Nordstrom shares drop 7% on weaker-than-expected sales growth

Nordstrom‘s stock plunged 7 percent in Friday’s premarket after the company reported disappointing quarterly sales growth.

The Seattle-based retailer said same-store sales — a key metric for retail companies — rose 0.6 percent in the first quarter from the year-earlier period. Analysts polled by StreetAccount expected an increase of 1.1 percent.

Atlantic Equities analyst Daniela Nedialkova said in a note Friday the miss was driven by a weaker performance in Nordstrom’s off-price business, which includes Nordstrom Rack.

“While this shortfall sparked the negative after-hours reaction, we see a positive in the continued acceleration of full-line. This is the second positive comp in a row from full-line, after a long period of negatives and a lack of consistency,” Nedialkova said.

The miss on same-store sales was enough to overshadow better-than-expected revenue and earnings for the first quarter. Nordstrom posted revenue of $3.56 billion and a profit of 51 cents per share.

Nedialkova — who has an overweight rating on the stock and a price target of $58 — said the stock’s decline represents a buying opportunity for investors. Nordstrom shares closed at $50.91 on Thursday.

“We see a strengthening full-line vs off-price trend as a positive indicator — both for overall consumer health and demand for softlines and for JWN itself. FY18 should be an inflection point for margins at JWN, and full-line is a big part of the inflection story,” she said.

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