Nordstrom Analyst Roundup After Q3 Earnings

Nordstrom, Inc. JWN reported Q3 earnings Thursday and beat expectations.

The stock was higher Friday, trading at $72.19 in the afternoon, up 1.28 percent.

Analysts commented on the earnings release. Below are some highlights along with current ratings and price targets.

Nomura - Neutral, $70 price target

“Nordstrom reported 3Q14 net sales of $3.0bn, an increase of 8.9 percent. We believe the sequential deceleration in the Rack business from +4 percent comps in 2Q reflects weakness in October. Gross margin decreased 30 basis points to 35.5 percent. SG&A remained roughly flat at 29.2 percent of sales. Nordstrom ended the quarter with consolidated inventories up 18 percent per square foot, outpacing sales per square foot growth of 5 percent. FY14E EPS from $3.90 to $3.75; FY15E EPS from $4.30 to $4.10.”

Credit Suisse - Outperform, $78 price target

“While e-commerce and Rack continued to drive sales growth, full-line brick-and-mortar comps were flat, the best result since 1Q13. JWN is clearly gaining share, one of the only department stores to do so in a highly competitive selling environment. We think its "Price Match" strategy, while contributing to the gross margin pressure, is the right move to gain credit in the eyes of the customer for pricing integrity. One of our concerns has been that inventories have been growing faster than sales for the past several quarters; management called out that it was unacceptable and is committed to better controlling inventory levels going forward.”

Barclays - Equal Weight, $68 price target

“We are encouraged by the full price store acceleration, but a softening Rack store comp could be viewed as more of a concern, particularly as this segment is more critical to growth going forward. The business today has 167 stores vs. 230 target and is half the volume of the full price brick and mortar business, but competition is also high in that segment. We will be interested to watch the consumer response to upcoming promotional changes, especially if this will involve adjustments to the price matching strategy. Our new price target of $68 is 17.4X our new FY15 EPS of $3.91.”

Deutsche Bank - Buy, $83 price target

“Nordstrom’s P&L continues to fluctuate, accounting for the company’s various transactions and segments. There’s more to come, as JWN confirmed on the conference call that they remain on pace to complete the credit card sale by the end of 1H15. Stepping beyond the confusion of model changes, however, JWN is outperforming where retail is most challenged – on the top-line. With a multi-channel comp of 3.4 percent comparing to other dept. stores at flat to negative and overall SSS growth of 3.9 percent in 3Q, JWN stands out as best in class and we are confident in the sustainability of current trends.”