Cowen Reiterates Outperform After Nordstrom (JWN) Agreed to Sell Credit Card Receivables

Cowen reiterates an Outperform rating and $85 price target on Nordstrom (NYSE: JWN) after JWM agreed to sell its credit card receivables for ~$2.2B. Use of proceeds remain TBD.

Analyst Oliver Chen commented, "JWN expects to receive total proceeds of ~$2.2B from the sale of the credit card receivables at the time of closing in the 2H15. After $325MM will be used to pay off debt (for which the receivables were held as collateral), JWN will have net proceeds of ~$1.8-1.9B. The company is currently assessing plans for the proceeds in a manner that aligns with its balanced capital approach. We expect the majority will likely be returned to shareholders in share repurchases/dividends given JWN's '15 capex guidance of $1.2B is fully funded, capex is expected to decline in '16 and beyond, and JWN generates ample cash (we est. $1.7Bn in operating cash flow or ~$500MM in FCF). If share repurchases are utilized, total proceeds of $1.8-1.9B equals ~13% of JWN's current market cap. We note TGT performed a similar transaction to sell its credit card receivables to TD Bank in March 2013 and used 90% of proceeds to pay down debt with remainder for stock repurchases over time."

For an analyst ratings summary and ratings history on Nordstrom click here. For more ratings news on Nordstrom click here.

Shares of Nordstrom closed at $74.39 yesterday.

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