Please ensure Javascript is enabled for purposes of website accessibility

Why Nordstrom Stock Lost 24% in May

By Demitri Kalogeropoulos – Jun 4, 2019 at 9:33AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares reached an almost 10-year low after the retailer slashed its 2019 outlook.

What happened

Last month was a tough one for Nordstrom (JWN -0.13%) shareholders, as their stock shed 24% in May compared to a 7% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

The slump added to a wider drawdown in the retailer's stock, with shares now near 10-year lows.

A man holding shopping bags.

Image source: Getty Images.

So what

Investors pummeled shares late in the month after the company revealed surprisingly weak fiscal first-quarter results. Revenue fell 4% during the period, with declines occurring in both its full-price and off-price segments and across its physical and e-commerce sales channels.

Now what

Executives expressed confidence that they could recover from the slump. "This is well within our control to turn around," copresident Erik Nordstrom said in a press release. Yet investors chose to focus more on the retailer's updated outlook, which implies continued struggles ahead. Specifically, Nordstrom now sees weaker results in both the top and bottom lines in 2019, with adjusted earnings and adjusted profitability forecasts each taking a big step lower. The pessimism around the stock has made it cheaper than inventors have seen in years. However, that low valuation seems justified given that market share and profit trends are far from stable today.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Nordstrom. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.