Nordstrom Beats Q2 Earnings But Guidance Shows A Decline In This Key Matrix: 4 Analysts Revise Forecasts

Shares of Nordstrom Inc JWN climbed in early trading on Wednesday, after the company reported upbeat second-quarter earnings.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

• Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating, while raising the price target from $23 to $24.
• Goldman Sachs analyst Brooke Roach maintained a Neutral rating, while lifting the price target from $19 to $21.
• JPMorgan analyst Matthew Boss reaffirmed an Underweight rating, while raising the price target from $19 to $20.
• BMO Capital Markets analyst Simeon Siegel maintained a Market Perform rating, while lifting the price target from $20 to $22.
• KeyBanc Capital Markets analyst Ashley Owens reiterated an Overweight rating and price target of $24.

Check out other analyst stock ratings.

Telsey Advisory Group: Nordstrom reported adjusted earnings of 96 cents per share, surpassing the consensus estimate of 71 cents per share thanks to better gross margins, despite an increase in expenses. Gross margins expanded by 160 basis points (bps) to 36.6%, "primarily due to strong regular price sales and leverage on higher revenue," she added.

Management's guidance "still reflects caution," with continued macro environment uncertainty, the analyst stated.

"Building on the first half momentum, JWN raised the lower end of its annual guide, which we view as a vote of confidence in the rest of the year despite continued macro uncertainties," she further wrote.

Goldman Sachs: Comps slowed sequentially "from the strength observed in 1Q," Roach said. Management indicated that the Nordstrom Anniversary Sale performed in-line with expectations, "with particularly strong results from their private label brand portfolio, active (+DD), women's apparel, beauty, and kids," she added.

"Against a choppy macro backdrop, the positive comp trends in both banners at strong margins (including a gross margin beat) are encouraging," the analyst wrote. Although management's guidance reflects caution in forecasting the back half of the year, investors are likely to focus on the "sustainability of consumer engagement in the holiday season at both banners," she further stated.

JPMorgan: Nordstrom recorded net sales growth of 3.4%, which was "almost entirely led by the Nordstrom Rack banner, Boss said. Full-Line net sales grew by merely 0.9%, missing the estimates, he added.

Digging deeper, management's guidance implies a decline in total revenues of around 3% year-on-year in the back half of the year, the analyst stated. "In addition, management cited expectations for "pressure" on 3Q gross margin due to softer topline expectations & higher B&O deleverage," he further wrote.

BMO Capital Markets: Both banners grew for the second consecutive quarter, Siegel said. While the Nordstrom brand grew by 1% "following 1Q’s positive inflection (after 6 quarters of declines)," Rack grew by 8.5%, he added.

Anniversary Sale net sales benefited the quarter by around 100 bps, which was lower than expected possibly due to a "weaker end to the sale," the analyst stated. This was the first time since the third quarter of 2023 that Nordstrom recorded a better gross margin "than the group median," he further wrote.

KeyBanc Capital Markets: "JWN’s execution of customer experience efforts, compelling merchandise and flow, and digital growth across both banners supported strong regular-price sales and customer count/trips," Owens wrote in a note. The company also highlighted that Nordstrom private brands were gaining traction, with double-digit growth across both banners, he added.

Nordstrom raised the low end of its full-year guidance, "while remaining prudent," the analyst stated. "Guidance continues to imply softer comps in the 2H, with 3Q impacted by ~100 bps due to timing shift out of Anniv. sale, and the -135 bps impact from 1 fewer week this year," he further said.

JWN Price Action: Shares of Nordstrom had risen by 4.45% to $22.08 at the time of publication on Wednesday.

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