Nordstrom Earnings: Signs of Progress but Outlook for 2024 Disappoints; Shares Attractive

Although no-moat Nordstrom’s fourth-quarter sales and adjusted profitability surpassed our expectations, its shares slid 9% in aftermarket trading on March 5 as its 2024 guidance was underwhelming. Like some peers in the retail space (including no-moat Macy’s), Nordstrom anticipates weak consumer demand for apparel, especially in the first half of the year. Given this outlook, we expect to lower our $40 per share fair value estimate by a mid-single-digit percentage. Even so, there are signs of progress at the company, including in its inventory control (down 3%), logistics, and costs.