Shares of Nordstrom (JWN) are under pressure on Wednesday despite reporting better-than-expected quarterly results and raising its outlook for the full year, as second-quarter sales still came in below pre-pandemic levels. Following the earnings release, JPMorgan analyst Matthew Boss downgraded the stock to a Sell-equivalent rating, saying the company's absolute and relative performance "remains underwhelming."

RESULTS: Nordstrom reported second-quarter earnings per share of 49c and revenue of $3.66B, both better than the expected 28c and $3.31B, respectively. The retailer also raised its full-year 2021 revenue growth to more than 35%, with consensus at $13.75B. Prior view was revenue growth of more than 25%. Additionally, Nordstrom raised full-year 2021 EBIT margin as a percent of sales to approximately 3%-3.5% from approximately 3%. The company also said second-quarter digital sales were up 30% compared with the same period in fiscal 2020 and increased 24% compared with the same period in fiscal 2019.

According to the company, the timing shift of the Anniversary Sale had a negative impact on company digital sales of approximately 500 basis points compared with the second quarter of 2019. Digital sales represented 40% of total sales during the quarter, Nordstrom added.

'UNDERWHELMING' PERFORMANCE: Following the company's quarterly results, JPMorgan analyst Matthew Boss downgraded Nordstrom to Underweight from Neutral with a price target of $34, down from $39. The company's absolute and relative performance "remains underwhelming" with full price revenues 900 basis points below department store peers, Boss told investors in a research note. The analyst added that the current backdrop is "potentially as good as it gets" for both Nordstrom's core customer and on the pricing/promotional front.

TARGETS CUT: Keeping a Neutral rating on the shares, Credit Suisse analyst Michael Binetti lowered the firm's price target on Nordstrom to $34 from $39 following quarterly results. Despite the headline beat, the analyst is "disappointed" with retail revenues in what he considers the best retail environment in decades with the vast majority of companies posting revenues ahead of pre-COVID levels.

Deutsche Bank analyst Gabriella Carbone also lowered the firm's price target on Nordstrom to $37 from $40, while keeping a Hold rating on the shares. While the company's second-quarter results were above the Street, the quarter and second half of 2021 guidance were "lackluster" relative to department store peers' performances, Carbone told investors in a research note.

PRICE ACTION: In Wednesday morning trading, shares of Nordstrom have dropped over 17% to $31.29.