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Nordstrom (JWN) Tops Q4 Earnings, Issues Guidance; Stock Up
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Nordstrom Inc. (JWN - Free Report) posted solid fourth-quarter fiscal 2016 earnings per share, which topped estimates and improved year over year. This also marked the company’s third consecutive earnings beat. Further, the company provided its initial outlook for fiscal 2017.
Consequently, shares of this leading fashion specialty retailer increased nearly 3.4% in the after-hours trading session. However, we note that Nordstrom has declined 21.4% in the past three months, underperforming the Zacks categorized Retail-Apparel/Shoe industry’s fall of 13.2% in same period.
Nordstrom’s quarterly adjusted earnings of $1.37 per share 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, 2017, 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. The current Zacks Consensus Estimate for fiscal 2017 is pegged at $2.91 per share, which is close to the higher-end of the company’s guidance.
Chico’s has gained nearly 15.1% in the last one year. Moreover, it has a long-term earnings growth rate of 11.5%.
Children’s Place, with a long-term earnings growth rate of 10.3%, has gained nearly 44.8% in the past one year.
Zumiez has jumped 12.2% in the last six months. The stock has a long-term earnings growth rate of 15%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Nordstrom (JWN) Tops Q4 Earnings, Issues Guidance; Stock Up
Nordstrom Inc. (JWN - Free Report) posted solid fourth-quarter fiscal 2016 earnings per share, which topped estimates and improved year over year. This also marked the company’s third consecutive earnings beat. Further, the company provided its initial outlook for fiscal 2017.
Consequently, shares of this leading fashion specialty retailer increased nearly 3.4% in the after-hours trading session. However, we note that Nordstrom has declined 21.4% in the past three months, underperforming the Zacks categorized Retail-Apparel/Shoe industry’s fall of 13.2% in same period.
Nordstrom’s quarterly adjusted earnings of $1.37 per share 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, 2017, 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. The current Zacks Consensus Estimate for fiscal 2017 is pegged at $2.91 per share, which is close to the higher-end of the company’s guidance.
Nordstrom, Inc. Price, Consensus and EPS Surprise
Nordstrom, Inc. Price, Consensus and EPS Surprise | Nordstrom, Inc. Quote
Zacks Rank & Key Picks
Nordstrom currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same industry include Chico’s FAS Inc. , The Children’s Place Inc. (PLCE - Free Report) and Zumiez Inc. (ZUMZ - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chico’s has gained nearly 15.1% in the last one year. Moreover, it has a long-term earnings growth rate of 11.5%.
Children’s Place, with a long-term earnings growth rate of 10.3%, has gained nearly 44.8% in the past one year.
Zumiez has jumped 12.2% in the last six months. The stock has a long-term earnings growth rate of 15%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>