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Why Is Nordstrom (JWN) Down 4.5% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Nordstrom, Inc. (JWN - Free Report) . Shares have lost about 4.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Nordstrom Tops Q4 Earnings, Issues Guidance
Nordstrom posted solid fourth-quarter fiscal 2016 adjusted earnings of $1.37 per share that came substantially ahead of the Zacks Consensus Estimate of $1.13. The robust bottom-line results were driven by solid inventory management and operational efficiencies, along with sales growth in Nordstrom Rack and strong eCommerce performance, which now represents nearly 25% of the company’s business.
However, on GAAP basis, the company posted earnings per share of $1.15 compared with earnings of $1.00 per share in the year-ago quarter. This was impacted by the goodwill impairment charge associated with Trunk Club, which was acquired in 2014.
Sales
Total revenue advanced 2.9% to $4,316 million, but lagged the Zacks Consensus Estimate of $4,365 million.
The company’s net Retail sales increased 2.4% to $4,243 million, while Credit Card revenues rose 43.1% to $43 million. Total company comparable store sales (comps) dipped 0.9% driven by fall in comps at full-line stores, offset by growth at Nordstrom Rack.
Nordstrom brand’s net sales (including the U.S. and Canada full-line stores, Nordstrom.com and Trunk Club) decreased 1.1%, with comps falling 2.7%. The top-performing region during the quarter was East, while the best-performing categories were Women's Apparel and Beauty.
Coming to the Nordstrom Rack brand (that includes Nordstrom Rack stores and nordstromrack.com/HauteLook) net sales advanced 10.7%, while comps grew 4.3% on the back of growth in the Eastern region.
Operational Update
Nordstrom's gross profit margin expanded 112 basis points (bps) to 36%, mainly on account of superb inventory management along with fewer markdowns.
Selling, general and administrative (SG&A) expenses, as a percentage of sales, declined 60 bps to 27.6%, primarily favorable year-over-year comparisons offset by performance-related costs to enhance operational efficiencies.
Store Update
As of Jan 28, Nordstrom operated 349 stores in 40 states, including 123 full-line stores in the U.S., Canada and Puerto Rico; 215 Rack outlets, two Jeffrey boutiques and two clearance stores.
In fiscal 2017, the company plans to inaugurate one new full-line store and 15 Rack outlets, while relocating two full-line stores and one Rack store.
Financials
Nordstrom ended fiscal 2016 with cash and cash equivalents of $1,007 million, long-term debt net of current liabilities of $2,113 million and total shareholders’ equity of $870 million.
During the fiscal, Nordstrom generated $1,648 million in cash from operating activities and free cash flow of $550 million. Capital expenditures during the year were $846 million.
In the fiscal fourth quarter, the company repurchased nearly 4 million shares valued at $189 million. Currently, Nordstrom has about $1 billion remaining under its share repurchase authorization, including the additional $500 million authorization announced in Feb 2017.
Guidance
Following the strong quarter, the company provided initial view for fiscal 2017. The company anticipates net sales to increase nearly 3–4% in fiscal 2017, with comps estimated to remain flat. The company’s guidance includes the impact of the additional 53rd week in fiscal 2017, which is likely to add about $200 million to net sales.
Further, the company expects Retail EBIT in the rage of $780–$840 million, while Credit EBIT is estimated to be about $135 million. Based on the above iterations, the company envisions fiscal 2017 earnings per share in the range of $2.75–$3.00.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted lower by 10% due to these changes.
At this time, Nordstrom's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. 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.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Nordstrom (JWN) Down 4.5% Since the Last Earnings Report?
A month has gone by since the last earnings report for Nordstrom, Inc. (JWN - Free Report) . Shares have lost about 4.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Nordstrom Tops Q4 Earnings, Issues Guidance
Nordstrom posted solid fourth-quarter fiscal 2016 adjusted earnings of $1.37 per share that came substantially ahead of the Zacks Consensus Estimate of $1.13. The robust bottom-line results were driven by solid inventory management and operational efficiencies, along with sales growth in Nordstrom Rack and strong eCommerce performance, which now represents nearly 25% of the company’s business.
However, on GAAP basis, the company posted earnings per share of $1.15 compared with earnings of $1.00 per share in the year-ago quarter. This was impacted by the goodwill impairment charge associated with Trunk Club, which was acquired in 2014.
Sales
Total revenue advanced 2.9% to $4,316 million, but lagged the Zacks Consensus Estimate of $4,365 million.
The company’s net Retail sales increased 2.4% to $4,243 million, while Credit Card revenues rose 43.1% to $43 million. Total company comparable store sales (comps) dipped 0.9% driven by fall in comps at full-line stores, offset by growth at Nordstrom Rack.
Nordstrom brand’s net sales (including the U.S. and Canada full-line stores, Nordstrom.com and Trunk Club) decreased 1.1%, with comps falling 2.7%. The top-performing region during the quarter was East, while the best-performing categories were Women's Apparel and Beauty.
Coming to the Nordstrom Rack brand (that includes Nordstrom Rack stores and nordstromrack.com/HauteLook) net sales advanced 10.7%, while comps grew 4.3% on the back of growth in the Eastern region.
Operational Update
Nordstrom's gross profit margin expanded 112 basis points (bps) to 36%, mainly on account of superb inventory management along with fewer markdowns.
Selling, general and administrative (SG&A) expenses, as a percentage of sales, declined 60 bps to 27.6%, primarily favorable year-over-year comparisons offset by performance-related costs to enhance operational efficiencies.
Store Update
As of Jan 28, Nordstrom operated 349 stores in 40 states, including 123 full-line stores in the U.S., Canada and Puerto Rico; 215 Rack outlets, two Jeffrey boutiques and two clearance stores.
In fiscal 2017, the company plans to inaugurate one new full-line store and 15 Rack outlets, while relocating two full-line stores and one Rack store.
Financials
Nordstrom ended fiscal 2016 with cash and cash equivalents of $1,007 million, long-term debt net of current liabilities of $2,113 million and total shareholders’ equity of $870 million.
During the fiscal, Nordstrom generated $1,648 million in cash from operating activities and free cash flow of $550 million. Capital expenditures during the year were $846 million.
In the fiscal fourth quarter, the company repurchased nearly 4 million shares valued at $189 million. Currently, Nordstrom has about $1 billion remaining under its share repurchase authorization, including the additional $500 million authorization announced in Feb 2017.
Guidance
Following the strong quarter, the company provided initial view for fiscal 2017. The company anticipates net sales to increase nearly 3–4% in fiscal 2017, with comps estimated to remain flat. The company’s guidance includes the impact of the additional 53rd week in fiscal 2017, which is likely to add about $200 million to net sales.
Further, the company expects Retail EBIT in the rage of $780–$840 million, while Credit EBIT is estimated to be about $135 million. Based on the above iterations, the company envisions fiscal 2017 earnings per share in the range of $2.75–$3.00.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted lower by 10% due to these changes.
Nordstrom, Inc. Price and Consensus
Nordstrom, Inc. Price and Consensus | Nordstrom, Inc. Quote
VGM Scores
At this time, Nordstrom's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. 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.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.