Nordstrom shares slide after weak revenue guidance and analyst downgrade

Nordstrom Inc. shares were down as much as 5.3% in Tuesday trading after the department store retailer announced 2018 sales guidance that’s below the FactSet consensus.

Nordstrom JWN, -2.67%  is hosting its investor day on Tuesday, starting at 11:30 a.m. ET.

Nordstrom expects fiscal 2018 sales of $15.2 billion to $15.4 billion, lower than the $15.8 billion FactSet consensus.

Same-store sales are expected to be up 0.5% to 1.5% and diluted earnings per share are expected to be $3.35 to $3.35. The FactSet consensus is for a same-store sales increase of 0.8% and EPS of $4.54.

For the long term, sales are expected to grow 3% to 4% on an average annualized basis from 2017 to 2022, and earnings before interest and taxes (EBIT) is expected to grow 5% to 6% on an average annualized basis for the period.

Nordstrom was downgraded to sector weight at KeyBanc Capital Markets based on the cost of competing with Inc. AMZN, +0.23%  which continues to build its apparel business, and Stitch Fix Inc. SFIX, +6.01%  which has a “data-focused approach,” analysts said.

“At Nordstrom, e-commerce is now 25% of sales, but inconsistent full-line comps point to channel substitution,” wrote analysts led by Edward Yruma. “We remain impressed by Nordstrom’s openness to reinventing itself – fortuitous investments in e-commerce and Rack have given the retailer a fairly unique level of stability. However, initiatives like pop-ups, product exclusives, and remodels have been unable to counter the natural traffic migration to e-commerce at the full-line stores.”

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Moreover, it will be costly to maintain these efforts.

Nordstrom was also downgraded last week to market perform from outperform at Cowen on a number of concerns, including the same-store sales results at the off-price Rack chain, which lags behind other off-price retailers.

Nordstrom announced Monday that it will add two new Local stores in California, building on its small-format, highly-personalized store design.

Stitch Fix announced the launch of the Stitch Fix Kids, a subscription service with available sizes ranging from 2T to 14 with average prices ranging from $10 to $35 per item. Stitch Fix shares rallied early Tuesday up 10.3% after it was initiated at overweight with a $38 price target at KeyBanc.

Nordstrom shares closed Tuesday down 2.7%, but were up 10% for 2018 to date, while the S&P 500 index SPX, +0.35%  has rallied 4.5% for the period.

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