Analyst Note| David Swartz |
Nordstrom beat our 2021 second-quarter sales and earnings expectations and provided a full-year outlook above our expectations. Against an easy comparison, its quarterly sales growth of 101% eclipsed our 83% forecast. However, its sales were still down about 6% as compared with 2019’s second quarter (some negative impact from Anniversary Sale timing). Nordstrom’s operating margin also outperformed our estimate (4.2% versus 3.0%) but conspicuously paled in comparison to the double-digit operating margins recently reported by no-moat department store operators Macy’s and Kohl’s. Nordstrom’s share price slid by about 8% in post-market trading, possibly because of concerns over cost pressures and the rate of sales recovery. We expect to lift our per share fair value estimate on the firm of $33.50 by a low-single-digit percentage but view its shares as fully valued.