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Why Is Nordstrom (JWN) Up 2.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Nordstrom (JWN - Free Report) . Shares have added about 2.8% in that time frame, outperforming 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 drivers.
Nordstrom Beats on Q2 Earnings, Updates FY24 Outlook
Nordstrom’s second-quarter results, wherein both the top and bottom lines beat the respective Zacks Consensus Estimate and improved year over year.
It posted adjusted earnings of 96 cents a share, which surpassed the Zacks Consensus Estimate of 74 cents and improved from 84 cents reported in the year-ago period. Total revenues of $3,894 million rose 3.2% year over year and came ahead of the Zacks Consensus Estimate of $3,850 million.
JWN’s Quarterly Performance: Key Metrics and Insights
JWN’s net sales improved 3.4% year over year to $3,785 million, with comparable sales growth of 1.9%. The timing of the Anniversary Sale event played a key role in boosting sales by 100 basis points. Top performing categories during the quarter included active, women’s apparel, beauty and kids. The gross merchandise value (GMV) rose 3.5%.
Credit card net revenues declined by 0.9% to $109 million.
Net sales for the Nordstrom banner rose 0.9% from the year-ago quarter's figure to $2,514 million, faring better than our estimate of $2,455.5 million. Nordstrom banner’s comparable sales edged up 0.9%, while GMV jumped 1.1%. The Anniversary Sale event had a favorable impact of about 200 basis points on Nordstrom banner net sales.
Sales at the Nordstrom Rack banner advanced 8.8% to $1,271 billion, faring better than our estimate of $1,222.9 million. Comparable sales rose 4.1%.
Digital sales grew by 6.2% compared with the year-ago period. The timing shift of the Anniversary Sale contributed about 100 basis points to the increase in digital sales. During the quarter, digital sales accounted for 37% of the total sales.
The gross profit, representing 36.6% of net sales, improved by 155 basis points compared to the same period in fiscal 2023. This increase was driven by strong regular price sales and the leverage gained from higher overall sales. Adjusted selling, general and administrative (SG&A) expenses, as a percentage of net sales, deleveraged 20 basis points to 33%. We had expected SG&A expenses to deleverage 10 basis points.
Adjusted earnings before interest and taxes (EBIT) came in at $244 million, up from $192 million reported in the prior-year quarter. We note that the EBIT margin increased to 6.4%, up from 5.3% registered in the year-ago period.
JWN’s Financial Health Snapshot
Nordstrom ended the quarter with cash and cash equivalents of 679 million, long-term debt of $2,615 million and total shareholders’ equity of $948 million. JWN had an available liquidity of $1.5 billion as of Aug. 3, 2024. During the six-month period, the company generated $528 million in net cash from operating activities.
What to Expect From JWN in Fiscal 2024?
Nordstrom has updated its financial expectations for fiscal 2024. It now foresees total revenues, including retail sales and credit card revenues, to be down 1% to up 1% compared with the prior estimate of down 2% to up 1%.
Management now envisions comparable sales to be flat to up 2% compared with the earlier projection of a 1% decline to a 2% rise. The company guided adjusted EBIT between 3.6% and 4% compared with the prior estimate of 3.5% to 4%.
Nordstrom now anticipates earnings in the range of $1.75-$2.05 per share. It had earlier guided earnings between $1.65 and $2.05 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -24.02% due to these changes.
VGM Scores
Currently, Nordstrom has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nordstrom has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Nordstrom is part of the Zacks Retail - Apparel and Shoes industry. Over the past month, Urban Outfitters (URBN - Free Report) , a stock from the same industry, has gained 1.6%. The company reported its results for the quarter ended July 2024 more than a month ago.
Urban Outfitters reported revenues of $1.35 billion in the last reported quarter, representing a year-over-year change of +6.3%. EPS of $1.24 for the same period compares with $1.10 a year ago.
For the current quarter, Urban Outfitters is expected to post earnings of $0.82 per share, indicating a change of -6.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -4.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Urban Outfitters. Also, the stock has a VGM Score of A.
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Why Is Nordstrom (JWN) Up 2.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Nordstrom (JWN - Free Report) . Shares have added about 2.8% in that time frame, outperforming 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 drivers.
Nordstrom Beats on Q2 Earnings, Updates FY24 Outlook
Nordstrom’s second-quarter results, wherein both the top and bottom lines beat the respective Zacks Consensus Estimate and improved year over year.
It posted adjusted earnings of 96 cents a share, which surpassed the Zacks Consensus Estimate of 74 cents and improved from 84 cents reported in the year-ago period. Total revenues of $3,894 million rose 3.2% year over year and came ahead of the Zacks Consensus Estimate of $3,850 million.
JWN’s Quarterly Performance: Key Metrics and Insights
JWN’s net sales improved 3.4% year over year to $3,785 million, with comparable sales growth of 1.9%. The timing of the Anniversary Sale event played a key role in boosting sales by 100 basis points. Top performing categories during the quarter included active, women’s apparel, beauty and kids. The gross merchandise value (GMV) rose 3.5%.
Credit card net revenues declined by 0.9% to $109 million.
Net sales for the Nordstrom banner rose 0.9% from the year-ago quarter's figure to $2,514 million, faring better than our estimate of $2,455.5 million. Nordstrom banner’s comparable sales edged up 0.9%, while GMV jumped 1.1%. The Anniversary Sale event had a favorable impact of about 200 basis points on Nordstrom banner net sales.
Sales at the Nordstrom Rack banner advanced 8.8% to $1,271 billion, faring better than our estimate of $1,222.9 million. Comparable sales rose 4.1%.
Digital sales grew by 6.2% compared with the year-ago period. The timing shift of the Anniversary Sale contributed about 100 basis points to the increase in digital sales. During the quarter, digital sales accounted for 37% of the total sales.
The gross profit, representing 36.6% of net sales, improved by 155 basis points compared to the same period in fiscal 2023. This increase was driven by strong regular price sales and the leverage gained from higher overall sales. Adjusted selling, general and administrative (SG&A) expenses, as a percentage of net sales, deleveraged 20 basis points to 33%. We had expected SG&A expenses to deleverage 10 basis points.
Adjusted earnings before interest and taxes (EBIT) came in at $244 million, up from $192 million reported in the prior-year quarter. We note that the EBIT margin increased to 6.4%, up from 5.3% registered in the year-ago period.
JWN’s Financial Health Snapshot
Nordstrom ended the quarter with cash and cash equivalents of 679 million, long-term debt of $2,615 million and total shareholders’ equity of $948 million. JWN had an available liquidity of $1.5 billion as of Aug. 3, 2024. During the six-month period, the company generated $528 million in net cash from operating activities.
What to Expect From JWN in Fiscal 2024?
Nordstrom has updated its financial expectations for fiscal 2024. It now foresees total revenues, including retail sales and credit card revenues, to be down 1% to up 1% compared with the prior estimate of down 2% to up 1%.
Management now envisions comparable sales to be flat to up 2% compared with the earlier projection of a 1% decline to a 2% rise. The company guided adjusted EBIT between 3.6% and 4% compared with the prior estimate of 3.5% to 4%.
Nordstrom now anticipates earnings in the range of $1.75-$2.05 per share. It had earlier guided earnings between $1.65 and $2.05 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -24.02% due to these changes.
VGM Scores
Currently, Nordstrom has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nordstrom has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Nordstrom is part of the Zacks Retail - Apparel and Shoes industry. Over the past month, Urban Outfitters (URBN - Free Report) , a stock from the same industry, has gained 1.6%. The company reported its results for the quarter ended July 2024 more than a month ago.
Urban Outfitters reported revenues of $1.35 billion in the last reported quarter, representing a year-over-year change of +6.3%. EPS of $1.24 for the same period compares with $1.10 a year ago.
For the current quarter, Urban Outfitters is expected to post earnings of $0.82 per share, indicating a change of -6.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -4.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Urban Outfitters. Also, the stock has a VGM Score of A.