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Nordstrom's Outlook Is 'Deteriorating,' UBS Says In Downgrade

Jayson Derrick

High-end fashion retailer Nordstrom, Inc. (NYSE: JWN) faces a "deteriorating" outlook after a survey with consumers point to potential market share losses, according to UBS.

The Analyst

UBS analyst Jay Sole downgraded Nordstrom from Buy to Neutral with a price target lowered from $65 to $33.

The Thesis

The firm's 2018 survey of consumers found Nordstrom ranked No. 1 (Nordstrom Rack ranking No. 4) among consumers buying business attire and special occasion clothing, Sole wrote in the note. A similar 2019 survey found consumers plan on shopping at Nordstrom's lower-priced rivals more for work and special occasion.

Sole said the loss of sentiment could be a function of consumers simply thinking they don't need to spend top dollars at Nordstrom as may have been the norm in the past. One of the trends seen in the fashion market lately is "dressing down" and this is something Nordstrom can't easily recover from.

The UBS survey found 5% of Nordstrom consumers think prices increased, but Sole noted the perception at key rivals Bloomingdale's improved. This may imply Nordstrom consumers are seeing less value for the money they spend and could translate to declining traffic in stores.

The high-end fashion market is seeing minimal growth as a whole, so any market share loss at Nordstrom at the expense of even a small rival could "significantly" impact Nordstrom, Sole said.

Price Action

Shares of Nordstrom traded lower by 2% at $30.81 Monday afternoon.

Related Links:

Goldman Turns Bearish On Fashion Retailers Nordstrom, Ross Stores

Wall Street Reacts To Nordstrom's Disappointing Q1: 'We See The Turnaround As Likely Paused For Now'

Latest Ratings for JWN

Date Firm Action From To
Jul 2019 Downgrades Buy Neutral
Jun 2019 Downgrades Neutral Sell
Jun 2019 Upgrades Reduce Hold

View More Analyst Ratings for JWN
View the Latest Analyst Ratings

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