Nordstrom, Inc. (NYSE:JWN) reported its fourth-quarter earnings at $1.23 per share, significantly ahead of the consensus estimate of $1.00 per share, backed by higher-than-expected gross margins.
Telsey Advisory Group On Nordstrom
Analyst Dana Telsey maintained a Market Perform rating on the stock, while raising the price target from $27 to $30.
Nordstrom’s gross margin expanded 500 basis points (bps) to 38.4%, beating the consensus estimate of an expansion of 310 bps, “driven by better merchandise margins (lower markdowns) and buying/ occupancy leverage,” the analyst wrote. She added that the company’s operating margin expanded 600 bps to 6.8% in the fourth quarter, surpassing the Street expectations of 5.9% but below the 7.5% recorded pre-pandemic.
“While macro pressures persist, JWN is seeing encouraging early signs with the resumption of travel, in-person events, and a return to work, which should all be supportive of growth,” Telsey said in the note.
“In addition, the company should continue to benefit from pricing and category management improvements and supply chain optimization, while a mid-single digit average price increase can further support increased merchandise margins,” she further mentioned.
Credit Suisse On Nordstrom
Analyst Michael Binetti reiterated the Neutral rating on Nordstrom, while raising the price target from $26 to $29.
The analyst raised the first-quarter earnings estimate from a loss of 15 cents per share to positive earnings of 11 cents per share. He also raised the full-year 2022 and 2023 estimates from $2.35 per share to $3.46 per share and from $2.50 per share to $3.60 per share.
“Despite JWN’s big stock move in the aftermarket, it’s important to note 2022 rev guidance mid-point is still only roughly in line with 2019 (despite adding the NYC flagship and with Rack store growth over the last two years),” Binetti said in the note.
“Further, the company is guiding to margins inflecting to 5.6%-6.0% despite ending 4Q with inventories above plan again,” he added.
Photo: Courtesy of Mike Kalasnik on Flickr
