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Nordstrom Inc JWN

Morningstar Rating
$20.39 +0.07 (0.34%)
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Company Report

Nordstrom: Moat Rating Downgraded to None as Retail Competition Intensifies; Shares Attractive

We are adjusting our moat rating on Nordstrom to none from narrow as we no longer believe it has a competitive advantage based on a brand intangible asset. The company operates the largest US luxury department store company by sales, and Rack is one of the larger off-price concepts in the market. As such, we have historically believed it had an advantage over other traditional department stores like Macy’s and Kohl’s, both rated as no-moat. However, recent financial results suggest that the market forces, such wide-moat Amazon’s apparel offerings, that have drawn sales from traditional department stores are negatively impacting Nordstrom, as well. Over the past decade or so, its operating margins have declined to the midsingle digits from the low double digits as its sales growth has been inconsistent and its selling, general, and administrative costs have risen to about 34% of net sales from less than 28% prior to 2015. While its management often discusses various solutions to its problems, we anticipate significant spending will be needed to contend with the competitive threats to both of its nameplates.

Price vs Fair Value

JWN is trading within a range we consider fairly valued.
Price
$20.39
Fair Value
$51.00
Uncertainty
Very High
1-Star Price
$15.00
5-Star Price
$28.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Nordstrom's online sales were nearly $6 billion in 2022, making it one of the largest e-commerce firms in the United States.

Bears

Large amounts of apparel sales have shifted to outlets, e-commerce, and specialty stores. Annual U.S. department store sales have dropped by more than half over the past 15 years.

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News

Trading Information

Previous Close Price
$20.32
Day Range
$20.1320.57
52-Week Range
$12.8823.53
Bid/Ask
$20.11 / $20.91
Market Cap
$3.31 Bil
Volume/Avg
3.6 Mil / 5.0 Mil

Key Statistics

Price/Earnings (Normalized)
13.34
Price/Sales
0.22
Dividend Yield (Trailing)
3.73%
Dividend Yield (Forward)
3.73%
Total Yield
4.03%

Company Profile

Nordstrom is a fashion retailer that operates about 93 department stores and approximately 260 off-price Nordstrom Rack stores. The company also operates both full- and off-price e-commerce sites, two clearance stores, and seven Local locations. Nordstrom’s largest merchandise categories are women’s apparel (28% of 2022 sales), shoes (26% of 2022 sales), men’s apparel (15% of 2022 sales), and women’s accessories (13% of 2022 sales). Nordstrom, which traces its history to a shoe store opened in Seattle in 1901, continues to be partially owned and managed by members of the eponymous family.
Sector
Consumer Cyclical
Industry
Department Stores
Stock Style Box
Small Value
Total Number of Employees
60,000

Competitors

Valuation

Metric
JWN
M
KSS
Price/Earnings (Normalized)
13.346.82
Price/Book Value
4.361.270.81
Price/Sales
0.220.220.17
Price/Cash Flow
2.923.034.28
Price/Earnings
JWN
M
KSS

Financial Strength

Metric
JWN
M
KSS
Quick Ratio
0.190.110.05
Current Ratio
1.001.181.14
Interest Coverage
1.936.510.34
Quick Ratio
JWN
M
KSS

Profitability

Metric
JWN
M
KSS
Return on Assets (Normalized)
4.27%4.69%−0.84%
Return on Equity (Normalized)
58.03%20.19%−3.33%
Return on Invested Capital (Normalized)
8.90%9.07%0.75%
Return on Assets
JWN
M
KSS
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Department Stores Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
AONNY
AEON Co Ltd ADRDklg$20.4 Bil
AONNF
AEON Co LtdFhqn$20.4 Bil
SVTMF
SM Investments CorpFbzsph$19.9 Bil
ELPQF
El Puerto de Liverpool SAB de CVQvkb$9.8 Bil
SRHGF
Shoprite Holdings LtdQcmgdm$7.4 Bil
SRGHY
Shoprite Holdings Ltd ADRDjwhvx$7.4 Bil
TOKUY
Tokyu Corp ADRXfngg$7.1 Bil
M
Macy's IncJgxs$5.3 Bil
KSS
Kohl's CorpXxxm$3.0 Bil

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