On Wednesday, President Trump berated Nordstrom for dropping Presidential daughter, Ivanka Trump’s clothing line from their shelves.
As the Seattle Times reported, there was a brief dip followed by a 4% rally. And while you can chalk this up to Nordstrom stores being located in Democratic strong holds, or liberal investors allocating with their politics, there’s a bigger question. Can being a Trump foe actually be good for business?
This story unfolded as I was preparing to guest lecture at a class in media business management. When this happened, I was updating my analysis of Trump-foe, The New York Times. You may recall that a few years ago, they had their internal digital strategy analysis leak.
This famous publisher’s innovation journey makes s a good jumping off point to discuss the sticking points that every enterprise faces in pursuing digital change. And without going in to detail – I often open on a macro-theme that despite lots of talk about its demise, publishing is a growing, profitable business attracting some very smart money.
Teaching this case has brought me back to look at the Times a number of times over the last few years. Students are often been surprised to see it compare favorably to enterprises in tech and entertainment. So, this seemed like a good time to see how the election day change had treated the Grey Lady.
Opposing Trump as Been Very Good for the New York Times
So, just as the Nordstrom Trump-bump was taking place, I noticed NY Times seems to have experience a remarkable benefit from his scorn as well.
Since election day, the New York times market value us up a mind blowing 34% — nearly four times more than the very hot S&P, which grew an impressive 8% in the same period.
Will the Nordstrom Trump bump last? Who cares?
Clearly, not all Trump targets have enjoyed this list. Lockheed Martin and GM faced real headwinds from Trump criticism. And while Nordstrom’s 4% lift in interesting, its fair to ask if anything fundamental changed to support this new value, or if its a publicity driven blip.
What’s the media seems to have missed in this story is the longer view. When the Washington Post’s Danielle Paquette declared that Nordstrom broke the curse of the Trump tweet, they reasonably focused just on that day’s performance.
Nordstrom has had crazy growth all year – criticism or not
Having seen the Times lifted by Trump over months, I naturally took the same long view of Nordstrom.
Guess what? Over the last year their market value is up….wait for it, 93%. And yes, since the election, their share price has better than doubled the hot S&P posting 15.7% growth.
So, when you look of a year’s business growth, this latest 4% variance doesn’t even stand out.
Some firms can thumb their nose at a President, others can’t
So, why does Nordstrom seem immune from Trump Tweets, while Lockheed Martin, GM and Boing aren’t? That’s not hard, the Federal government purchases lots more from the firms hurt by Trump tweets than those apparently helped by them. When Trump tweets about Boing, he’s a customer; when he tweets about Nordstrom his a hot-head father and a freakishly undisciplined politician.
So is being a Trump target good for business?
It depends on the business. On a very basic level, the New York Times is in the culture business. Trump is a New York figure, and he’s railed against the press and them specifically in chilling terms. So, yes, Trump has made the Times an opposition cause to be invested in to counterbalance his influence. Many would suggest the Times had this exact posture that role long before his administration, but he’s formalized it.
And while Nordstrom’s recent stock blip may have been helped by some variant of this sentiment, that’s a rounding error. They’re not the opposition fashion distributor. The longer view of their value growth suggests they’ve been lifted by a economy which is arguably at the top of the business cycle.
Don’t confuse Trump for the business cycle.
The cyclical nature of Nordstrom’s business is arguably a far stronger influence than politics. Since election day, Trump’s extend a level of economic exuberance in an already airy market. That’s a bigger favor to Nordstrom than any criticism his administration can provide.
Disclaimer: this post discusses stock values and business dynamics in firms I have no financial interest in, and will hold an interest in over the next seven days. All information cited is public, and this discussion should not be considered investment advice.