Stifel reported on Friday that it has cut Nordstrom, Inc. (JWN
Analyst Richard Jaffe said that although JWN reported strong fourth quarter results, the company’s weak outlook for 2014 is a concern. The analyst noted that JWN’s Q4 results were “cautious given the current retail environment and the additional expenses related to Canada expansion, technology investments and accelerated Rack pre-opening costs.”
The analyst also noted that “management has taken a long-term view, recognizing that the retail world is changing rapidly and dramatically, and has adjusted its growth investments to be consistent with the changing environment. Nordstrom has focused its efforts on the e-commerce business, the Rack off-price business and the new markets of Canada and New York City. These investments are different than prior investments and differ greatly from the investment in a new Nordstrom full-line store.”
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Regarding the company’s expansion to Canada, Jaffe said: “Canadian retail real estate in prime locations is different than the US. There are fewer high quality locations and as a result they are costly; requiring upfront expenditures, build-out expenses and monthly rent to be paid. The analyst notes that population density is better around larger cities in Canada.”
Nordstrom shares were down $1.24, or 2.09%, during pre-market trading Friday. The stock is down 3.82% YTD.
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