Of the 31 analysts covering Nordstrom (JWN), 17 analysts have given a “hold” recommendation as of January 19 and ten analysts have given a “buy” recommendation. Four analysts have given a “sell” recommendation. In the first nine months of fiscal 2015, Nordstrom’s total sales, including credit card revenue, grew by 8.3%, outperforming Macy’s (M), Dillard’s (DDS), and Kohl’s (KSS), which reported sales growth of -2.8%, 0.8%, and 1%, respectively. However, Nordstrom’s bottom line continues to be hit by its investments in the Trunk Club acquisition and Canadian stores, and costs associated with the expansion of its online business.
Analysts’ 12-month price target for Nordstrom’s stock is $56.60. This reflects a potential appreciation in the stock of 22.7% over the price of $46.14 on January 19. So far, Nordstrom’s stock price has fallen by 8% in 2016. The Consumer Discretionary Select Sector SPDR ETF (XLY) and the S&P 500 have fallen by 6.6% and 6.5%, respectively, on a year-to-date basis. The decline in the stock market so far has been primarily caused by the steep fall in oil prices and the reaction to weak Chinese data. XLY has 0.3% exposure to Nordstrom.
Can the fourth quarter results help?
Nordstrom reported lower-than-expected sales in 3Q15. The company lowered its full-year fiscal 2015 sales guidance following subdued sales in 3Q15 and an expectation of a softer sales environment in the fourth quarter. Nordstrom lowered its net sales growth outlook for fiscal 2015 to between 7.5% and 8% from the prior guidance of 8.5% to 9.5%.
The fourth quarter includes the holiday season, which is a critical sales period for department stores and retailers. Macy’s reported a 4.7% decline in its same-store holiday sales on January 6. In contrast, JCPenney (JCP) reported a 3.9% rise in same-store sales in the holiday period. For more information, read Macy’s Reports Dismal Holiday Sales: Will Restructuring Help?
Analysts expect Nordstrom’s 4Q15 sales to come in at $4.2 billion, compared with $4.0 billion in 4Q15. The possibility of Nordstrom reporting lower-than-expected 4Q15 sales and earnings might pull down its stock price further. Nordstrom is scheduled to report its 4Q15 results on February 18, 2016. For more updates and analysis, visit our Department Stores page.