Nordstrom sign outside one of the company’s full-line department stores.
Tim Boyle | Getty Images News | beautiful pictures
Other retailers include Macy’s, Kohl’s and Target has also issued better-than-expected full-year forecasts in recent days. They predict there will be more incentive to consume as people return to social and office activities.
But no company has seen such a strong reaction on Wall Street as Nordstrom. Shares have recently rallied more than 30% in pre-market trading.
That’s because Nordstrom has been steeped in negative sentiment in recent months, according to Evercore ISI analyst Omar Saad. That was largely because its discount rack business was underperforming, he said. And so, in the most recent quarter, Nordstorm made “new strides,” he said, which was more than enough to help the retailer’s stock surge.
It also means Nordstrom still has a lot of room to grow, especially in the Rack business, where net revenue remains below pre-pandemic levels in 2019. For comparison, the business as a whole Nordstrom’s department stores are essentially unchanged from that era, the company reported on Tuesday.
By market close on Tuesday, shares of Nordstrom had sold off more than 30% in the past six months. Nordstrom is also currently among the most shorted stocks, with 22% of tradable stocks being shorted.
BMO Capital Markets analyst Simeon Siegel echoed Saad’s view. The analyst commends Nordstrom for ending the year much stronger than it started.
Still, he said, BMO remains out of recommending the stock because it’s unclear whether Nordstrom can actually hit its full-year goals, or if it will hit a “one-time achievement.” are not.
BMO’s price target on Nordstrom stock is $30. The stock closed Tuesday at $19.54.
This story is evolving. Please check back for updates.