Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Nordstrom, Gap plunge with Street worried about rivals chipping away share

Published 24/11/2021, 14:16
© Reuters. FILE PHOTO: The outside of the Nordstrom flagship store is seen during a media preview in New York, U.S., October 21, 2019. REUTERS/Shannon Stapleton/File Photo
JWN
-
GPSI34
-
J1WN34
-

(Reuters) - Shares of Nordstrom Inc (NYSE:JWN) and Gap Inc (NYSE:GPS) slumped more than 20% on Wednesday as warnings of product shortages during the crucial holiday season raised fears that the retailers were losing out to better-prepared competitors.

A bunch of Wall Street analysts lowered their price targets, with Wells Fargo (NYSE:WFC) nearly halving its target on Gap and Jefferies making the most aggressive cut on Nordstrom.

On Tuesday, Nordstrom said its off-price business - Nordstrom Rack - has suffered severe shortages of women's apparel and shoes, while Gap flagged up to $650 million in lost sales and cut its annual forecast.

Nordstrom was downgraded to "hold" from "buy" at Jefferies, and Credit Suisse (SIX:CSGN) analysts said Nordstrom Rack is not positioned well competitively compared to rivals such as TJX (NYSE:TJX) Cos and Burlington Stores.

"Nordstrom will need to re-evaluate its strategy of primarily using Rack to clear end of season goods from the brands that it sells at full-price stores," the brokerage said.

Nordstrom executives on a post-earnings call said they had not responded "as quickly and as aggressively" enough to have sufficient inventory.

In contrast, other retailers, including American Eagle Outfitters (NYSE:AEO), Macy's (NYSE:M) and Target (NYSE:TGT), have chartered container ships, used air freight or ordered in advance to overcome supply-chain bottlenecks to stock their shelves for the holidays.

"In this market, retailers have been rewarded more than usual when they exceed expectations and continue to raise guidance. Gap did the exact opposite and this market has been brutal to retailers who have struggled," CFRA Research analyst Zachary Warring said.

© Reuters. FILE PHOTO: The outside of the Nordstrom flagship store is seen during a media preview in New York, U.S., October 21, 2019. REUTERS/Shannon Stapleton/File Photo

Shares of Gap and Nordstrom were on pace to open at their lowest in about a year.

Shares of retailers after reporting third quarter results: https://graphics.reuters.com/NORDSTROM-STOCKS/egpbkadnbvq/chart.png

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.