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Why Is Nordstrom (JWN) Down 4.1% Since its Last Earnings Report?
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It has been about a month since the last earnings report for Nordstrom, Inc. (JWN - Free Report) . Shares have lost about 4.1% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is JWN due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nordstrom Misses on Q4 Earnings, Issues FY18 View
Nordstrom posted fourth-quarter fiscal 2017 results and also provided guidance for fiscal 2018.
In the reported quarter, the company’s adjusted earnings of $1.20 per share missed the Zacks Consensus Estimate of $1.24. On a GAAP basis, the bottom line came in at 89 cents per share compared with $1.15 in the year-ago quarter.
Revenues
Total revenues advanced 8.9% to $4,702 million. While the company’s net Retail sales increased 8.4% to $4,600 million, Credit Card revenues surged 39.7% to $102 million. The Zacks Consensus Estimate for fourth-quarter revenues was pegged at $4,621 million.
Furthermore, total comparable-store sales (comps) rose 2.6%. Moreover, the company’s results reflected significant progress on its digital strategy.
Net sales at Nordstrom full-line stores (including the U.S. and Canada full-line stores, and Nordstrom.com and Trunk Club) were up 6.4%, with comps rising 2.4%. Notably, the best-performing merchandising categories were Men's and Kids' Apparel.
Coming to Nordstrom Rack (that includes Nordstrom Rack stores and Nordstromrack.com/HauteLook) net sales advanced 15% while comps increased 3.7%.
Operational Update
Nordstrom's Retail gross profit margin contracted 42 bps to 35.6% mainly on account of increased occupancy expenses related to new store expansion for Nordstrom Rack, and in Canada and the New York City Men’s flagship. Further, inventory rose 6.9% while merchandise margin met the company's expectations reflecting persistent momentum in regular price selling trends.
Selling, general and administrative (SG&A) expenses, as a percentage of sales, improved 243 bps to 30.1% mainly driven by increased marketing, technology and supply chain costs related to the company's growth efforts.
Store Update
As of Feb 3, 2018, Nordstrom operated 366 stores in 40 states. These include 122 full-line stores in the United States, Canada and Puerto Rico, 232 Rack outlets, two Jeffrey boutiques, two clearance stores, seven Trunk Club clubhouses as well as Nordstrom Local service concept.
In fiscal 2018, management intends to inaugurate 12 Nordstrom Racks and one full-line store, with plans to relocate one Rack store.
Financials
Nordstrom ended the quarter with cash and cash equivalents of $1,181 million, long-term debt net of current liabilities of $2,681 million and total shareholders’ equity of $977 million.
In fiscal 2017, management bought back 4.6 million shares worth $206 million. Following this, nearly $414 million remained under the current buyback authorization. Further, it does not intend to buy back any shares owing to the possibility of going private deal.
Nordstrom generated $1400 million in cash from operating activities and free cash flow of $383 million in fiscal 2017. Capital expenditures in the year were $670 million. For fiscal 2018, the same is projected to be roughly $740 million.
Guidance
Management issued guidance for fiscal 2018. Net sales are projected in the band of $15.2-$15.4 billion, with comps growth in the 0.5-1.5% range.
Further, the company expects EBIT to lie between $885 million and $940 million, which is likely to be reduced by roughly $30 million due to the revenue recognition accounting changes.
Based on the above iterations, the company now envisions fiscal 2018 earnings per share in the range of $3.30-$3.55, excluding the impact of share repurchases.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted by 6.4% due to these changes.
At this time, JWN has an average Growth Score of C, a grade with the same score on the momentum front. 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.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
JWN has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Nordstrom (JWN) Down 4.1% Since its Last Earnings Report?
It has been about a month since the last earnings report for Nordstrom, Inc. (JWN - Free Report) . Shares have lost about 4.1% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is JWN due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nordstrom Misses on Q4 Earnings, Issues FY18 View
Nordstrom posted fourth-quarter fiscal 2017 results and also provided guidance for fiscal 2018.
In the reported quarter, the company’s adjusted earnings of $1.20 per share missed the Zacks Consensus Estimate of $1.24. On a GAAP basis, the bottom line came in at 89 cents per share compared with $1.15 in the year-ago quarter.
Revenues
Total revenues advanced 8.9% to $4,702 million. While the company’s net Retail sales increased 8.4% to $4,600 million, Credit Card revenues surged 39.7% to $102 million. The Zacks Consensus Estimate for fourth-quarter revenues was pegged at $4,621 million.
Furthermore, total comparable-store sales (comps) rose 2.6%. Moreover, the company’s results reflected significant progress on its digital strategy.
Net sales at Nordstrom full-line stores (including the U.S. and Canada full-line stores, and Nordstrom.com and Trunk Club) were up 6.4%, with comps rising 2.4%. Notably, the best-performing merchandising categories were Men's and Kids' Apparel.
Coming to Nordstrom Rack (that includes Nordstrom Rack stores and Nordstromrack.com/HauteLook) net sales advanced 15% while comps increased 3.7%.
Operational Update
Nordstrom's Retail gross profit margin contracted 42 bps to 35.6% mainly on account of increased occupancy expenses related to new store expansion for Nordstrom Rack, and in Canada and the New York City Men’s flagship. Further, inventory rose 6.9% while merchandise margin met the company's expectations reflecting persistent momentum in regular price selling trends.
Selling, general and administrative (SG&A) expenses, as a percentage of sales, improved 243 bps to 30.1% mainly driven by increased marketing, technology and supply chain costs related to the company's growth efforts.
Store Update
As of Feb 3, 2018, Nordstrom operated 366 stores in 40 states. These include 122 full-line stores in the United States, Canada and Puerto Rico, 232 Rack outlets, two Jeffrey boutiques, two clearance stores, seven Trunk Club clubhouses as well as Nordstrom Local service concept.
In fiscal 2018, management intends to inaugurate 12 Nordstrom Racks and one full-line store, with plans to relocate one Rack store.
Financials
Nordstrom ended the quarter with cash and cash equivalents of $1,181 million, long-term debt net of current liabilities of $2,681 million and total shareholders’ equity of $977 million.
In fiscal 2017, management bought back 4.6 million shares worth $206 million. Following this, nearly $414 million remained under the current buyback authorization. Further, it does not intend to buy back any shares owing to the possibility of going private deal.
Nordstrom generated $1400 million in cash from operating activities and free cash flow of $383 million in fiscal 2017. Capital expenditures in the year were $670 million. For fiscal 2018, the same is projected to be roughly $740 million.
Guidance
Management issued guidance for fiscal 2018. Net sales are projected in the band of $15.2-$15.4 billion, with comps growth in the 0.5-1.5% range.
Further, the company expects EBIT to lie between $885 million and $940 million, which is likely to be reduced by roughly $30 million due to the revenue recognition accounting changes.
Based on the above iterations, the company now envisions fiscal 2018 earnings per share in the range of $3.30-$3.55, excluding the impact of share repurchases.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted by 6.4% due to these changes.
Nordstrom, Inc. Price and Consensus
Nordstrom, Inc. Price and Consensus | Nordstrom, Inc. Quote
VGM Scores
At this time, JWN has an average Growth Score of C, a grade with the same score on the momentum front. 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.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
JWN has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.