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Why Nordstrom Stock Lost 24% in May

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

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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 -1.80% ) 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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Nordstrom, Inc. Stock Quote
Nordstrom, Inc.
JWN
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