Struggling Nordstrom is going all-in on New York City in a major turnaround attempt - but the market doesn't seem to care | Markets Insider

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• Nordstrom opened its new flagship New York City women's store on Thursday.
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• Shares sank as much as 2.24% by mid-morning.
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• Wall Street reactions to the store were positive but didn't translate into share gains - most analysts still have "neutral" ratings on the company's stock.
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• Read more on Business Insider.

Nordstrom's seven-story flagship New York City store opened Thursday to an icy reaction from the stock market.

Shares sank as much as 2.24% Thursday after the store, Nordstrom's first in the city that offers women's goods, opened its Midtown location. The flagship joins Nordstrom's men's store, several Nordstrom Racks, and merchandise-less Nordstrom Local hubs on the Upper East Side and in the West Village in the city.

The new NYC flagship is the largest single-project investment that Nordstrom has ever made, according to CNBC. It shows that the company's making a big bet on the location amid a tough year, where it's struggled alongside other retailers to adjust to changing consumer trends and continue to grow sales in a shifting retail environment.

Even after the company's positive second-quarter earnings and a report that the founding family wants to take a larger stake in the retail chain, shares have struggled to gain. Nordstrom has fallen more than 23% this year, while the S&P 500 index has risen more than 20%.

The consensus from some analysts is that a physical location in New York City is good for Nordstrom, but they maintained neutral ratings on shares.

That's in line with Wall Street's expectations for the company. Of the analysts that cover Nordstrom, 15% say to "buy," 70% say to "hold" shares, and 15% rate the shares "sell," according to Bloomberg data.

Here's what analysts are saying about Nordstrom following the opening of its new store in NYC:

1. Jen Redding, Wedbush Securities

Rating: Neutral

Price target: $36, from $24

"We came away more constructive on Nordstrom's local market opportunity as synergies in customer spend for cross-platform/cross-price shoppers make sense and resonate with consumers in our proprietary research. Additional Local rollouts are planned for JWN's top 10 markets in 2020. Management's tone was upbeat and all events were well-attended," Wedbush analyst Jen Redding wrote in a note Wednesday.

"Over the long term, we continue to see long term value in shares of Nordstrom, and see benefits from the company's localized market strategy, unique limited distribution brand growth, and leverage owing to a powerful omni channel as driving value in time."

2. Dana Telsey, Telsey Advisory Group

Rating: Market perform

Price target: $32

"Nordstrom's entry into the New York market should help drive a multiyear sales lift in the region, which the company has previously identified as a $700 million-plus full-price opportunity," Dana Telsey of Telsey Advisory Group wrote in a Wednesday note.

"However, for the company overall, we continue to look for indications that marketing efforts and improvement in product assortments are helping to drive traffic/conversion following weak sales performance over the past three quarters."

3. Robert Drbul, Guggenheim Securities

Rating: Neutral

Price target: None

"We believe expansion in NYC is a logical next-step for Nordstrom's market strategy, given its size," Guggenheim Securities' Robert Drbul wrote in a note Tuesday after Nordstrom's soft opening. Beyond NYC, the company has plans to open stores in San Francisco, Dallas, and Chicago by the holiday season in late 2019.

He added: "The primary goal of such expansions is ultimately to gain share faster and grow in these key markets. The company believes it has built the backbone for its local market strategy in LA, limiting the capital intensiveness/ investment needed to expand the strategy to additional markets."