12:21 PM EDT, 08/28/2024 (MT Newswires) -- Nordstrom's ( JWN ) fiscal Q3 full-price sales are forecast to decline 0.5% year over year as the challenging macro environment continues to pressure consumer spending, UBS said in a note sent Wednesday.

Competition versus off-price retailers and different direct-to-consumer channels are also adding pressure. That leads UBS to believe the company will not open any new outlets in the current quarter.

The investment firm is projecting a 1.1% drop in the upmarket department store chain's full-price sales for fiscal 2024. It lowered fiscal 2024 sales growth forecast to 1.3% from 1.4% previously.

UBS said Nordstrom's ( JWN ) better-than-expected fiscal Q2 results were not a "thesis changer," as it predicts further market share loss for Nordstrom ( JWN ) that will lead to downward revisions to earnings per share estimates and weaker sentiment over the next few years.

"We think [Nordstrom ( JWN )] is a share loss and margin compression stock," UBS said. "We believe consumers continue to shift their shopping preference to off-price retailers given the challenging macro environment."

UBS raised price target for Nordstrom ( JWN ) to $13 from $12 with a sell rating. The price target increase was due to slightly better margin outlook for the company in the near term.

Nordstrom ( JWN ) shares were up 5% in recent trading.

Price: 22.11, Change: +0.97, Percent Change: +4.59