UBS skewers Nordstrom as a ‘no-growth retailer’ that’s suffering from a ‘cultural shift’ in shopper behavior

Rachel Askinasi/Business Insider

• UBS said in a new analysis that Nordstrom is a "no-growth retailer" with "very poor" investor sentiment.
• Nordstrom is suffering from a "cultural shift" of shoppers opting for low prices over quality, UBS said.
• Nordstrom’s price perception is also declining and the company will likely suffer from a predicted pullback in spending among wealthy shoppers, the report stated.
• Nordstrom did not immediately respond to a request for comment.
• Visit Business Insider’s homepage for more stories.

UBS delivered a blistering analysis of Nordstrom on Tuesday that described the company as a "no-growth retailer" with "very poor" investor sentiment that is increasingly losing ground to discounters.

The analysis said Nordstrom is suffering from several headwinds, including a "cultural shift" of shoppers opting for low prices over quality. 

"Consumers have traditionally shopped Nordstrom for business and special occasion attire. Consumers today are migrating to discount retailers for these items," said the report, which was based on data from UBS shopper surveys. "We think this reflects a cultural shift where consumers don’t think they need to invest in the type of high-quality merchandise available at Nordstrom for work as much as they used to."

UBS said this trend also reflects the "casualization" of America, in which shoppers are increasingly opting for more casual clothing. 

Read more: An avalanche of store closings ‘bigger than anything we’ve seen’ is sweeping across the US — and Trump has the power to slow it down

"This is not something we think Nordstrom can easily recover from," UBS said in the report, as it downgraded the company from "buy" to "neutral" and lowered its price target from $65 to $33. Nordstrom did not immediately respond to a request for comment.

The department store chain is also losing ground to rivals on pricing with both its Nordstrom and Nordstrom Rack banners, according to the UBS data. 

"No retailer, among the ones we surveyed, had a bigger year-over-year drop in price perception, other than Gap and JCPenney," the report said. 

UBS said Nordstrom will likely need to increase promotions to win back customers.

The report also predicted that Nordstrom will feel pressure in the coming months from a potential pullback in spending among wealthy shoppers. 

UBS data "suggests high-income US consumer spending will stay weak through the fall season," the report said. 

NOW WATCH: A pair of Air Jordans can resell for up to $2,000. Here’s why these iconic Nike sneakers are so expensive.

See Also:

• 10 fast-food chains with the most locations in America
• Trader Joe’s and Green Giant vegetables are being recalled over listeria fears
• 4 ways Showfields is bringing experiential retail from ‘the age of creators’ to ‘the age of curators’

SEE ALSO: More than 7,100 stores are closing in 2019 as the retail apocalypse drags on — here’s the full list

Source: Business Insider – hpeterson@businessinsider.com (Hayley Peterson)