Department Stores on the Street: Analyst Pre-Holiday Recommendations
Department stores JCPenney (JCP), Macy’s (M), Nordstrom (JWN), and Kohl’s (KSS) have “hold” ratings from a majority of analysts right now.
Analysts have lukewarm expectations for the sales of department stores this year as online retailers such as Amazon (AMZN) are eating away at market shares.
US retail e-commerce sales grew 16.2% on a YoY basis in 2Q17. The US e-commerce sales as a percentage of total retail sales reached 8.9% in 2Q17.
Department stores and retailers are taking serious initiatives to gear up for the crucial 2017 holiday season.
The US holiday season is the most important sales season for US retailers and department stores.
Nordstrom (JWN) stock is rated a “hold” by 17 of the 28 (or 61.0%) analysts covering the stock.
Nordstrom (JWN) stock fell 5.3% to $40.40 on October 16, 2017, in reaction to the news that the Nordstrom family suspended its efforts to take the company private.
On August 10, 2017, Gordon Haskett upgraded Kohl’s stock from “reduce” to “hold” with a target price of $37.00—up from the previous target of $36.00.
As of September 26, Kohl’s was trading at a 12-month forward PE ratio of 12.4x. Its valuation multiple has risen 16.0% since its 2Q17 results in August.
Kohl’s has generated a total return of -3.0% on a YTD (year-to-date) basis as of September 26, 2017. Kohl’s stock has underperformed the S&P 500 Index.
Kohl’s (KSS) EPS (earnings per share), excluding one-time items, has exceeded analysts’ expectations in the last five consecutive quarters.
Kohl’s (KSS) has been delivering disappointing sales numbers. Fiscal 2Q17 was the sixth consecutive quarter that the company’s sales fell on a YoY basis.
On September 26, Kohl’s (KSS) announced that Kevin Mansell, its chairman, CEO, and president, will retire in May 2018. Michelle Gass will be the next CEO.
The majority of analysts have a consensus “hold” rating for Nordstrom stock.
As of September 15, Nordstrom (JWN) was trading at a 12-month forward PE (price-to-earnings) ratio of 15.5x.
Nordstrom (JWN) delivered better top-line growth in the first half of fiscal 2017 compared to department stores like Macy’s (M), Kohl’s (KSS), and JCPenney (JCP).
As of September 15, Nordstrom stock has fallen 2.5% on a YTD (year-to-date) basis.
Online sales continue to be a key growth driver for upscale department store Nordstrom (JWN). In fiscal 2Q17, sales at Nordstrom.com grew ~20%.
Most analysts have a “hold” rating for major department store stocks. Department stores are taking several steps to boost their top line and profitability.
For fiscal 2017, analysts expect Macy’s sales to fall 4.1% to $24.7 billion. The company’s adjusted EPS is expected to rise 8.7% to $3.38 in fiscal 2017.