According to analysts, fashion lovers are back to their pre-Covid spending habits, who say this presents as good news for Norstrom (ticker: JWN) stock as consumers look to buy dressier clothes to fit their back-t-normal lifestyles.
“More customers are shopping for social events, travel, and return to the office. When overlaid with exposure to the high-end, more insulated consumer from inflation impacts, Nordstrom is well-positioned,” said Jefferies analyst Stephanie Wissink wrote in a research note.
“We are highly encouraged by the direction and degree of improvement; given the thesis had had fits and starts, we’re looking for a series of quarters that reinforces a growth and margin uplift to justify a higher valuation and estimate upside potential,” she added.
The stock gained 6% in premarket trading, landing at $21.81 after the department store lifted its financial forecasts representing a second time this year. Shares have dropped 13% year to date, while the S&P 500 has fallen 17%.
For the rest of the year, Nordstrom now holds the expectation of total revenue growth, which includes retail sales and credit-card revenue, of 6% to 8% from the previous year- an increase from the range of 5% to 7% growth previously. It expects adjusted earnings per share of $3.20 to $3.50, increasing from the previous expectation of $3.15 to $3.50, over the $3.11 consensus estimate.
Wissink gave the stock a Hold price target of $22. Although she remained highly encouraged by the company’s news, she claimed to be looking for a series of quarters that reinforces a growth and profit margin uplift to give justification for a higher valuation and estimate a potential upside. It would seem that many analysts also hold the same optimism for semi-luxury clothing moving forward.
“We believe Nordstrom is positioned to gain share and drive profitable growth as consumers resume activities, including social events, travel, and return to work. We note merchandising challenges for this dynamic environment, but we believe fashion categories should do well in reopening,” said Robert Drbul, Guggenheim analyst. He gave Nordstrom a Neutral with an undisclosed price target.