Nordstrom struggled over the last year, but the company could turn things around in 2020.
Retail department stores like Nordstrom struggled for most of 2019. The stock is up from its August lull but still hasn’t managed to bounce back to its 2015 highs.
And most analysts have been negative about department store stocks in general, including Nordstrom. The stock is considered a hold on Wall Street, with a potential downside of more than 11%.
But JP Morgan analyst Matthew Boss seems to have had a change of heart when it comes to Nordstrom. The analysts upgraded the stock from neutral to underweight and raised his price target from $26 per share to $41.
3 reasons to invest in Nordstrom stock
Here are a few reasons why Nordstrom could turn things around in 2020.
1. Nordstrom’s digital sales are improving
One of the biggest problems department stores face is the increase in online shopping. That’s why Nordstrom has been working on improving its digital sales and creating an omnichannel experience for its customers.
And so far, these efforts seem to be paying off. The company’s digital sales rose 7% during the third quarter. During its most recent earnings report, management said that its e-commerce business now represents 34% of its total business.
2. The company’s strategic partnerships
Brick-and-mortar is still a viable business model, but these companies need to think outside of the box. The successful retail stores are the ones that have found a unique way to position themselves in the market.
One of the ways Nordstrom has done this is by forming strategic partnerships with other companies. The company features popular brands that don’t sell through many other retail outlets.
For instance, the company recently set up “mini-shops” for the popular beauty brand Glossier at seven different Nordstrom locations across the U.S. The event was promoting Glossier’s new fragrance launch and was a great source of foot traffic for Nordstrom.
3. Nordstrom continues to improve its profitability
Nordstrom also continues to improve its profitability through supply chain improvements and more discipline when it comes to expenses. The company did a good job of managing its inventory during the holiday shopping season. And management expects its cost-savings plan to save between $150 million and $200 million this year.
Challenges still lie ahead for Nordstrom, but these are all positive indicators for the company. If the company can continue to improve its execution and increase its digital presence, it may be able to turn things around in the coming years.