Nordstrom Likely A Victim Of Industry Woes As Q4 Report Looms

Shares of Nordstrom, Inc. JWN have lost 25 percent since the company released its fiscal third-quarter results, versus an 8 percent gain for S&P500. Although Nordstrom seems “relatively well positioned in a tough sector,” its sales and margins could remain under pressure in 2017 due to “earnings growth headwinds, Baird’s Mark R. Altschwager said in a report.

Altschwager maintains a Neutral rating on the company, with a price target of $56.

Shares Hurt By Negative Sector Sentiment

Holiday trends have been challenging for the sector, as reflected by the negative updates from Macy's Inc M, Kohl's Corporation KSS and J C Penney Company Inc JCP.

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While Nordstrom’s shares have been under pressure, the company seems better positioned in the sector, given its “leaner footprint, off-price exposure [and] Canada whitespace,” Altschwager commented.

Q4 And 2017

The analyst expects Nordstrom to report FQ4 EPS at $1.10, versus consensus expectation of $1.16.

The company’s F2017 sales could benefit from “wealth-effect tailwinds,” such as the stock market being at a record high and potential for a tax reform. Altschwager added, however, that Nordstrom’s guidance for the year could be conservative, against a “challenging industry backdrop.”

Investors would likely be focused on holiday trends, product/category-level performance, F2017 guidance, CFO transition [with Mike Koppel scheduled to leave the company in spring] and cost savings & restructuring initiatives.