14% rise in sales. However, challenges related to supply chain, theft, and inventory management have impacted gross margins.
KeyBanc maintained an Overweight rating for Nordstrom, observing emerging trends in women's fashion from the company's 2024 Anniversary Sale.
The company's potential go-private initiative is also under review. Meanwhile, Argus increased the price target for Nordstrom, citing top-line growth, while CFRA downgraded Nordstrom from Hold to Sell due to margin improvement challenges.
Nordstrom Rack is set to open a new store in Coral Springs, Florida, in fall 2025, as part of the company's expansion strategy in Florida. The new store aims to provide customers with a variety of brands at competitive prices. This development is part of Nordstrom's strategy to offer a more interconnected experience to customers, both in-store and online.
HBC, the parent company of Saks Fifth Avenue, has acquired Neiman Marcus for $2.65 billion, forming a new entity, Saks Global. This move positions the combined companies to better negotiate with vendors and manage costs more effectively, competing against other high-end retailers, including Nordstrom.
InvestingPro Insights
As Nordstrom (NYSE:JWN) navigates through market expectations, InvestingPro data reveals nuanced aspects of the company's financial health. With a market capitalization of $3.66 billion and a P/E ratio currently standing at 12.17, Nordstrom trades at a valuation that reflects its recent profitability, as indicated by a positive EPS over the last twelve months. Notably, the company's Price/Book ratio is relatively high at 4.38, signaling that investors may be attributing a premium to its assets relative to the industry average.
InvestingPro Tips suggest that Nordstrom's stock price movements have shown considerable volatility, which could be a point of interest for investors looking for short-term trading opportunities or those concerned with market fluctuations. Additionally, analysts on InvestingPro are predicting the company will remain profitable this year, which may provide some reassurance amidst concerns raised by Citi's analysis.
For readers interested in a deeper dive into Nordstrom's financials and stock performance, there are additional InvestingPro Tips available at https://www.investing.com/pro/JWN, offering a comprehensive analysis that could further inform investment decisions.
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