Nordstrom Stock Plunges After Earnings: 4 Analysts Break Down Q2 Print, Guidance Cut

Zinger Key Points
  • Nordstrom will take "aggressive actions" to clear inventory, an analyst warned.
  • Management has the ability to improve trends at Rack, another analyst said.

Nordstrom, Inc. JWN Tuesday reported second-quarter earnings that were slightly better than the consensus estimate, but lowered its full-year forecast, warning of an inventory glut due to slowing demand.

Telsey Advisory Group On Nordstrom

Analyst Dana Telsey maintained a Market Perform rating and reduced the price target from $28 to $25.

Nordstrom’s quarterly earnings reflect stronger revenue growth being offset by “softer-than-expected gross margin and SG&A leverage,” Telsey said in a note. “Despite solid performance in 2Q, JWN reduced its FY22 guidance to reflect indications of slowing demand,” she added.

The company plans to take aggressive actions to clear inventory, which could impact gross profit in the back half of the year by about $200 million, “roughly equally between quarters,” the analyst further wrote.

KeyBanc Capital Markets On Nordstrom

Analyst Noah Zatzkin reiterated an Overweight rating and $30 price target.

Nordstrom’s quarterly beat “was driven by strength at the Nordstrom banner and solid Anniversary Sale results,” Zatzkin mentioned.

“Softness that began exiting June was principally driven by lower income segments of Rack customers,” the analyst wrote. “We remain confident in management's ability to improve trends at Rack as the Company continues to optimize brand mix, and believe JWN possesses strong LT margin opportunity via supply chain initiatives,” he added.

Check out other analyst stock ratings.

Morgan Stanley On Nordstrom

Analyst Kimberly Greenberger reaffirmed an Underweight rating and reduced the price target from $19 to $18.

“JWN benefited from post-pandemic category shifts in 2Q,” Greenberger said in a note. “However, elevated promotional activity & sales deceleration caused management to revise its 2H22 outlook meaningfully,” she added.

BMO Capital Markets On Nordstrom

Analyst Simeon Siegel maintained a Market Perform rating and reduced the price target from $25 to $24.

Although Nordstrom lowered its outlook for the remainder of the year, “we believe it would have been prudent to cut even further and reset the bar,” Siegel said.

“We fear the challenging macro and potential for further near-term discounting will likely further weigh on the current year outlook but believe shares reflect this,” he added.

JWN Price Action: Shares of Nordstrom were down 18.51% to $18.90 midday Wednesday. 

Photo via Shutterstock. 

Posted In: BMO Capital MarketsDana TelseyKeyBanc Capital MarketsKimberly GreenbergerMorgan StanleyNoah ZatzkinSimeon SiegelTelsey Advisory GroupAnalyst ColorEarningsNewsGuidancePrice TargetReiterationTop StoriesAnalyst RatingsMoversTrading Ideas

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