High-end fashion retailer Nordstrom, Inc. JWN faces a "deteriorating" outlook after a survey with consumers point to potential market share losses, according to UBS.

The Analyst

UBS analyst Jay Sole downgraded Nordstrom from Buy to Neutral with a price target lowered from $65 to $33.

The Thesis

The firm's 2018 survey of consumers found Nordstrom ranked No. 1 (Nordstrom Rack ranking No. 4) among consumers buying business attire and special occasion clothing, Sole wrote in the note. A similar 2019 survey found consumers plan on shopping at Nordstrom's lower-priced rivals more for work and special occasion.

The UBS survey found 5% of Nordstrom consumers think prices increased, but Sole noted the perception at key rivals Bloomingdale's improved. This may imply Nordstrom consumers are seeing less value for the money they spend and could translate to declining traffic in stores.

The high-end fashion market is seeing minimal growth as a whole, so any market share loss at Nordstrom at the expense of even a small rival could "significantly" impact Nordstrom, Sole said.

Price Action

Shares of Nordstrom traded lower by 2% at $30.81 Monday afternoon.

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