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Factors Setting the Tone for Nordstrom (JWN) in Q4 Earnings
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Nordstrom, Inc. (JWN - Free Report) is slated to report fourth-quarter fiscal 2017 results on Mar 1, after the closing bell.
The company has been gaining from the smooth execution of customer strategy along with disciplined inventory management. Also, it is enhancing market share through persistent store expansion and strengthening capabilities via further investments. Notably, these initiatives helped the company to deliver sixth straight positive earnings surprise in third-quarter fiscal 2017, wherein sales marked its second successive beat. However, higher expenses continue to remain a headwind, which are likely to weigh upon the company’s near-term margin performance.
The Zacks Consensus Estimate of $1.24 for the fourth quarter reflects a year-over-year decline of 9.5%, though it remained stable in the last 30 days. Moreover, analysts polled by Zacks expect revenues to come in at $4,611 million, up 6.8% from the prior-year quarter. Furthermore, the consensus mark for sales at Nordstrom full-line stores and Nordstrom Rack are pegged at $2,060 million and $1,097 million, respectively, showing year-over-year increases of 38.4% and 13.6%.
Let’s see how things are shaping up prior to the earnings announcement.
Factors at Play
Nordstrom is making significant progress with respect to its customer-based strategy and is on track to reach its long-term growth target of $20 billion by 2020. With regard to cost savings, the company plans to strike a balance between its sales and expense growth. Also, it is focused on advancing in the technology space by boosting e-commerce and digital networks, and improving its supply-chain channels and marketing efforts. Management anticipates online penetration to exceed 25% by the end of the year.
Recently, the company also released sales and comparable store sales (comps) for the combined months of November and December, which primarily comprises the holiday season. Nordstrom recorded a 2.5% increase in net sales for the nine weeks (ended Dec 30, 2017) while comps for the period rose 1.2%. The solid holiday show was primarily driven by growth in Nordstrom’s full-line and Rack stores compared with the year-to-date sales performance and persistent strength in e-commerce at Nordstrom.com and Nordstromrack.com/HauteLook.
Driven by the robust holiday sales, management raised its previously stated guidance for fiscal 2017. The company now expects sales growth of nearly 4.2%, including the 53rd week, with comps expected to gain 0.5%. Additionally, Nordstrom anticipates earnings in the range of $2.90-$2.95 per share, marking an increase from the prior guidance range of $2.85-$2.95 per share. The revised guidance assumes strong sales growth, persistent stability in merchandise margins and higher supply chain, technology, and occupancy costs related to the company’s growth initiatives.
These factors have boosted the company’s share price performance in the last three months. The stock has gained 22.7% compared with the industry’s growth of 11.7%.
Though Nordstrom’s growth strategy bodes well, higher investments related to occupancy, technology, supply chain and marketing are likely to hurt the company’s performance. Apparently, the company’s merchandise margin was hurt by higher occupancy expenses related to new Rack and Canada stores in the fiscal third quarter. This led contraction in gross margins and increase in SG&A expenses. For fiscal 2017, the company anticipates Retail gross profit to be impacted by higher new store occupancy expenses and mix impact from off-price growth.
What the Zacks Model Unveils
Our proven model does not show that Nordstrom is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Nordstrom has an Earnings ESP of -0.72%. The company carries a Zacks Rank #2, which increases the predictive power of ESP. However, its negative ESP makes surprise prediction difficult.
Stocks With Favorable Combination
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Dollar General Corporation (DG - Free Report) has an Earnings ESP of +2.20% and a Zacks Rank of 2.
Macy's, Inc. (M - Free Report) has an Earnings ESP of +0.92% and a Zacks Rank #2.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Factors Setting the Tone for Nordstrom (JWN) in Q4 Earnings
Nordstrom, Inc. (JWN - Free Report) is slated to report fourth-quarter fiscal 2017 results on Mar 1, after the closing bell.
The company has been gaining from the smooth execution of customer strategy along with disciplined inventory management. Also, it is enhancing market share through persistent store expansion and strengthening capabilities via further investments. Notably, these initiatives helped the company to deliver sixth straight positive earnings surprise in third-quarter fiscal 2017, wherein sales marked its second successive beat. However, higher expenses continue to remain a headwind, which are likely to weigh upon the company’s near-term margin performance.
Nordstrom, Inc. Price, Consensus and EPS Surprise
Nordstrom, Inc. Price, Consensus and EPS Surprise | Nordstrom, Inc. Quote
The Zacks Consensus Estimate of $1.24 for the fourth quarter reflects a year-over-year decline of 9.5%, though it remained stable in the last 30 days. Moreover, analysts polled by Zacks expect revenues to come in at $4,611 million, up 6.8% from the prior-year quarter. Furthermore, the consensus mark for sales at Nordstrom full-line stores and Nordstrom Rack are pegged at $2,060 million and $1,097 million, respectively, showing year-over-year increases of 38.4% and 13.6%.
Let’s see how things are shaping up prior to the earnings announcement.
Factors at Play
Nordstrom is making significant progress with respect to its customer-based strategy and is on track to reach its long-term growth target of $20 billion by 2020. With regard to cost savings, the company plans to strike a balance between its sales and expense growth. Also, it is focused on advancing in the technology space by boosting e-commerce and digital networks, and improving its supply-chain channels and marketing efforts. Management anticipates online penetration to exceed 25% by the end of the year.
Recently, the company also released sales and comparable store sales (comps) for the combined months of November and December, which primarily comprises the holiday season. Nordstrom recorded a 2.5% increase in net sales for the nine weeks (ended Dec 30, 2017) while comps for the period rose 1.2%. The solid holiday show was primarily driven by growth in Nordstrom’s full-line and Rack stores compared with the year-to-date sales performance and persistent strength in e-commerce at Nordstrom.com and Nordstromrack.com/HauteLook.
Driven by the robust holiday sales, management raised its previously stated guidance for fiscal 2017. The company now expects sales growth of nearly 4.2%, including the 53rd week, with comps expected to gain 0.5%. Additionally, Nordstrom anticipates earnings in the range of $2.90-$2.95 per share, marking an increase from the prior guidance range of $2.85-$2.95 per share. The revised guidance assumes strong sales growth, persistent stability in merchandise margins and higher supply chain, technology, and occupancy costs related to the company’s growth initiatives.
These factors have boosted the company’s share price performance in the last three months. The stock has gained 22.7% compared with the industry’s growth of 11.7%.
Though Nordstrom’s growth strategy bodes well, higher investments related to occupancy, technology, supply chain and marketing are likely to hurt the company’s performance. Apparently, the company’s merchandise margin was hurt by higher occupancy expenses related to new Rack and Canada stores in the fiscal third quarter. This led contraction in gross margins and increase in SG&A expenses. For fiscal 2017, the company anticipates Retail gross profit to be impacted by higher new store occupancy expenses and mix impact from off-price growth.
What the Zacks Model Unveils
Our proven model does not show that Nordstrom is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Nordstrom has an Earnings ESP of -0.72%. The company carries a Zacks Rank #2, which increases the predictive power of ESP. However, its negative ESP makes surprise prediction difficult.
Stocks With Favorable Combination
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Best Buy Co., Inc. (BBY - Free Report) has an Earnings ESP of +5.16% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dollar General Corporation (DG - Free Report) has an Earnings ESP of +2.20% and a Zacks Rank of 2.
Macy's, Inc. (M - Free Report) has an Earnings ESP of +0.92% and a Zacks Rank #2.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>