On Wednesday, TD Cowen maintained a Market Perform rating on Nordstrom (NYSE: NYSE:JWN) but increased the shares price target from $17.00 to $22.00. This adjustment follows Nordstrom's recent earnings report, in which the company surpassed earnings per share (EPS) expectations.
The retailer reported an EPS of 96 cents, compared to the anticipated 88 cents by analysts. This beat was attributed to a lower tax rate which helped offset a combination of softer net sales growth and gross margins. Net sales saw a year-over-year increase of 2.2%, which was below the expected 4.3%, and gross margins improved by 126 basis points year over year, compared to the predicted improvement of 206 basis points.
Nordstrom's forecast for fiscal year 2024 EPS fell short of analysts' expectations at the midpoint by 8%, projecting $1.85 versus the anticipated $2.01. The company's outlook includes comparable store sales ranging from a 1% decline to a 2% increase. Despite the lower guidance, there was a positive inflection in sales at Nordstrom Rack, the company's off-price division, which saw a year-over-year increase of 15%.
The company also announced plans to expand its retail presence, with the addition of 22 new stores. This expansion brings the total number of stores to 280, up from the current 258 locations. The price target increase to $22 reflects these developments and the recent financial performance of the company.
The update from TD Cowen highlights Nordstrom's mixed results, with the positive EPS and Rack sales growth balanced against the softer guidance for the upcoming fiscal year. The new price target suggests a level of cautious optimism about the company's stock performance going forward.
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