Analyst Note
| David Swartz |Narrow-moat Nordstrom’s results for the fourth quarter of 2020 and guidance for 2021 were in line with its earlier (January) pre-announcement and (February) analyst event disclosures (see our prior notes). While its fourth-quarter sales decline of 20.0% was marginally better than our forecast of a 21.5% drop, its operating margin of just 0.8% was well below our 3.7% forecast. More positively, the firm realized cost savings of more than $420 million in the year, including more a than $300 million reduction in permanent overhead expenses, which we think should allow it to achieve 2021 EPS around the $1.57 that we had previously forecast. We do not expect to make any material change to our per share fair value estimate of $33.50 and view Nordstrom’s shares as fully valued.