Nordstrom’s Holiday Sales Plunge 22%; Stock Sinks 5.5%


Nordstrom stock is down about 5.5% in Thursday’s pre-market session after the luxury department store chain reported a 22% year-over-year decline in sales during the nine-week holiday period ending on Jan. 2.

Meanwhile, Nordstrom (JWN) said that its holiday sales trend improved sequentially by about 500 basis points and was in-line with the company’s expectations. The retailer had anticipated a sales decline in low-twenties percentage for the fourth quarter.

The company’s online sales during the holiday period rose 23% year-over-year but lagged online sales growth of 34% reported during the same time last year.

Nordstrom’s CEO Erik Nordstrom said, “By leveraging order pickup and store fulfillment capabilities across our two brands of Nordstrom and Nordstrom Rack, we’re seeing benefits to our customers as well as to our business.”

The company expects to report positive EBIT (earnings before interest and taxes) and operating cash flow for the fourth quarter. Moreover, Nordstrom said that it expects its 4Q EBIT margin to “deleverage” by about 500 basis points compared to the prior-year quarter, reflecting lower volumes. Nordstrom is scheduled to report fourth-quarter results on March 2. (See JWN stock analysis on TipRanks).

Following the holiday sales report, Guggenheim analyst Robert Drbul said that the holiday sales decline “is ~in line with our top line expectations for the quarter.” Drbul added, “While the company noted top line momentum continuing into January, we think 4Q20E results will be impacted by lower sales volume, shipping surcharges, and wage rate increases during the holiday period.”

“While we continue to favor Nordstrom’s off-price, digital, and local market strategy in addition to brand offerings, we believe shares are fairly valued,” the analyst summed up. He maintained a Hold rating on the stock.

Overall, consensus among analysts is a Hold with 8 Hold, 2 Buys, and 2 Sells. The average price target of $24.73 implies downside potential of 34.2% to current levels. Shares were down by 8.8% over the past year.

TipRanks data shows that investors currently have a Negative stance on the stock, with less than 0.1% of all portfolios holding JWN shares.

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