© Reuters. Nordstrom (JWN) Drops Despite Beating Earnings, Analyst Says Rack Recovery Will Take Time
By Senad Karaahmetovic
Shares of Nordstrom (NYSE:NYSE) fell nearly 10% ahead of Wednesday’s trading even though the company cut its full-year guidance.
For the third quarter, Nordstrom posted EPS of $0.20 on revenue of $3.5 billion, beating the median analyst estimate of $0.13 on revenue of $3.47 billion. Overall, revenue fell nearly 3% year over year.
“As customer demand declined in late June, we took action to adjust inventory and costs to changing trends, helping us prepare,” said Erik Nordstrom, CEO of Nordstrom. to navigate the current macroeconomic environment”.
On a full-year basis, JWN said they expect EPS will be between $2.30 and $2.60, well above the consensus of $2.37. The company also sees revenue growth of +5% to +7% while adjusted pre-tax margins are expected in the range of 4.3-4.7%
Barclays analysts have reiterated their Underweight rating and $18 per share price target on post-earnings JWN stock.
“We believe Rack’s recovery will likely take time to rebalance the category toward higher-end products,” the analysts said in a client note. Next year’s risks as inflation-cost pressures continue despite optimization initiatives.”
KeyBanc analysts were much more positive for JWN as they said third-quarter results showed inventory positions were improving. Analysts believe JWN is trading at an attractive valuation.
“JWN posted the best operating results and lowest profit and maintained fiscal year guidance amid a difficult retail environment. It is important that JWN continues to make progress on inventory placements. its inventory (+0.5% y/y), JWN positioning is good in 4Q and the Company is expected to end the year with a clean inventory, which we think JWN will be well positioned for. in fiscal year 2023 compared with many peers,” the analysts wrote.
They added: “We remain confident in management’s ability to improve Rack performance as JWN makes progress in optimizing brand mix and affirm that JWN has the opportunity to margin LT. through supply chain initiatives”.