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Nordstrom Stock Soared by 7 Percent After Trump Slammed it on Twitter

Investors are rewarding Nordstrom for being in touch with their core customer, say experts.
Ivanka Trump
Carolyn Kaster / AP

President Donald Trump may have inadvertently done Nordstrom a favor this week when he slammed the Seattle-based retailer on Twitter — shares have risen by 7 percent.

After the department store announced it would not carry Ivanka Trump’s spring collection — characterizing the move as a business decision — the Trump camp disputed Nordstrom’s claim that her merchandise wasn’t selling well.

Trump adviser Kellyanne Conway added more fuel to the fire Thursday when she delivered what she called a “commercial” in support of the brand during a live TV interview. Threats of boycotts from both pro- and anti-Trump factions surfaced on social media, but the dust-up spared the retailer’s stock. In fact, after dipping briefly, shares rebounded.

Related: Trump's Feud With Nordstrom Sparks Warnings From Ethics Experts

Retail experts say the reason Nordstrom stock shook off the controversy while other companies have seen their share prices fall after being on the receiving end of a disgruntled tweet was simple: Unlike Lockheed Martin, which depends on U.S. government contracts, or General Motors, whose investments in Mexico could be threatened by an import tax, there isn’t much Donald Trump can do to hurt the fortunes of a high-end department store chain.

Retail analysts dismissed the idea that the decision to drop Ivanka Trump’s brand was politically motivated.

Consumers Come First

“The fashion business is all about the product,” said Richard Jaffe, research analyst and managing director at Stifel Nicolaus. “What’s happening at Nordstrom, what’s happening with the Ivanka brand, we believe, is simply about the product and consumers’ response to it.”

Nordstrom’s brand identity revolves around listening to customers and delivering a high level of service, said Matt Sargent, senior vice president for retail at Frank N. Magid Associates, suggested that Wall Street found the company’s responsiveness reassuring.

“That’s what Nordstrom has highlighted here, that they do understand their customer,” he said. “Investors are rewarding Nordstrom for being in touch with their core customer.”

“Like many celebrity lines, it apparently did very well at the outset,” said Mark Cohen, director of retail studies and adjunct professor at Columbia Business School, adding that popularity is typically fleeting for these kinds of name brands.

“Most celebrity lines that launch strongly eventually fail. They kind of peter out because the celebrity is not a designer,” he said.

Ivanka Trump said last month that she would be stepping down from her executive roles in both the Trump Organization as well as her own brand. Scaling back her involvement also could have been a factor prompting Nordstrom to tap the brakes.

This isn’t to say politics didn’t play a role, albeit an indirect one. “Obviously, we’re living in very politically charged times,” Sargent said. “It’s incredibly important for retailers to understand how their customer is going to respond.”

Simply Too Controversial?

Some retail industry pros speculated that the falloff in sales could be due to the Ivanka brand’s association with Donald Trump.

“I think it’s probably being more affected by the politics of the boycott rather than something fundamentally wrong with the brand,” said retail analyst Jan R. Kniffen, founder and CEO of J. Rogers Kniffen Worldwide Enterprises, referring to Nordstrom’s inclusion on the “Grab Your Wallet” list, a social media protest campaign urging Trump opponents to stop shopping at stores that sell Trump-branded products.

Related: Ivanka Trump Promoted Fashion Line from RNC Stage

“Between either the boycott affecting the store or the boycott affecting the brand, Nordstrom said, ‘We don’t need this,’” Kniffen said.

“The line has not been performing. Maybe that is because some are boycotting the line but the fact remains, it's not selling,” Liz Dunn, founder and CEO of Talmage Advisors, said via email.

“I find it bizarre that anyone would seriously suggest a company do something not in the best interest of its bottom line solely to please the current administration.”