Nordstrom's Growth Efforts Seem Promising: Buy or Hold the Stock?

Nordstrom, Inc. JWN is strengthening its digital capabilities, driving growth and enhancing customer engagement. It has been quite focused on driving Nordstrom banner growth, optimizing operations and building momentum at Nordstrom Rack. Digital efforts are also underway.

The company’s shares have surged 31.7% in the past year, outperforming the Zacks Retail - Apparel and Shoes industry’s 16.5% decline and the S&P 500 index’s 5.4% increase. The broader Retail-Wholesale sector rose 11.5% in a year.  

Let’s dive deeper to know more about this Seattle-based fashion retailer.

Factors in Favor of JWN Stock

Nordstrom is focused on leveraging technology to streamline operations, improve inventory management and offer a seamless shopping experience. Initiatives such as faster delivery and personalized services underscore its commitment to digital innovation. In fourth-quarter fiscal 2024, digital sales represented 38% of the company’s net sales.

Nordstrom looks to strengthen Rack’s productivity throughout its network, reduce transportation costs and delivery times, and enhance services via faster delivery. The company is introducing more premium brands at Rack, a better assortment and increased brand awareness. The Rack banner's digital channel is a differentiator for the off-price retail. Its Closer to You strategy and store-expansion efforts also bode well. 

The company has redefined its flagship brand to offer it a trendy look, with a style-driven and top-quality assortment. Increased focus on distribution capabilities and improved connectivity of physical and digital inventory are other tailwinds. Hence, JWN is confident about its brand strength and its ability to achieve profitable growth while delivering value to shareholders.

JWN Price Performance

JWN’s Earnings Estimate Revision

Given the tailwinds surrounding the stock, the Zacks Consensus Estimate for fiscal 2025 and fiscal 2026 has been northbound. 

Over the past 30 days, the consensus estimate for earnings per share (EPS) for the current fiscal year has risen 2.9% to $2.13 and 2.7% to $2.29 for fiscal 2026. This implies a year-over-year earnings dip of 1.8% for the current fiscal year and 7.5% for the next fiscal year. The consensus mark for sales implies growth of 1.9% for fiscal 2025 and 1.4% for fiscal 2026.

JWN Stock’s Valuation

Nordstrom stock is trading at an attractive valuation relative to the industry. Going by the price/earnings ratio, JWN stock is currently trading at 11.11 on a forward 12-month basis, lower than 13.37 of the industry. The stock is also trading lower than its median of 11.98. A Value Score of A further adds strength.

Conclusion

Nordstrom’s robust strategies, including sturdy momentum at the Rack banner and digital endeavors, position it for success. The stock’s attractive valuation further demonstrates strength. The company currently sports a Zacks Rank #1 (Strong Buy).

Other Key Picks in Retail

We have highlighted three other top-ranked stocks, namely Gap GAP, Boot Barn BOOT and Urban Outfitters URBN.

Gap, clothing and accessories retailer, currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for Gap’s current financial-year sales indicates growth of 1.6% from the year-ago figure. GAP delivered an average earnings surprise of 77.5% in the trailing four quarters.

Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, currently has a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Boot Barn’s current financial-year sales indicates growth of 14.9% from the year-ago figure. The company delivered a trailing four-quarter earnings surprise of 7.2%, on average.

Urban Outfitters, a fashion lifestyle specialty retailer, currently carries a Zacks Rank of 2. URBN delivered an average earnings surprise of 28.4% in the trailing four quarters.

The consensus estimate for Urban Outfitters’ current financial-year sales indicates growth of 6.6% from the year-ago figure.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research