Nordstrom's First-Quarter Earnings Rise and Meet Expectations

Marco Green
June 3, 2017

Nordstrom Inc (JWN.N) reported weaker-than-expected quarterly same-store sales as fewer people visited the apparel retailer's stores in the United States, sending its shares down 3.7 per cent after the bell. Sales from Nordstrom Rewards customers represented 47% of first quarter sales, compared with 39% a year ago.

However, on GAAP basis, the company posted earnings per share of 37 cents compared with earnings of 26 cents per share in the year-ago quarter.

Carter Harrison, a GlobalData Retail analyst, believes the sluggish performance may have something to do with fickle customers amid competition and said Rack is facing tougher year-over-year growth rates. Over the short term, some market observers may have noticed that Nordstrom, Inc. has a 23.43% short float with 15 days to cover.

"While Nordstrom's total revenue growth algorithm should remain well-above department store peers for some time, the company is likely going to have to take much more aggressive action to address fixed cost deleverage from persistent negative mid-single digit percent declines in the bricks-and-mortar channel if we're right that USA mall/department store traffic trends are unlikely to improve in the medium term", UBS's Michael Binetti wrote in a Friday note. Top-performing categories were men's and women's apparel, and the West was the top-ranking US geographic region. SG&A expenses fell 70 bps to 32.0% of sales. We are reaching the point in the earnings season when most retail companies will report, and this has the potential to right some of the losses this year.

The company's annual outlook expectations for earnings per diluted share are unchanged, incorporating first quarter results, debt refinancing costs and the impact of share repurchases in the first quarter. Its adjusted profit of $0.43 a share easily beat the $0.27 that analysts were expecting. Advisory Services Network LLC bought a new stake in Nordstrom during the first quarter valued at $113,000.

By the market close Thursday, shares of Nordstrom had fallen around 21 percent over the past six months, but are only down about 3.5 percent for the year-to-date period. PLCE and Build-A-Bear Workshop, Inc.

Big 5 Sporting has gained almost 63.2% in the last one year.

Children's Place, with a long-term earnings growth rate of 8%, has gained almost 20.2% year to date. Analyst's mean target price for FOXA is $34.32 while analysts mean recommendation is 2.10. These are sinister companies because many appear to be sound investments.

See today's Zacks "Strong Sells" absolutely free . Over the past 2 quarters, the stock is down -9.93%, compared with a gain of almost 2.26% for 3 months and about -0.77% for the past 30 days.

Build-A-Bear Workshop, Inc.

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