What happened

Shares of Nordstrom (JWN 0.34%) plunged 17.6% on Wednesday, following the release of the retailer's second-quarter financial report.  

So what

Nordstrom's net sales doubled from the second quarter of 2020, when coronavirus-related store closures weighed heavily on its results. Revenue from Nordstrom's namesake brand surged 127%, while sales for its Nordstrom Rack brand increased 61%.

Moreover, cost controls helped Nordstrom's gross margin improve by 13.7 percentage points to 35%. The retailer's net earnings, in turn, came in at $80 million, or $0.49 per share, compared to a loss of $255 million, or $1.62 per share, in the year-ago period.

"We capitalized on improving customer demand with focused execution, healthy inventory sell-through, and continued expense management to deliver strong quarterly results," CEO Erik Nordstrom said in a press release.

A downwardly sloping stock chart.

Nordstrom's stock price fell sharply on Wednesday. Image source: Getty Images.

Investors, however, appeared to focus on Nordstrom's performance in comparison to its pre-pandemic results. The retailer's sales were down 6% from the second quarter of 2019. Even after accounting for a shift in the timing of the company's Anniversary Sale, Nordstrom's revenue was still down 4%.

Now what

After reviewing its second-quarter financial metrics, J.P. Morgan analyst Matthew Boss lowered his rating on Nordstrom's shares from neutral to underweight and slashed his price forecast from $39 to $34. 

Boss noted that despite Nordstrom's high-income customer base, its results have lagged that of its rivals. Worse still, Boss believes the relatively positive economic trends its customers have experienced might be "as good as it gets," which would bode poorly for Nordstrom's prospects in the coming quarters.