Two 59%+ winners, four above 25% in Aug – How this AI model keeps picking winners
On Tuesday, KeyBanc shared insights from the recently concluded Shoptalk 2025 event, highlighting an optimistic future for the retail industry bolstered by advancements in machine learning (ML) and artificial intelligence (AI). The annual retail conference, which began in 2015, drew over 10,000 attendees to Las Vegas, including notable executives from AKA Brands, Nordstrom (NYSE:JWN) (currently trading near its 52-week high of $24.99 with annual revenue of $15.02 billion), GAP, Levi’s (NYSE:LEVI), and American Eagle (NYSE:AEO).
The conversations at Shoptalk revealed several key themes. The evolving use cases for ML and AI, the increased focus on influencer and experiential marketing, and a surprising lack of concern regarding current tariff and trade policies were among the topics discussed. KeyBanc analysts came away with a positive outlook on retail’s future, particularly with the potential for stronger performance in the second half of 2025 as trade tensions ease.
Despite current uncertainties in consumer trends, there is a growing belief that the retail sector remains robust. Executives acknowledged near-term challenges but maintained that underlying consumer demand is solid, as demonstrated by spending during the holiday period. High-income demographics continue to show stable spending habits, while retailers keep a close watch on discretionary spending among middle-income consumers. The recent easing of inflation has also been cited as a potential boost to consumer confidence later in the year. According to InvestingPro data, Nordstrom’s strong performance is evident in its 25.34% one-year return and healthy profit margins of 37.43%.Want deeper insights into retail stocks? InvestingPro subscribers get access to exclusive financial health scores, Fair Value calculations, and comprehensive Pro Research Reports for over 1,400 US stocks.
Marketing strategies are increasingly targeting the Gen Z demographic, with a heavy emphasis on influencers and experiential marketing. Retailers are adjusting their supply chains to respond quickly to trends and are focusing on social strategies, including short-form video and live shopping, to drive direct conversions. AI-driven personalization is becoming more important for engaging consumers, as brands strive to offer recommendations and messaging that resonate in real-time.
Furthermore, discussions with company partners shed light on the direction and impact of ML initiatives. While AI has been a buzzword for years, adoption is still ramping up. McKinsey & Co. highlighted that a significant percentage of customers abandon online purchases due to overwhelming search results, and there is dissatisfaction with current search functionalities. Retailers are responding by enhancing AI/ML capabilities, particularly in search and assisted shopping, with a shift toward natural language and image search functionalities.
In summary, Shoptalk 2025 presented a landscape where retail is poised for positive transformation, driven by technology and a nuanced understanding of consumer behavior. The integration of AI into digital retail strategies is seen as a crucial step for retailers aiming to stay ahead in a competitive market. Nordstrom, trading at a P/E ratio of 13.99 and currently showing signs of undervaluation according to InvestingPro’s Fair Value analysis, appears well-positioned to capitalize on these technological advances.
In other recent news, Nordstrom reported normalized earnings for the fourth quarter of $1.10 per share, surpassing consensus estimates by $0.17, with revenues of $4.32 billion, which fell slightly short of expectations by $5 million. The company also revealed plans to go private following an acquisition by the Nordstrom Family and El Puerto de Liverpool, S.A.B. de C.V., with a cash offer of $24.25 per share, expected to close in 2025. In a related development, Nordstrom has entered into retention bonus agreements with key executives to ensure stability during its merger process with Norse Holdings, Inc. These bonuses are contingent upon executives maintaining their employment through specified payment dates.
Additionally, CFRA analyst Zachary Warring upgraded Nordstrom’s stock from Sell to Hold, raising the price target to $24.00, citing anticipated improvements in operating metrics. Meanwhile, Nordstrom’s Chief Financial Officer Catherine R. Smith announced her resignation, expected to take effect following the filing of the company’s Annual Report. Smith’s departure is not related to any disagreements with Nordstrom’s accounting practices.
In other executive news, Starbucks (NASDAQ:SBUX) announced the appointment of Cathy R. Smith, formerly of Nordstrom, as its new chief financial officer. Smith’s extensive experience in financial roles across major companies was highlighted by Starbucks CEO Brian Niccol, who expressed excitement about her joining the team. These developments reflect significant changes in Nordstrom’s corporate structure and financial outlook.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.