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Here's Why Nordstrom (JWN) is Marching Ahead of Its Industry
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Nordstrom Inc. (JWN - Free Report) has been witnessing a solid run on the bourses, owing to robust online show, strong demand and strategic growth endeavors. The Zacks Rank #1 (Strong Buy) stock has gained 21.6% in the past three months against the industry’s and the Retail-Wholesale sector’s declines of 24.5% and 9.3%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
Additionally, an uptrend in the Zacks Consensus Estimate echoes the same sentiment. The Zacks Consensus Estimate for Nordstrom’s fiscal 2021 sales and EPS suggests growth of 5.7% and 200%, respectively, from the year-ago period’s reported numbers. Earnings estimates for the current financial year have increased 67.5% to $3.30 over the past 30 days.
Let’s Delve Deeper
Nordstrom has been gaining from the solid demand for apparel and footwear. Strength in home, active, designer, beauty and kids categories bodes well. JWN launched more than 300 brands, including Open Edit, Farm Rio, Fanatics and ASOS DESIGN, in fiscal 2021. Alongside these, compelling merchandise, lower markdowns and the robust performance of Nordstrom Rack stores led to the impressive fourth-quarter fiscal 2021 results, wherein both top and bottom lines grew year over year.
The company remains focused on its long-term strategy aimed at enhancing its digital-first platform, expanding the reach of Nordstrom Rack, gaining market share and delivering profitable growth. As part of the strategy, JWN continues to scale the enhanced capabilities like the expansion of order pickup and ship-to-store to all Nordstrom Rack stores. The company also expanded its market strategy to all its 20 top markets. As part of the strategy, it continues to scale the enhanced capabilities launched in 2020, including the expansion of order pickup and ship-to-store to all Nordstrom Rack stores.
Nordstrom has been advancing in the technology space by boosting e-commerce and digital networks, and improving its supply-chain channels and marketing efforts. Although fourth-quarter fiscal 2021 digital sales fell 1% year over year, the same rose 23% from the fourth quarter of fiscal 2019. In the fiscal fourth quarter, digital sales represented 44% of net sales compared with 54% in the year-ago period. The digital business witnessed gains from improved digital traffic across both Nordstrom and Nordstrom Rack, as well as increased utilization of the Buy Online, Pick Up In-Store service. The company earlier completed the integration of Rack.com onto Nordstrom.com, offering a better customer experience. Its mobile app also witnessed a solid performance, with mobile users accounting for nearly 70% of the total digital traffic.
As part of its closer-to-you strategy, JWN aims to link stores and services to expedite deliveries, expand online offerings, and add cheaper merchandise at its Rack off-price stores to improve customers' shopping experiences. Management is also on track with integrating Nordstrom Rack assets and offering a wide range of price points offered at Nordstrom Rack. Increased focus on distribution capabilities, along with improved connectivity of physical and digital inventory, is likely to contribute to Nordstrom Rack sales by $2 billion in the long term.
Management envisions its digital unit to account for 50% of the total sales. Apart from these, a rise in new customers, enhanced personalization, and expanded product offering are expected to aid revenue growth, profit margin and generating cash flow. It predicts revenue growth in the low-single digits on an annual basis, with operating income outpacing revenues in the long term. The EBIT margin is expected to be more than 6%, with annual operating cash flow anticipated to be more than $1 billion.
Image Source: Zacks Investment Research
Driven by these factors, management issued an encouraging fiscal 2022 view. The company anticipates total year-over-year revenue growth of 5-7%. Adjusted earnings are envisioned to be $3.15-$3.50, with an EBIT margin of 5-6%. It expects to lower its inventory in the first quarter of fiscal 2022.
Bottom Line
Despite the ongoing industry-wide supply-chain disruptions and higher freight expenses, we believe that online strength, solid demand and well-chalked-out endeavors will help the JWN stock sustain its stellar show. A VGM Score of A and a long-term earnings growth rate of 6% reflect its inherent strength.
Capri Holdings currently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 1,018.2%, on average.
The Zacks Consensus Estimate for Capri’s current financial-year sales and EPS suggests growth of 37% and 215.8%, respectively, from the year-ago period’s reported figures. CPRI has an expected EPS growth rate of 53.9% for three-five years.
Tapestry presently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 28.2%, on average.
The Zacks Consensus Estimate for Tapestry’s current financial-year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s reported numbers. TPR has an expected EPS growth rate of 12.5% for three-five years.
Target currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the year-ago period’s reported figures. TGT has an expected EPS growth rate of 16.5% for three-five years.
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Here's Why Nordstrom (JWN) is Marching Ahead of Its Industry
Nordstrom Inc. (JWN - Free Report) has been witnessing a solid run on the bourses, owing to robust online show, strong demand and strategic growth endeavors. The Zacks Rank #1 (Strong Buy) stock has gained 21.6% in the past three months against the industry’s and the Retail-Wholesale sector’s declines of 24.5% and 9.3%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
Additionally, an uptrend in the Zacks Consensus Estimate echoes the same sentiment. The Zacks Consensus Estimate for Nordstrom’s fiscal 2021 sales and EPS suggests growth of 5.7% and 200%, respectively, from the year-ago period’s reported numbers. Earnings estimates for the current financial year have increased 67.5% to $3.30 over the past 30 days.
Let’s Delve Deeper
Nordstrom has been gaining from the solid demand for apparel and footwear. Strength in home, active, designer, beauty and kids categories bodes well. JWN launched more than 300 brands, including Open Edit, Farm Rio, Fanatics and ASOS DESIGN, in fiscal 2021. Alongside these, compelling merchandise, lower markdowns and the robust performance of Nordstrom Rack stores led to the impressive fourth-quarter fiscal 2021 results, wherein both top and bottom lines grew year over year.
The company remains focused on its long-term strategy aimed at enhancing its digital-first platform, expanding the reach of Nordstrom Rack, gaining market share and delivering profitable growth. As part of the strategy, JWN continues to scale the enhanced capabilities like the expansion of order pickup and ship-to-store to all Nordstrom Rack stores. The company also expanded its market strategy to all its 20 top markets. As part of the strategy, it continues to scale the enhanced capabilities launched in 2020, including the expansion of order pickup and ship-to-store to all Nordstrom Rack stores.
Nordstrom has been advancing in the technology space by boosting e-commerce and digital networks, and improving its supply-chain channels and marketing efforts. Although fourth-quarter fiscal 2021 digital sales fell 1% year over year, the same rose 23% from the fourth quarter of fiscal 2019. In the fiscal fourth quarter, digital sales represented 44% of net sales compared with 54% in the year-ago period. The digital business witnessed gains from improved digital traffic across both Nordstrom and Nordstrom Rack, as well as increased utilization of the Buy Online, Pick Up In-Store service. The company earlier completed the integration of Rack.com onto Nordstrom.com, offering a better customer experience. Its mobile app also witnessed a solid performance, with mobile users accounting for nearly 70% of the total digital traffic.
As part of its closer-to-you strategy, JWN aims to link stores and services to expedite deliveries, expand online offerings, and add cheaper merchandise at its Rack off-price stores to improve customers' shopping experiences. Management is also on track with integrating Nordstrom Rack assets and offering a wide range of price points offered at Nordstrom Rack. Increased focus on distribution capabilities, along with improved connectivity of physical and digital inventory, is likely to contribute to Nordstrom Rack sales by $2 billion in the long term.
Management envisions its digital unit to account for 50% of the total sales. Apart from these, a rise in new customers, enhanced personalization, and expanded product offering are expected to aid revenue growth, profit margin and generating cash flow. It predicts revenue growth in the low-single digits on an annual basis, with operating income outpacing revenues in the long term. The EBIT margin is expected to be more than 6%, with annual operating cash flow anticipated to be more than $1 billion.
Image Source: Zacks Investment Research
Driven by these factors, management issued an encouraging fiscal 2022 view. The company anticipates total year-over-year revenue growth of 5-7%. Adjusted earnings are envisioned to be $3.15-$3.50, with an EBIT margin of 5-6%. It expects to lower its inventory in the first quarter of fiscal 2022.
Bottom Line
Despite the ongoing industry-wide supply-chain disruptions and higher freight expenses, we believe that online strength, solid demand and well-chalked-out endeavors will help the JWN stock sustain its stellar show. A VGM Score of A and a long-term earnings growth rate of 6% reflect its inherent strength.
Other Stocks to Consider
Here are three other top-ranked stocks to consider, Tapestry (TPR - Free Report) , Capri Holdings (CPRI - Free Report) and Target (TGT - Free Report) .
Capri Holdings currently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 1,018.2%, on average.
The Zacks Consensus Estimate for Capri’s current financial-year sales and EPS suggests growth of 37% and 215.8%, respectively, from the year-ago period’s reported figures. CPRI has an expected EPS growth rate of 53.9% for three-five years.
Tapestry presently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 28.2%, on average.
The Zacks Consensus Estimate for Tapestry’s current financial-year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s reported numbers. TPR has an expected EPS growth rate of 12.5% for three-five years.
Target currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the year-ago period’s reported figures. TGT has an expected EPS growth rate of 16.5% for three-five years.