What Risks Does Nordstrom Face in this Volatile Retail Environment?

Nordstrom (JWN) is a fashion specialty retailer established in the United States. The company sells a wide selection of garments, shoes, jewelry, and other items through a variety of channels.

Nordstrom recently released its fourth-quarter results for 2021. Revenue increased by 23% year-over-year to $4.38 billion, exceeding consensus projections of $4.36 billion. Meanwhile, adjusted profits per share increased by 486% year-over-year to $1.23.

For Fiscal 2022, the company forecasts earnings in the range of $3.15 – $3.50 per share. Revenue growth is estimated between 5% and 7% year-over-year.

Let’s look at the risk factors for Nordstrom using the new Tipranks’ Risk Factors tool.

Risk Factors

Nordstrom’s main risk categories are Finance & Corporate and Ability to Sell, which account for 6 risks each of the total 24 risks identified. The next major Nordstrom risk category is Production, which accounts for 5 risks.

In its recent report, the organization has added one new risk under the Production category. The company said, “Any inability to mitigate global labor and merchandise pricing pressures or disruptions may negatively impact our profitability.”

Nordstrom tells investors that any increase in product or delivery costs, such as those caused by changes in the price of raw materials or transportation, could result in higher sales prices, impacting customer demand. Furthermore, the company warns that higher labor costs would raise operating expenses and, in turn, reduce profitability. On the other hand, if the company does not pay competitive wages, it may be unable to keep its personnel, resulting in high staff turnover and a negative impact on business operations.

Nordstrom further warns that while the firm is focused on enhancing its internal network by diversifying carrier capacity and improving inventory visibility, supply chain disruptions might harm the company’s ability to meet customer demand, hurting future results and profitability.

Wall Street’s Take

Turning to Wall Street, the stock has a Hold consensus rating based on one Buy, 10 Hold, and two Sell recommendations.

Moreover, the average JWN price target of $27.67 implies 5.97% upside potential to current levels.

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