Nordstrom cut to Hold at Jefferies; analysts cite "underwhelming" full-price sales

Investing.com -- Nordstrom (NYSE:JWN) has showed signs of stabilizing sales growth at its off-price Rack unit, but full-price sales at the department store chain "continue to underwhelm," according to analysts at Jefferies.

In a note to clients downgrading their rating of the company to "Hold" from "Buy," the analysts argued that while Nordstrom's exposure to higher-income shoppers may provide some support, demand has "remained challenged."

"We are encouraged Rack topline has [accelerated] and see potential for [continued] momentum, but lack of margin recovery, Nordstrom still lagging, and inconsistent execution move us to the sidelines," the Jefferies analysts wrote.

Earlier this week, Nordstrom unveiled disappointing full-year guidance that overshadowed better-than-expected fourth-quarter results.

For the three months ended Jan. 31, the firm reported adjusted earnings of $0.96 per diluted share and revenue of $4.42B, beating estimates of $0.89 and $839.1M, respectively.

But speaking to analysts in a post-results call, Chief Financial Officer Cathy Smith flagged that Nordstrom continues to "see a cautious consumer that is mindful of discretionary purchases in light of inflation, higher interest rates, and the resumption of student loan payments."