Shares of Nordstrom Inc. (JWN) surged in early trading on Wednesday following the company’s release of upbeat second-quarter earnings. The results came amid an active earnings season and provided a positive outlook for the retailer.
Here’s a breakdown of key analyst takeaways on Nordstrom’s performance:
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Telsey Advisory Group:
Analyst Dana Telsey reiterated a Market Perform rating while raising the price target from $23 to $24. She noted that Nordstrom’s adjusted earnings of 96 cents per share surpassed the consensus estimate of 71 cents, thanks to improved gross margins, despite increased expenses. Gross margins expanded by 160 basis points (bps) to 36.6%, primarily driven by strong regular price sales and leverage on higher revenue. While management’s guidance still reflects caution due to continued macroeconomic uncertainty, Telsey views the raised lower end of the annual guidance as a vote of confidence in the rest of the year.*
Goldman Sachs:
Analyst Brooke Roach maintained a Neutral rating but increased the price target from $19 to $21. She observed that comparable sales growth slowed sequentially from the first quarter, although the Nordstrom Anniversary Sale performed in line with expectations. The sale saw particularly strong results in private label brands, activewear, women’s apparel, beauty, and kids. Despite a choppy macroeconomic landscape, Roach highlights the encouraging positive comp trends and strong margins, including a gross margin beat. While management’s guidance reflects caution for the second half of the year, investors are likely to focus on the sustainability of consumer engagement during the holiday season.*
JPMorgan:
Analyst Matthew Boss reaffirmed an Underweight rating but raised the price target from $19 to $20. He pointed out that Nordstrom’s net sales growth of 3.4% was primarily driven by the Nordstrom Rack banner, while full-line net sales grew by a mere 0.9%, missing estimates. Management’s guidance suggests a decline in total revenues of around 3% year-on-year in the back half of the year. Boss also noted management’s expectations for pressure on third-quarter gross margins due to softer topline expectations and higher business and occupancy deleverage.*
BMO Capital Markets:
Analyst Simeon Siegel maintained a Market Perform rating while increasing the price target from $20 to $22. He highlighted that both Nordstrom and Nordstrom Rack banners grew for the second consecutive quarter. While the Nordstrom brand grew by 1%, following a positive inflection after six quarters of declines, Rack grew by 8.5%. The Anniversary Sale net sales benefited the quarter by around 100 bps, but this was lower than expected, possibly due to a weaker end to the sale. Notably, this was the first time since the third quarter of 2023 that Nordstrom recorded a better gross margin than the group median.*
KeyBanc Capital Markets:
Analyst Ashley Owens reiterated an Overweight rating and a price target of $24. He attributed the strong regular-price sales and customer count/trips to Nordstrom’s execution of customer experience efforts, compelling merchandise and flow, and digital growth across both banners. Owens also emphasized the growing traction of Nordstrom’s private brands, with double-digit growth across both banners. The company raised the low end of its full-year guidance while maintaining a prudent approach. However, guidance implies softer comps in the second half of the year, with the third quarter impacted by a timing shift out of the Anniversary Sale and a reduction in the number of weeks compared to last year.As of publication on Wednesday, shares of Nordstrom had risen by 4.45% to $22.08.
