Shares of Nordstrom (JWN 7.84%) were up 2.8% on Monday after a Morgan Stanley analyst reiterated her hold rating on the stock, but set her price target at $21 a share, some 30% above its current price.
The department store chain reported a massive $521 million first-quarter loss last week as the coronavirus pandemic took its toll, with sales plunged 40% to about $2 billion. It had to clear out merchandise at fire-sale prices, resulting in inventory levels falling 25% year over year. That let it look to the coming quarters with something of a clean slate now that its stores are reopening.
No one was expecting any retailer to report good results this past quarter, and Nordstrom didn't surprise in that regard, yet the chain has sufficient liquidity to finance a comeback with approximately $1.4 billion in cash.
It will emerge from the pandemic as a leaner operation after closing 16 underperforming stores, and will also face less competition as a number of competitors have filed for bankruptcy. Others, such as Lord & Taylor, intend to liquidate their stores upon reopening.
Because Nordstrom has a developed e-commerce platform, had previously advanced plans to shift business from shopping malls (which are dying venues), and is focused on operating a smaller business, it is poised to make a recovery. But it may be several quarters before that materializes.