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Nordstrom (JWN) Up 0.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Nordstrom (JWN - Free Report) . Shares have added about 0.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nordstrom due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nordstrom’s Q4 Earnings & Revenues Beat Estimates
Nordstrom posted impressive fourth-quarter fiscal 2021 results. Both top and bottom lines surpassed the Zacks Consensus Estimate and grew year over year. Results gained from solid demand for apparel and footwear, robust digital growth, compelling merchandise, and lower markdowns. The home, active, designer, beauty and kids categories witnessed double-digit growth from the pre-pandemic levels.
JWN launched more than 300 brands, including Open Edit, Farm Rio, Fanatics and ASOS DESIGN, in fiscal 2021. The company remains on track to enhance the performance of its Nordstrom Rack and improve inventory. However, global supply-chain disruptions act as a deterrent.
Quarterly Highlights
Nordstrom posted adjusted earnings of $1.23 per share, reflecting a sharp improvement from the year-ago figure of 21 cents. The metric also beat the Zacks Consensus Estimate of $1.04 per share.
Total revenues grew 23% year over year to $4,486 million and beat the Zacks Consensus Estimate of $4.418 million. This marked the sixth straight quarter of sequential top-line growth. Net sales also advanced 23% year over year to $4,382 million, while the metric declined 1% from fourth-quarter fiscal 2019. Credit Card net revenues grew 10.6% from the prior-year quarter to $104 million.
For fourth-quarter fiscal 2021, net sales for the Nordstrom brand rose 23% year over year to $3,027 million and remained flat from fourth-quarter fiscal 2019. Sales for the Nordstrom Rack brand advanced 23% year over year to $1,355 million but declined 5% from fourth-quarter fiscal 2019.
Digital sales fell 1% year over year but rose 23% from the fourth quarter of fiscal 2019. For the fiscal fourth quarter, digital sales represented 44% of net sales compared with 54% in the year-ago period.
Nordstrom's gross profit margin expanded 500 basis points (bps) year over year to 38% for the reported quarter. This substantial growth resulted from higher merchandise margins, stemming from lower markdowns, as well as lower buying and occupancy costs. The metric also expanded 340 bps from fourth-quarter fiscal 2019.
Ending inventory grew 19% from fourth-quarter fiscal 2019 due to planned investments.
Selling, general and administrative (“SG&A”) expenses — as a percentage of sales — contracted 125 bps year over year to 34% for the fiscal fourth quarter, owing to robust sales growth, which was somewhat offset by higher labor costs. However, the metric expanded 340 bps from fourth-quarter fiscal 2019 due to higher fulfillment and labor costs, offset by gains from the resetting of cost structures in 2020.
Earnings before interest and taxes (“EBIT”) of $299 million reflected significant growth from $30 million in the year-ago quarter. The increase mainly resulted from higher sales volume and expanded merchandise margins, which somewhat offset elevated labor costs. EBIT remained flat with fourth-quarter fiscal 2019. The EBIT margin expanded 10 bps to 6.8% on a two-year basis.
Other Financials
Nordstrom ended fourth-quarter fiscal 2021 with a strong balance sheet. Available liquidity as of Jan 29, 2022, was $1.1 billion, including $322 million of cash and cash equivalents. It had long-term debt (net of current liabilities) of $2,853 million and total shareholders’ equity of $581 million. Management expects to resume share repurchases and dividend payments in the first quarter of fiscal 2022.
As of Jan 29, 2022, the company provided $705 million of net cash for operating activities and spent $506 million as capital expenditure.
Outlook
Management issued the fiscal 2022 view. The company anticipates total year-over-year revenue growth of 5-7%. Adjusted earnings are envisioned to be $3.15-$3.50, with an EBIT margin of 5-6%. The company also expects to lower its inventory in the first quarter of fiscal 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 34.78% due to these changes.
VGM Scores
At this time, Nordstrom has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Nordstrom has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Nordstrom (JWN) Up 0.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Nordstrom (JWN - Free Report) . Shares have added about 0.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nordstrom due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nordstrom’s Q4 Earnings & Revenues Beat Estimates
Nordstrom posted impressive fourth-quarter fiscal 2021 results. Both top and bottom lines surpassed the Zacks Consensus Estimate and grew year over year. Results gained from solid demand for apparel and footwear, robust digital growth, compelling merchandise, and lower markdowns. The home, active, designer, beauty and kids categories witnessed double-digit growth from the pre-pandemic levels.
JWN launched more than 300 brands, including Open Edit, Farm Rio, Fanatics and ASOS DESIGN, in fiscal 2021. The company remains on track to enhance the performance of its Nordstrom Rack and improve inventory. However, global supply-chain disruptions act as a deterrent.
Quarterly Highlights
Nordstrom posted adjusted earnings of $1.23 per share, reflecting a sharp improvement from the year-ago figure of 21 cents. The metric also beat the Zacks Consensus Estimate of $1.04 per share.
Total revenues grew 23% year over year to $4,486 million and beat the Zacks Consensus Estimate of $4.418 million. This marked the sixth straight quarter of sequential top-line growth. Net sales also advanced 23% year over year to $4,382 million, while the metric declined 1% from fourth-quarter fiscal 2019. Credit Card net revenues grew 10.6% from the prior-year quarter to $104 million.
For fourth-quarter fiscal 2021, net sales for the Nordstrom brand rose 23% year over year to $3,027 million and remained flat from fourth-quarter fiscal 2019. Sales for the Nordstrom Rack brand advanced 23% year over year to $1,355 million but declined 5% from fourth-quarter fiscal 2019.
Digital sales fell 1% year over year but rose 23% from the fourth quarter of fiscal 2019. For the fiscal fourth quarter, digital sales represented 44% of net sales compared with 54% in the year-ago period.
Nordstrom's gross profit margin expanded 500 basis points (bps) year over year to 38% for the reported quarter. This substantial growth resulted from higher merchandise margins, stemming from lower markdowns, as well as lower buying and occupancy costs. The metric also expanded 340 bps from fourth-quarter fiscal 2019.
Ending inventory grew 19% from fourth-quarter fiscal 2019 due to planned investments.
Selling, general and administrative (“SG&A”) expenses — as a percentage of sales — contracted 125 bps year over year to 34% for the fiscal fourth quarter, owing to robust sales growth, which was somewhat offset by higher labor costs. However, the metric expanded 340 bps from fourth-quarter fiscal 2019 due to higher fulfillment and labor costs, offset by gains from the resetting of cost structures in 2020.
Earnings before interest and taxes (“EBIT”) of $299 million reflected significant growth from $30 million in the year-ago quarter. The increase mainly resulted from higher sales volume and expanded merchandise margins, which somewhat offset elevated labor costs. EBIT remained flat with fourth-quarter fiscal 2019. The EBIT margin expanded 10 bps to 6.8% on a two-year basis.
Other Financials
Nordstrom ended fourth-quarter fiscal 2021 with a strong balance sheet. Available liquidity as of Jan 29, 2022, was $1.1 billion, including $322 million of cash and cash equivalents. It had long-term debt (net of current liabilities) of $2,853 million and total shareholders’ equity of $581 million. Management expects to resume share repurchases and dividend payments in the first quarter of fiscal 2022.
As of Jan 29, 2022, the company provided $705 million of net cash for operating activities and spent $506 million as capital expenditure.
Outlook
Management issued the fiscal 2022 view. The company anticipates total year-over-year revenue growth of 5-7%. Adjusted earnings are envisioned to be $3.15-$3.50, with an EBIT margin of 5-6%. The company also expects to lower its inventory in the first quarter of fiscal 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 34.78% due to these changes.
VGM Scores
At this time, Nordstrom has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Nordstrom has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.