Nordstrom, Inc. shares traded higher by 11 percent on Wednesday after the company reported strong first-quarter sales numbers and raised its full-year guidance.
On Tuesday, Nordstrom reported a first-quarter adjusted EPS loss of 6 cents, slightly missing consensus analyst estimates of a 5-cent loss. First-quarter revenue of $3.57 billion exceeded Wall Street expectations of $3.28 billion. Revenue was up 19 percent from a year ago.
Nordstrom said net sales at its namesake stores grew 23.5 percent in the quarter, while Nordstrom Rack sales were up 10.3 percent from a year ago.
Challenging Visibility
Credit Suisse analyst Michael Binetti said Nordstrom’s first-quarter revenue growth was impressive, but its guidance is baking in significant improvements in the second half of the year.“The biggest concern we have isn’t near-term sales trends, but EBIT dollar growth skewed significantly to 2H leaves a lot of risk to the year in our view (if for no other reason than our view that planning a retail business beyond a few months is very hard right now),” Binetti wrote.
Telsey Advisory Group analyst Dana Telsey said visibility is still challenging given the macroeconomic headwinds in the retail sector.
Guidance Risk
Bank of America analyst Lorraine Hutchinson said Nordstrom’s sales are improving, but she sees risk to the company’s margin guidance.“We think macro pressures will likely put earnings at risk, particularly in 2H,” Hutchinson wrote.
BMO Capital Markets analyst Simeon Siegel said Nordstrom shares are cheap, but it has set the bar extremely high with its guidance hike.
Ratings And Price Targets
Bank of America has an Underperform rating and a $21 target.Credit Suisse has a Neutral rating and a $26 target.
Telsey Advisory Group has a Market Perform rating and a $28 target.
BMO Capital Markets has a Market Perform rating and a $28 target.