On the US stock charts today, Nordstrom, Inc. (NYSE: JWN) shares are seeing a significant increase. JWN stock is witnessing a 4.59% rise in the most recent pre-market session, trading at $22.11. This significant increase comes after the business revealed its excellent second-quarter financial results, which show robust growth and a promising future.
Performance Highlights
Nordstrom recorded net earnings of $122 million, or $0.72 in earnings per diluted share (EPS). The business also reported profits before interest and taxes (EBIT) of $190 million.
The timing of the company’s Anniversary Sale, which moved from the third to the second quarter by one week, contributed significantly to the increase in net sales, contributing almost 100 basis points in comparison to 2023.
The categories with the highest growth rates—beautiful, sporty, and home—benefited most from the Anniversary Sale. Strong client participation and favorable comments about the product variety, shopping experience, and level of service were received throughout the sale, which lasted one extra day into the third quarter.
Strategic Expansion and Dividend Declaration
In keeping with its stellar financial results, Nordstrom announced a $0.19 quarterly cash dividend per share. Investors who were in good standing on September 3, 2024, could expect to receive their dividend on September 18, 2024.
In addition, Nordstrom said that it is planning to develop a new Nordstrom Rack in Surprise, Arizona, which is expected to open in the fall of 2025, as part of its expansion efforts. This new store, which is situated in Prasada North, a well-liked shopping area with retailers like Target and Starbucks, will provide clients with an extensive selection of high-end products at affordable costs.
Expanding Presence in Arizona
Customers’ overall shopping experience will be enhanced by the new 26,000-square-foot Nordstrom Rack, which will provide convenient alternatives including online order pickup and easy returns.
With this acquisition, Nordstrom (JWN) will be able to expand its presence in the Phoenix area, where it now employs 1,295 people between its one Nordstrom store and its eleven Nordstrom Rack locations. It is projected that the expansion would meet the needs of the growing population as well as further solidify Nordstrom’s economic dominance in Arizona.
Nordstrom Inc. (NYSE: JWN) has been seeing a dangerous slowdown in its business that goes as far back as 2020. The department store chain is facing a range of issues on the macroeconomic front impacting its market competitiveness. The new ownership shift comes at a much-needed time for a change.
Market Ecstatic over Nordstrom Ownership Shift
The stock for Nordstrom Inc. (JWN) has been performing spectacularly since the start of 2023, taking on a sustained climb from $15 to almost $22, during this time. This growth curve impressively picked up the pace earlier today after news that the famous billionaire, Ryan Cohen, invested in a significant stake in the company. The market is clearly excited about Cohen’s decision-making moving forward, as he has vowed to implement serious board-level changes to companies he owns. Moreover, he holds the reputation of an activist investor and is known to trigger meme stock bullish rushes, as he did with the legendary Gamestop stock.
Wider Troubles Facing JWN
The news of Ryan Cohen’s investment in JWN comes as a breath of fresh air after the company continued struggling through one problem after the other. Just recently, the credit rating agency, Fitch, downgraded Nordstrom to the junk category, pointing to the serious risk creditors would face when lending to the company. It is clear that the company came under pressure with the macroeconomic problems impacting the wider consumer sector, and may see its problems exacerbate if a recession is to take place. The downgrading by Fitch further worsens financing for the company, at a time when it is already struggling to achieve healthy levels of liquidity.
Conclusion
Nordstrom has been struggling to perform relative to its competitors since the outbreak of the Covid-19 pandemic in 2020 and has seen its financial position dwindle ever since. The billionaire Ryan Cohen may be the change that the company needs to survive.
The apparel segment has been trying to recover over the past few months as economies continue to reopen. According to the Commerce Department, the clothing and accessories sales grew 0.8% month over month in April. Moreover, the jump was a much solid 11.2% on a YOY basis. Thus, the sector seems to be making a speedy recovery from the woes of the pandemic.
The pandemic had people confined to their homes, which ultimately led to a huge decline in their spending on clothes and related items. Hence, the apparel industry took a severe hit from the Covid outbreak. However, the beginning of 2021 brought relief as economies started reopening. But the omicron and delta variants continued giving blows. Finally, near the end of last year, things started improving for the industry and it has been making a speedy recovery since then. With offices and schools now functioning at optimum levels, people are now spending more on clothes and shoes as they upgrade their wardrobes. Summer and vacation plans are also helping boost demand in the sector.
But challenges remain at large with inflation and rising interest rate on top of the wider economic downfall. The Fed has already hiked rates by 75 basis points in the last two meetings, with more hikes on the way. Inflation has crossed the highest levels in 41 years of the country. The cherry on top. A recession is looming overhead. However, despite the numerous challenges, the apparel segment is on track to make a recovery. Helping the segment is the increase in personal income and expenditure. More cash on hand will likely boost spending in the future which in turn will aid the apparel business.
JWN; The Retail Victor
In the recent weeks, many retail companies posted earnings that disappointed immensely. After a horrible slate of financial reports from retail stocks, many were fearful of JWN’s earnings. There were even reports of dumping the stock or staying away from it as its earnings date came closer. But the high-end apparel retailer posted earnings that blew in the face of most of its industry peers.
With its upbeat earnings and outlook, JWN stock added nearly 9.5% in the pre-market on May 25. A volume of 5,609 shares had the stock reach $22.63 in the pre-market following a decline of 3.59% in the prior session. Investors’ fears over the earnings had the stock valued at $20.68 at the close of the regular trading session.
Q1, 2022 Financial Results
For the first quarter of 2022, the company posted net sales of $3.57 billion while analysts were expecting $3.28 billion. The net sale grew by 18.7% and the Nordstrom banner store sales jumped by 23.5%, exceeding the pre-pandemic levels. The Nordstrom Rack saw an increase of 10.3% in its sales and is marking a consistent sequential improvement towards its pre-pandemic levels. With digital sales remaining flat YOY, shoppers’ appetite for going out and visiting stores seems strong.
Furthermore, the gross merchandise value (GMV) went up 19.6% in the quarter while the Nordstrom banner GMV went up by 24.8%. The gross profit saw an increase of 190 basis points YOY.
While the quarterly net earnings were modest at $20 million, the adjusted EPS of $(0.06) came well above the expected $(0.08). The earnings per share represent a surprise of 25%. Moreover, the quarterly EPS was impacted by discrete tax expenses in relation to stock-based compensation.
Additionally, the company’s board has also authorized a new $500 million buyback plan.
JWN’s Outlook
For the ongoing fiscal 2022, the company’s updated guidance is mentioned in the table below:
Source: JWN Q1 Presentation
Analysts are expecting earnings of $0.84 on sales of $3.98 billion for the second quarter. And the full-year expectations are EPS of $3.30 on sales of $15.55 billion.
In a battle to deal with the rising costs due to inflation and supply chain hurdles, the company has upped its prices and so far, demand has held strong.
JWN Stock Analysis
Currently, JWN stock maintains a “Buy” rating from most analysts as its fundamentals remain strong and outlook bullish. Sporting a Value grade of A, the stock has a P/E ratio of 6.86 which is slightly below the industry average of 8.82. Its price-to-sales ratio of 0.23 also remains a little below the industry average while the P/CP ratio is 3.80. Its valuations demonstrate that the stock is likely undervalued at the moment and hence is a good value stock.
With its strong valuations, the apparel retailer had a price target of $22 from JP Morgan prior to the company’s earnings. Additionally, the stock has so far been doing relatively better than its industry peers. JWN has returned 8.58% year to date while its peers have lost over 10%. However, the frenzy over the retail earnings season had the stock lose over 16% in the past five days alone, making it underperform the market.
Conclusion
Despite the huge array of challenges brought forth by geopolitical and economic instability, the retail market is continuing its bullish trend. While rising inflation, surging interest rates, and a looming recession pose huge risks, reopening of economies and increased personal income plus expenditure are expected to boost demand.
JWN has also been reeling under higher Covid-related labor and freight costs amid the global supply chain bottlenecks. However, remaining firm on its growth strategy, the company has dealt well with the rising costs and has increased its prices. The increased prices have not impacted its demand in any way as the latest earnings release showed strong sales growth. Continuing its path to recovery, the company provided a bullish outlook for the year as well as the ongoing quarter.
On March 01, Nordstrom Inc. (JWN) declared its financial results for Q4 and fiscal 2021 along with the outlook for 2022. Consequently, the stock rallied in the after-hours on Tuesday.
It seems investors were unsure of the upcoming earnings as the stock traded heavily at 254% of the average volume. At 19.54 million shares, JWN stock declined by 5.79% as it fluctuated between $19.36 and $21.13. The stock closed the regular session at a value of $19.54 per share. Following the beat earnings, the stock rebounded in the after-hours to add 34.85%. Hence, JWN stock was trading at a value of $26.35 per share in the after-hours on Tuesday. The volume remained 5.91 million shares in the session.
The clothes, shoes, and accessories manufacturer, Nordstrom Inc. has a market capitalization of $3.3 billion. Its 159.31 million outstanding shares have declined by 13.62% year to date. The stock lost a value of 48.0% last year.
JWN’s Q4 2021 Highlights
In Q4 2021, the company had earnings of $200 million, against $33 million in the year-ago period. Therefore, the EPS was $1.23 on a diluted share basis in the fourth quarter of 2021.
Source: Entrepreneur
Moreover, the company reported earnings before taxes (EBIT) of $299 million, which was 6.8% of the sales in Q4 2021.
JWN’s net sales saw an increase of 23% in Q4 2021, against the same period of the previous year.
Additionally, at the end of the year, the company had $1,1 billion in liquidity which included cash of $322 million.
Future Outlook
For fiscal 2022, the company expects revenue to grow by 5-7% YOY and an EBIT margin of 5-6% of sales.
Furthermore, the expected EPS for fiscal 2022 is $3.15 to $3.50. This excludes share repurchase activity impact.
Relocation of Nordstrom Rack
On January 31, the company announced the relocation plan of its Nordstrom Rack store within The Summit in Birmingham, AL. Managed by Bayer Properties, the 27,000 sq. ft. store is set to be opened in spring 2023.
In addition, the new location is part of a mixed-use shopping and entertainment destination including retail, restaurant, and office space.
The off-price retail division of JWN, Nordstrom Rack offers up to 70% off on apparel, accessories, beauty, home, and shoes from various brands to the customers.
Conclusion
On Tuesday, the company not only reported a beat Q4 but also an upbeat outlook for fiscal 2022. Thus, the results highly impressed the investors while they were gloomy before the earnings release. As a result, the JWN stock soared in the after-hours on Tuesday.
Nordstrom was highly affected by the COVID-19 pandemic during the year. However, the third quarter earnings surprise has attracted investors.
Nordstrom, Inc. (JWN) is ending the year on a high after suffering heavily from the global pandemic. Over the past month, JWN stock has soared over 110% as the investors step in seeing future growth.
JWN shares surged on the unexpected Q3 results. The stock surged from $24.55 from the previous close to the day’s high of $29.54 on Thursday. At close, JWN was trading at $27.41 up by 11.65%.
This marks the stock price jumping from $12.58 on Oct. 27 to $29.54, showing a more than double increase.
Recently, Nordstrom posted its third quarter 2020 results which came as a surprise. The quarterly EPSimproved to $0.34 per share beating the $0.07 loss projected by analysts. This was the first time that the company has exceeded its EPS in the last four quarters.
Moreover, the company recorded a sales decline of 16% up from the prior quarter decrease of 53%. As the situation is getting better, the company is gradually recovery from its sales losses.
On Tuesday, the CEO of the company, Erik Nordstrom noted that their ability toturn things around with financial flexibility, early during the pandemic, was the main reason that helped them to increase their operating profit to $100 million. The cash flow also improved to more than $150 million in Q3 2020.
Erik also commented that online sales had stronger growth with the shutdown of its physical stores. The online sales during Q3 were $1.6 billion, reflecting a total of 52% of Nordstrom’s business.
The revenue was $3.09 compared to $3.67 in the same quarter a year ago. While, the net income was $53 million, down from $126 million in Q3 2019.
One of the main reasons that leveraged the third quarter results going up was the shifting of big anniversary sale from Q2 to Q3. This helped the digital sales to increase 37% from the prior year.
The management addressed that noted an increase in the purchase of activewear, beauty products, and home goods during the quarter. The customers are buying more cloths and accessories online during the pandemic.
The CFO, Anne Bramman updated the outlook for the ongoing quarter. She highlighted that the sales are expected to decline to the low 20-percentage range for the fourth quarter of 2020. Still, the company forecasted a positive operating cash flow. The outlook remains uncertain due to the unsettled pandemic.
