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Nordstrom Stock Falls as Goldman Downgrades to ‘Sell’

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Jun. 27 2019, Updated 5:29 p.m. ET

Rating downgrade by Goldman Sachs

Nordstrom (JWN) stock was down 2.5% as of 1:11 PM ET today after Goldman Sachs downgraded its rating for the department store chain to “sell” from “neutral.” Goldman sees more trouble for Nordstrom, expecting weakness in the company’s full-line and off-price same-store sales to be compounded by pressure on operating income because of strategic investments. Goldman assigned a price target of $30 for Nordstrom stock. This price estimate reflects a downside potential of about 7% compared to the closing stock price on June 26.

In January, Goldman downgraded Nordstrom stock to “neutral” from “buy” after the company reported weak holiday sales.

Goldman also sees a challenging retail environment affecting Nordstrom and other retailers’ performance. JCPenney (JCP) and Macy’s (M) have voiced concerns about how tariffs will hurt companies, customers, and the economy as a whole.

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Recent performance

Nordstrom’s revenue fell 3.3% to $3.44 billion in the first quarter of fiscal 2019 and lagged behind analysts’ forecast of $3.58 billion. Nordstrom’s revenue comprises its retail net sales and credit card revenue. The company’s net sales fell 3.5% in the first quarter due to a 5.1% fall in its full-price business sales and a 0.6% drop in off-price sales.

To see what caused the decline in Nordstrom’s first-quarter revenue, check out Why Nordstrom’s Revenue Declined in the First Quarter.

Nordstrom lowered its net sales growth guidance for fiscal 2019 to the range of -2.0%–0.0% from the previous outlook of 1%–2% growth following weakness in the first quarter. The company expects its fiscal 2019 EPS in the range of $3.25–$3.65, compared to the previous expectation of $3.65–$3.90.

Nordstrom stock was down 30.9% on a year-to-date basis as of June 26 in comparison to the 16.2% rise in the S&P 500 Index. As of June 26, the average 12-month price target for Nordstrom stock was $38.75, which reflected an upside potential of 20%.

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