Consumer strength ‘one of the last bullish talking points’ in the stock market, strategist says

Tigress Financial Partners CIO Ivan Feinseth joins Yahoo Finance Live to look at Nordstrom's shares surge following its Q1 revenue beat, the strength of the American consumer, and Nordstrom's retail outlook.

Video transcript

RACHELLE AKUFFO: Nordstrom is part of the retail earnings parade this week, the stock jumping 20% after the top and bottom line beat, as well as a full year guidance and boosting revenue forecast. For more, let's bring in Ivan Feinseth, Tigress Financial Partners chief investment officer. So, Ivan, what stood out to you from this Q1 data?

IVAN FEINSETH: First, it shows that people are valuing the differentiated Nordstrom shopping experience. I think Nordstrom is a retailer that really does it right. They have incredible customer service. They have differentiated merchandise. They really focus on having unique product offerings. They connect to the consumer well with their Nordy Club. And they also have both the mainline Nordstrom stores and the Rack that people like to shop at because it has this treasure hunt experience.

But it's good to see that, one, retailers like Nordstrom doing well and further confirming that the consumer-- the strength of the consumer has been one of the last bullish talking points of the stock market, as we've been in this incredible selloff for the past almost four months. And so, that's a positive. And the fact that the stock is jumping on the slightest bit of good news also shows there's a tremendous amount of buying power, that when something is positive, that money pours into it.

So I think, all in all, it was a great quarter. It gives, again, another good talking point to the strength of the consumer. And it highlights Nordstrom's specific strength as a retailer. So I think all is very good.

RACHELLE AKUFFO: And it's interesting. Obviously, a lot of people were sort of ready to hit the panic button once they saw Walmart and Target report their earnings. But you said you believe that the results from Walmart and Target were misread by the markets. What do you think they got wrong?

IVAN FEINSETH: Well, I think they tried to extrapolate it as the issues of consumer spending, and it's not really. First of all, the big retailers like that are really-- their business is driven by a sourcing model. And we know that sourcing has been difficult with the supply chain issues that we've experienced throughout the pandemic and also the issues in China, with the rolling COVID lockdowns.

And a lot of countries where they source product from have not even fully recovered to the level that the US has recovered because of the availability of vaccines. So I think both Walmart and Target have done very well in this environment. And I think that the selloff, especially in Target, was way overdone.

Then we saw good news out of VF Corp., highlighting the strength of North Face, which is, I would say, an aspirational brand. Also, TJ Maxx, a very unique retailer with a unique shopping experience, also did well. So I continue to say, overall, the consumer remains strong with over $2 and 1/2 trillion in excess savings and a total of $4 trillion in cash available to consumers, as well as credit capacity. So I think the consumer, I believe, once again, will lead us out of the stock market downturn. And I also believe that the market is panicking over a recession that I don't think is really going to materialize, at least to the level of fear that exists out there.

RACHELLE AKUFFO: And obviously, fear driving a lot of what we're seeing in the markets today. And we did see that Nordstrom stock had dropped more than 40% over the past year. But what is your outlook in terms of where Nordstrom goes from here in terms of partnerships and routes to explore to really keep its consumer base?

IVAN FEINSETH: Well, Nordstrom, over the past few years, evolved tremendously, building out their omnichannel fulfillment. Buy online, receive at home. Buy online, pick up in store. Buy in store, take home. And also, buy in store, ship to your house. So they have a great fulfillment infrastructure. And as I said, most importantly, they have-- they're known for incredible customer service, differentiated merchandise, and connecting well with the consumer through their loyalty program, which I think those are the key ingredients that a successful retailer needs. And those are everything that Nordstrom has.

RACHELLE AKUFFO: And we did see at this year's National Retail Federation big show that Nordstrom announced it was expanding, as you mentioned, with some of those direct-to-consumer brands, like ASOS, as well as partnerships with retail competitors, even entering the sports licensing arena for the first time with its deal with Fanatics. What are your thoughts on that strategy?

IVAN FEINSETH: Well, the more that they can, again, source unique merchandise that have strong brand equity with consumers is always positive. So the more that they can have exclusive relationships and have specific products that are only available through their channels, it's also positive. So the better they can source highly desirable merchandise, the better they're going to do.

RACHELLE AKUFFO: And just quickly, any downsides that you see for Nordstrom going forward?

IVAN FEINSETH: Well, like all retail, especially high end retail that, unfortunately, the selloff in the stock market could tend to have a reverse wealth effect, where causing people who are normally-- that have significant amount of their net worth tied to the fluctuations of the stock market, may pull back in spending. And that could be an issue.

But it still seems that the high end consumer and most consumers, I think, overall, we are seeing this shift back to travel from merchandise back to experiences. But I think people are buying less, but they're paying up and they want more high quality products. So they're buying more expensive items, less of them, but more expensive items. And those spending trends also benefit Nordstrom's.

RACHELLE AKUFFO: All right, we do thank you for joining us. Ivan Feinseth there, Tigress Financial Partners chief investment officer, thank you so much.