Nordstrom Balances Strong Holiday Sales And Competition, Analysts Highlight Margin Pressure

Telsey Advisory Group analyst Dana Telsey maintained a Market Perform rating on Nordstrom Inc JWN with a price target of $24.00.

For the nine-week period ending January 4, 2025, the company reported a 4.9% year-over-year increase in total net sales, outperforming the previous consensus estimate of a 4.7% decline for the fourth quarter, per the analyst.

Same-store sales at the group level rose by 5.8% year-over-year, surpassing the consensus estimate of a 3.5% decline for the quarter.

Following stronger-than-anticipated holiday results, the company revised its revenue guidance higher, but maintained its profitability projections for the year.

The analyst says that Nordstrom reported stronger-than-expected holiday sales, with positive performance at both the Nordstrom and Rack banners, driven by effective promotional strategies and a compelling product selection.

The company raised its fiscal 2024 revenue guidance, showcasing its resilience in a highly competitive retail landscape, asserted the analyst.

However, the analyst added that the company reiterated its full-year EPS forecast, slightly lower than the previous year, reflecting potential gross margin pressure due to efforts to remain competitive.

With earnings exceeding expectations in the second and third quarters, the company demonstrated improved momentum, said the analyst.

According to the analyst, the Nordstrom Rack division also presents growth potential, benefiting from a stronger off-price market that sets it apart from other department store chains.

Goldman Sachs analyst Brooke Roach is optimistic about Nordstrom’s sequential strength during the holiday period, as both banners showed improved comparable sales trends.

However, the analyst expects investors to pay close attention to management’s comments about their strategies to stay competitive in the promotional environment.

The analyst notes the anticipated January revenue slowdown in JWN’s guidance is likely a conservative estimate. Still, factors such as winter weather, wildfires in California, and other variables could contribute to the expected slower growth as the quarter ends, per the analyst.

The company is slated to release its fourth-quarter financial results on March 4, 2025.

Price Action: JWN shares are trading higher by 0.55% at $24.14 at the last check Monday.

Photo via Shutterstock.