Jefferies sees “the makings of transformation” in Nordstrom’s model.
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Nordstrom shares are higher in early Friday trading, following a bullish report from Jefferies, which argues that the department store is making the right moves for the new retail environment.
Analyst Stephanie Wissink initiated coverage of Nordstrom (ticker: JWN) with a Buy rating and a $48 price target. She writes that the company is implementing a hyper-personalized and localized data-driven strategy, and that she is “intrigued by the melding of a legacy of curation, forward edge fashion, with unique partnership models.”
Wissink sees “the makings of transformation” in Nordstrom’s model, especially as its business becomes permanently evenly split between physical stores and e-commerce. She acknowledges that the stock is volatile—as evidenced by a postearnings selloff earlier this month on higher inventories—so it’s difficult to tell how well the company is executing on merchandising, but she thinks that estimates for the company’s recovery are achievable, if not beatable.
According to her research, Nordstrom shoppers appreciate the company’s omnichannel capabilities, and its skew toward upper-income shoppers seems intact, with customers reporting spending $100 or more per visit. That would likely get a further boost from a change in the fashion cycle that many predict will accompany an economic reopening.
Moreover, she writes that while Nordstrom is categorized as a department store, with 50% of its sales coming from online and 30% from its off-price segment, its valuation should reflect the diversity of its business. While her target price is nearly 30% above where the shares stand today, in a blue-sky scenario she thinks the stock could be worth $91.
Nordstrom is up 0.8%, at $37.68, in premarket trading. The shares are up 19.8% since Barron’s recommended them at the start of the year and have risen more than 73% in the past 12 months.
Write to Teresa Rivas at [email protected]
