Nordstrom, Inc.
Thesis
We are long Nordstrom with a price target of $94, representing 46% upside on 11/12/2018’s price of $64.30. Despite common perception, Nordstrom is not only a traditional department store, but it also generates over 50% of its revenue from e-commerce and Nordstrom Rack. Continued outperformance in these favorable pockets of the retail industry will support growth in cash flows and a valuation re-rating.
Did it work?
The long thesis for Nordstrom anticipated a significant upside of 46% based on its e-commerce and Nordstrom Rack performance. However, the stock has declined by 55.7% since the pitch, indicating that the expected growth in cash flows and valuation re-rating did not materialize. This substantial drop in price confirms that the thesis did not play out as anticipated.
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