Nordstrom Sinks 8% Despite Robust Q2 Results & Improved Guidance

Nordstrom, Inc. (JWN) reported better-than-expected second-quarter results backed by a strong improvement in sales at Nordstrom and Nordstrom Rack, as well as solid anniversary sales. However, shares of the American omnichannel retailer sank 8% in the after-hours trading session on August 24.

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The company reported quarterly earnings of $0.49 per share, much higher than analysts’ estimates of $0.28 per share. JWN reported a loss of $1.62 per share in the prior-year period.

Moreover, revenue for the quarter doubled on a year-over-year basis to $3.66 billion and surpassed the Street’s estimate of $3.31 billion. (See Nordstrom stock charts on TipRanks)

Commenting on the solid results, Erik Nordstrom, CEO of the company, said, “We capitalized on improving customer demand with focused execution, healthy inventory sell-through, and continued expense management to deliver strong quarterly results.”

Nordstrom added, “We remain focused on executing our strategy to win in our most important markets, broaden the reach of Nordstrom Rack and increase our digital velocity, and are well-positioned for continued progress toward our long-term strategic and financial goals as we look ahead to the second half of the year.”

Based on the strong first-half performance and continued expected momentum in the second half, Nordstrom raised its full-year 2021 revenue guidance to grow more than 35% year-over-year, much better than the previous guidance of 25% growth.

Following the results, Guggenheim analyst Robert Drbul maintained a Hold rating on the stock and said, “While Nordstrom continues to make progress on its sales and earnings recovery, we are somewhat surprised that the sales results weren’t better, relatively speaking, given the positioning of many of their categories related to the engagements and events, such as dresswear, occasion wear, men’s sportswear and shoes.”

Drbul noted that Nordstrom is well-positioned to capture market share and improve profitability as consumers’ lifestyles return to normal. Also, the analyst favors the company’s off-price, digital, and local market strategies, in addition to brand offerings. However, he believes that JWN underperforms compared to its peers alongside numerous metrics.

Overall, the stock has a Hold consensus rating based on 3 Buys, 5 Holds, and 2 Sells. The average Nordstrom price target of $37.50 implies that shares are fully valued at current levels. Shares have gained 143.3% over the past year.