Shares of Nordstrom, Inc. JWN have surged 34.3% in the past year, outperforming the Zacks Retail - Apparel and Shoes industry’s 31.9% growth and S&P 500 index’s 25.2% increase. The broader Retail-Wholesale sector rose 35.4% in a year.  

JWN is strictly focused on driving Nordstrom banner growth, optimizing operations and building momentum at Rack. Digital efforts are also underway.

Let’s delve deeper.

Analyzing JWN’s Core Strengths

Nordstrom has been strengthening its digital capabilities, driving growth and enhancing customer engagement. During the third quarter of fiscal 2024, digital sales rose 6%, supported by expanded product assortments, improved search and discovery tools, and high in-stock availability for fast-turning items. The timing shift of the Anniversary Sale hurt digital sales by about 100 basis points. In the reported quarter, digital sales accounted for 34% of the total sales. 

The company is focused on leveraging technology to streamline operations, improve inventory management and offer a seamless shopping experience. Initiatives such as faster delivery and personalized services underscore Nordstrom’s commitment to digital innovation. The company’s digital transformation initiative aims to enhance data accessibility and analysis, accelerating the adoption of generative AI solutions and services. The initiative is expected to be completed by year-end.

JWN has been making efforts to change the storage and access of data. This transformational change looks to improve data access and analysis capabilities, hence enhancing the ability to leverage generative AI solutions and services at a higher pace. In the most recent quarter, digital momentum continued with sales growth of 6% year over year. Growth at nordstrom.com was backed by an increase in the assortment across a balance of price points, improvements in search and discovery and high in-stock rates of its fastest-turning items.

Nordstrom has been expanding its Rack banner by increasing the brand penetration. It looks to strengthen Rack’s productivity throughout its network, reduce transportation costs and delivery times and enhance services via faster delivery. The company continues to focus on introducing more premium brands at Rack, better assortment and increased brand awareness. The Rack banner's digital channel is a differentiator to the off-price retail.

The company has also been making notable efforts to drive efficiency and enrich the customer experience. JWN is redefining its flagship brand to give it a trendy look, offering a style-driven and top-quality assortment. Increased focus on distribution capabilities and improved connectivity of physical and digital inventory are other tailwinds.

JWN Price Performance

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JWN Stock’s Valuation

Nordstrom stock is trading at an attractive valuation relative to the industry. Going by the price/earnings ratio, JWN stock is currently trading at 12.3 on a forward 12-month basis, lower than 20.19 of the industry. A Value Score of B further adds strength.

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Conclusion

Nordstrom’s robust strategies, including sturdy momentum at its Rack banner and digital endeavors, position it well for success. Its long-term growth strategies, coupled with the stock’s attractive valuation, further demonstrate strength. 

Analysts seem quite optimistic about this key fashion specialty retailer. The Zacks Consensus Estimate for 2025 sales and earnings per share (EPS) is currently pegged at $15.21 billion and $2.01, respectively. These estimates indicate corresponding growth of 1.5% and 1.7% year over year. The company currently sports a Zacks Rank #1 (Strong Buy).

Other Key Picks

We have highlighted three other top-ranked stocks, namely Boot Barn BOOT, Deckers DECK and Genesco GCO. 

Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Boot Barn’s current financial-year sales indicates growth of 14.9% from the year-ago figure. The company has a trailing four-quarter earnings surprise of 7.2%, on average. 

Deckers, a footwear and accessories dealer, currently sports a Zacks Rank of 1. DECK delivered an average earnings surprise of 36.8% in the trailing four quarters.

The Zacks Consensus Estimate for Deckers’ current financial-year sales implies growth of 15.3% from the year-ago figure.

Genesco, a leading footwear and accessories retailer, currently sports a Zacks Rank of 1. GCO delivered an average earnings surprise of 36.9% in the last four quarters. 

The consensus estimate for Genesco’s current financial-year sales indicates growth of 2% from the year-ago figure.

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