Trump’s Nordstrom Tweet: Did It Help or Hurt the Retailer?
“It’s almost like a war-room mentality, but that’s what brand management requires in these times,” says one retail analyst.
Donald Trump’s latest Twitter wrath may have backfired.
On Wednesday morning, the Tweeter-in-Chief took to his favorite social-media platform to criticize Nordstrom for dropping his daughter Ivanka’s eponymous collection, a decision the retailer said last week was due to poor sales.
After widespread coverage of Nordstrom’s decision, Trump’s fingers apparently couldn’t be silent any longer. At 10:51 a.m. ET Wednesday, Trump tweeted his reaction: “My daughter Ivanka has been treated so unfairly by @Nordstrom. She is a great person – always pushing me to do the right thing! Terrible!”
At 10:55 a.m., Nordstrom’s stock price (which opened at $42.33) dipped to $42.50, down 62 cents from a high of $43.12 roughly an hour before. The dip only proved to be temporary, however, as the stock started climbing again just five minutes later. By the 4 p.m. close Wednesday, Nordstrom’s stock had climbed to $44.53, up $1.75 from the previous day’s close of $42.78. “I wondered [during the dip] if perhaps his supporters had rallied around the wound on the Trump kingdom,” says David Wolfe, creative director of the New York-based retail analysis firm The Doneger Group. “It certainly shows how hyper-sensitive the stock market can be.”
Likely also key to the closing price is the updated statement Nordstrom released just before 4 p.m.: “To reiterate what we’ve already shared when asked, we made this decision based on performance. Over the past year and particularly in the last half of 2016, sales of the brand have steadily declined to the point that it didn’t make good business sense for us to continue with the line for now. We’ve had a great relationship with the Ivanka Trump team, we’ve had open conversations with them over the past year to share what we’ve seen, and Ivanka was personally informed of our decision in early January.”
Nordstrom’s stock price ultimately should be credited to the retailer’s overall performance and not the impact of one tweet, says Sahir Anand, vp research and principal retail analyst for Chicago-based Ensemble IQ/EKN Research. “If you look at retail as a whole, 2016 was not such a good year for department stores in the U.S., but Nordstrom was one of the real bright spots,” he says. “They’re a gold standard of customer service, and they’ve figured out the ideal combination of bricks and clicks. They’ve shown that they make smart decisions based on financial responsibilities, and not by an individual or a particular event. These decisions aren’t based on personalities.”
Wolfe agrees. “The products Ivanka Trump’s company has produced have been fine, but not exceptional,” he says. “I’ve been in this business for more than 50 years, and every time, these decisions boil down simply to whether the merchandise sells or not. I know I’ve seen a lot of it at off-price stores, which is not a sign of success.”
This isn’t the first time Donald Trump has taken to Twitter to express dissatisfaction with a company: Boeing, Lockheed-Martin and Toyota likewise have experienced the aftereffects of a Trump tweet. This is, however, the first time he’s retweeted from his personal account to his @POTUS account, an action that sparked ethics questions of whether it could be a potential conflict for the president to use a taxpayer-funded Twitter account to comment on a publicly traded company doing business with his daughter. MSNBC analyst and former Tennessee congressman Harold Ford, Jr., addressed the conflict-of-interest issue Wednesday afternoon by asking, “Does he have an investment in this business? That raises the real red flags.”
Anand says smart companies know how to handle such tweets, whether they come from Trump or any disgruntled consumer. “Every major company is attuned to social analytics and social sensibility these days,” he says. “It’s almost like a war-room mentality, but that’s what brand management requires in these times.”
Ultimately a range of factors is always going to impact a stock price, says Anand. His advice to Nordstrom and others? Ride out the tweetstorm. “Retail is an extremely tough business that depends on consumer confidence, but a brand should be judged on customer satisfaction and fiduciary responsibility,” he says. “The stock market should not judge a brand based on a tweet.”