Shares of Nordstrom Inc. JWN fell 3.8% in trading Thursday morning after the luxury department store retailer said holiday season sales fell 22%. Nordstrom is largely a clothing retailer, a category that has been affected during COVID-19. But even taking that approach into account, Neil Saunders, managing director of GlobalData Retail, says the company did not sell the right merchandise during these times of pandemic.
Nordstrom focused too much on cocktail dresses and party dresses, causing holiday sales to drop 22%, says one analyst
“[G]Given that the company had almost a year to adapt to the pandemic, we were disappointed by the prevalence of high fashion apparel, including cocktail dresses and party dresses, on the floors of most stores, ”he wrote. See: Updated Boot Barn as Country & Western Style Goes Casual “These items were completely inappropriate for this holiday season and did nothing to turn browsers into shoppers. If Nordstrom had skewed its range, even a little, towards comfortable and sporty clothing, then it may well have been able to generate slightly better figures. was building up over the nine-week period leading up to January 2, 2021, and that momentum has continued after the holiday season. Nordstrom is receiving help from its digital business, which increased 23% and accounted for 54% of sales. total sales. “[W]While we acknowledge that Nordstrom’s online business is more mature than many other players, we can’t help but notice that the company’s digital growth is well below the market average, meaning it lost share even online. Saunders said. “Again, this mainly comes down to a supply that doesn’t match the demand. “UBS analysts say department stores could be getting a post-holiday boost from stimulus checks that are hitting consumers’ bank accounts, but said it could be temporary. Plus: Target’s holiday sales show how important stores are even as COVID-19 drives online business [C]Businesses are seeing month-over-month improvement in January. We believe this is due to stimulus, ”wrote analysts led by Jay Sole. UBS estimates that $ 112 billion of the expected $ 166 billion in payments have been sent. “January earnings may be masking underlying weakness, in our opinion. This means that the configuration for 1Q21 could be unfavorable as the stimulus wears off and the pace of vaccine distribution continues to be slower than expected, ”analysts said. UBS rates the sale of Nordstrom stock with a price target of $ 11. Still, JPMorgan analysts point out that Nordstrom’s e-commerce business puts them in a better position than their competitors in the department store sector. “[W]Note that Nordstrom is relatively better positioned than its department store peers due to higher e-commerce penetration (equivalent to one-third of 2019 sales vs. ~ 20%), ”the analysts wrote. JPMorgan rates Nordstrom shares neutral with a $ 32 price target. Nordstrom shares have soared nearly 174% in the past three months, but are down 12.8% over the past year. The benchmark S&P 500 SPX index, + 0.18% has risen 16.3% over the past 12 months.