Back to top

Image: Bigstock

Factors Likely to Affect Nordstrom's (JWN) Q4 Earnings

Read MoreHide Full Article

Nordstrom, Inc. (JWN - Free Report) is scheduled to release fourth-quarter fiscal 2020 numbers on Mar 3, after the closing bell. This fashion specialty retailer is likely to have witnessed revenue and earnings declines in the to-be-reported quarter.

The Zacks Consensus Estimate for fiscal fourth-quarter earnings of 12 cents suggests a decrease of 91.6% from the year-ago quarter’s reported figure of $1.42. Moreover, the consensus mark has moved down 7.7% in the past 30 days. Further, the consensus mark for revenues is pegged at $3,592 million, indicating a decline of 20.9% from the figure reported in the year-ago quarter.

However, the company’s earnings beat estimates by a significant margin in the last reported quarter. Moreover, it delivered an earnings surprise of 500.4%, on average, in the trailing four quarters.

Nordstrom, Inc. Price and EPS Surprise

Factors to Note

Nordstrom continues to grapple with the impacts of COVID-19 and soft store traffic. Management, in its last earnings call, envisioned sales to decline in the low twenties in the fiscal fourth quarter. Further, the company has been witnessing soft margins due to higher COVID-related costs and increased promotions to reduce inventory. Also, planned shipping surcharges and premium pay related to the holiday season are likely to have hurt the EBIT margin. In fact, the company predicted EBIT margin to decline roughly 500 bps year over year in the fiscal fourth quarter.

Moreover, increased stay-at-home practices have been influencing consumers’ shopping patterns. As a result, altered preferences from apparel, shoes and other accessories to more essential things amid the coronavirus pandemic might have adversely impacted the to-be-reported quarter’s performance.

However, it has been gaining from positive customer demand, which is likely to have sustained in fourth-quarter fiscal 2020. Moreover, the company’s e-commerce business is expected to have performed well, driven by enhanced omnichannel capabilities, including order pickup, store fulfillment services as well as two-day delivery or next-day pickup facilities. Apart from these, improved merchandise margins and overhead cost reductions are likely to have provided some cushion to the bottom line.

What Does the Zacks Model Say

Our proven model does not conclusively predict an earnings beat for Nordstrom this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Nordstrom carries a Zacks Rank #4 (Sell) and an Earnings ESP of -58.33%.

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:

Abercrombie & Fitch (ANF - Free Report) currently has an Earnings ESP of +9.17% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation (TGT - Free Report) currently has an Earnings ESP of +8.17% and a Zacks Rank #2, at present.

DICK’S Sporting Goods (DKS - Free Report) currently has an Earnings ESP of +3.93% and a Zacks Rank #2.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.

Click here for the 4 trades >>