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Nordstrom, Inc. (JWN - Free Report) posted second-quarter fiscal 2023 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. The bottom line improved year over year, while the top line declined. Results benefited from efforts to improve the Nordstrom Rack performance, higher inventory productivity and supply-chain optimization.
Also, its Anniversary sale event performed well driven by strong sell-through of new merchandise in stores and online. The company also witnessed sequential improvement in sales at Nordstrom and Nordstrom Rack stores.
Nordstrom posted adjusted earnings of 84 cents per share, up 3.7% from the prior-year quarter’s reported figure of 81 cents. Earnings per share also surpassed the Zacks Consensus Estimate of 45 cents.
Total revenues of $3,772 million declined 8.3% year over year but beat the Zacks Consensus Estimate of $3,665 million. Dismal revenues resulted from a 275-basis-point (bps) adverse impact of the wind-down of Canada operations and an 8.5% decline in gross merchandise value ("GMV"). Sales were also hurt by declines across the Nordstrom and Nordstrom Rack banners.
Image Source: Zacks Investment Research
Shares of the Zacks Rank #4 (Sell) company have gained 6.6% year to date against the industry’s decline of 1.1%.
Quarterly Highlights
Net sales fell 8.2% year over year to $3,662 million but surpassed our estimate of $3,505.7 million. Credit Card net revenues grew 5.8% year over year to $110 million and lagged our estimate of $113.3 million.
In second-quarter fiscal 2023, net sales for the Nordstrom banner decreased 10% from the year-ago quarter to $2,491 million but surpassed our estimate of $2,423.7 million. GMV declined 10.4% year over year for the Nordstrom banner in the fiscal second quarter. The Nordstrom banner’s net sales included a negative impact of 400 bps related to the wind-down of the Canada operations. The unfavorable timing shift of the Anniversary Sale hurt Nordstrom banner’s sales by 300 basis points.
Sales at the Nordstrom Rack banner declined 4% year over year to $1,171 million but beat our estimate of $1,082 million. The elimination of store fulfillment for Nordstrom Rack digital orders from the third quarter of fiscal 2022 hurt fiscal second-quarter Nordstrom Rack banner net sales by 500 bps.
Digital sales plunged 13% year over year in the fiscal second quarter due to the elimination of store fulfillment for Nordstrom Rack digital orders in third-quarter fiscal 2022 and the sunsetting of Trunk Club in the second quarter of fiscal 2022. These actions hurt fiscal second-quarter digital sales by 500 bps. The unfavorable timing shift of the Anniversary Sale hurt digital sales by 300 basis points. In the fiscal second quarter, digital sales contributed 36% to net sales.
Nordstrom's gross profit margin contracted 20 bps year over year to 35% for the reported quarter mainly due to deleverage on lower sales, partly offset by lower buying and occupancy costs.
SG&A expenses, as a percentage of sales, remained flat year over year to 33%, driven by improvements in variable costs stemming from supply-chain efficiency initiatives, favorable carrier rates and gains from the sale of a real estate asset. These were offset by higher labor costs and deleverage from lower sales.
Adjusted earnings before interest and taxes (EBIT) of $316 million fell 7.3% year over year in the fiscal second quarter. The adjusted EBIT margin was flat in the fiscal second quarter to 5.3%.
Other Financials
Nordstrom ended second-quarter fiscal 2023 with available liquidity of $1.7 billion, including $885 million of cash and cash equivalents, and $800 million available on its revolving credit facility. The company had a long-term debt (net of current liabilities) of $2,609 million and total shareholders’ equity of $674 million as of Jul 29, 2023.
In the six months ending Jul 29, 2023, JWN’s net cash provided for operating activities was $465 million. The company spent $225 million on capital expenditure for the aforementioned period. Nordstrom recently approved a dividend of 19 cents, payable Sep 13, to its shareholders of record as of Aug 29.
Management retained its outlook for fiscal 2023, including the 53rd week and the expected impact of the wind-down of Canada operations. JWN anticipates total revenues to decline 4-6% year over year in fiscal 2023. Revenues are expected to include a 250-bps impact of the closing of the Canada operations and a nearly 130-bps gain from the 53rd week.
The EBIT margin is expected to be 1.5-2% of sales, including the impacts of the charges related to the closing of the Canada business. The adjusted EBIT margin is likely to be 3.7-4.2% of sales.
The company predicts an income tax rate of 6% for fiscal 2023, including a 2,100-bps impact of the one-time charges for the Canada business wind-down. Adjusted earnings are envisioned to be $1.80-$2.20 per share, excluding the charges related to the Canada business wind-down. Earnings per share, including the wind-down-related charges, are expected to be 60 cents to $1.00. The company’s earnings guidance excludes any potential share repurchase.
The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS indicates 5.6% and 405.9% growth, respectively, from the year-ago period’s reported levels. The company has a trailing four-quarter earnings surprise of 121.2%, on average.
Urban Outfitters, which engages in the retail and wholesale of general consumer products, currently sports a Zacks Rank #1. The expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year earnings suggests growth of 57.1% from the year-ago reported number. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 5.5%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period’s actual. WMT has a trailing four-quarter earnings surprise of 12%, on average.
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Nordstrom (JWN) Tops Q2 Earnings & Revenue Estimates
Nordstrom, Inc. (JWN - Free Report) posted second-quarter fiscal 2023 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. The bottom line improved year over year, while the top line declined. Results benefited from efforts to improve the Nordstrom Rack performance, higher inventory productivity and supply-chain optimization.
Also, its Anniversary sale event performed well driven by strong sell-through of new merchandise in stores and online. The company also witnessed sequential improvement in sales at Nordstrom and Nordstrom Rack stores.
Nordstrom posted adjusted earnings of 84 cents per share, up 3.7% from the prior-year quarter’s reported figure of 81 cents. Earnings per share also surpassed the Zacks Consensus Estimate of 45 cents.
Total revenues of $3,772 million declined 8.3% year over year but beat the Zacks Consensus Estimate of $3,665 million. Dismal revenues resulted from a 275-basis-point (bps) adverse impact of the wind-down of Canada operations and an 8.5% decline in gross merchandise value ("GMV"). Sales were also hurt by declines across the Nordstrom and Nordstrom Rack banners.
Image Source: Zacks Investment Research
Shares of the Zacks Rank #4 (Sell) company have gained 6.6% year to date against the industry’s decline of 1.1%.
Quarterly Highlights
Net sales fell 8.2% year over year to $3,662 million but surpassed our estimate of $3,505.7 million. Credit Card net revenues grew 5.8% year over year to $110 million and lagged our estimate of $113.3 million.
In second-quarter fiscal 2023, net sales for the Nordstrom banner decreased 10% from the year-ago quarter to $2,491 million but surpassed our estimate of $2,423.7 million. GMV declined 10.4% year over year for the Nordstrom banner in the fiscal second quarter. The Nordstrom banner’s net sales included a negative impact of 400 bps related to the wind-down of the Canada operations. The unfavorable timing shift of the Anniversary Sale hurt Nordstrom banner’s sales by 300 basis points.
Sales at the Nordstrom Rack banner declined 4% year over year to $1,171 million but beat our estimate of $1,082 million. The elimination of store fulfillment for Nordstrom Rack digital orders from the third quarter of fiscal 2022 hurt fiscal second-quarter Nordstrom Rack banner net sales by 500 bps.
Digital sales plunged 13% year over year in the fiscal second quarter due to the elimination of store fulfillment for Nordstrom Rack digital orders in third-quarter fiscal 2022 and the sunsetting of Trunk Club in the second quarter of fiscal 2022. These actions hurt fiscal second-quarter digital sales by 500 bps. The unfavorable timing shift of the Anniversary Sale hurt digital sales by 300 basis points. In the fiscal second quarter, digital sales contributed 36% to net sales.
Nordstrom's gross profit margin contracted 20 bps year over year to 35% for the reported quarter mainly due to deleverage on lower sales, partly offset by lower buying and occupancy costs.
SG&A expenses, as a percentage of sales, remained flat year over year to 33%, driven by improvements in variable costs stemming from supply-chain efficiency initiatives, favorable carrier rates and gains from the sale of a real estate asset. These were offset by higher labor costs and deleverage from lower sales.
Adjusted earnings before interest and taxes (EBIT) of $316 million fell 7.3% year over year in the fiscal second quarter. The adjusted EBIT margin was flat in the fiscal second quarter to 5.3%.
Other Financials
Nordstrom ended second-quarter fiscal 2023 with available liquidity of $1.7 billion, including $885 million of cash and cash equivalents, and $800 million available on its revolving credit facility. The company had a long-term debt (net of current liabilities) of $2,609 million and total shareholders’ equity of $674 million as of Jul 29, 2023.
In the six months ending Jul 29, 2023, JWN’s net cash provided for operating activities was $465 million. The company spent $225 million on capital expenditure for the aforementioned period. Nordstrom recently approved a dividend of 19 cents, payable Sep 13, to its shareholders of record as of Aug 29.
Nordstrom, Inc. Price, Consensus and EPS Surprise
Nordstrom, Inc. price-consensus-eps-surprise-chart | Nordstrom, Inc. Quote
Outlook
Management retained its outlook for fiscal 2023, including the 53rd week and the expected impact of the wind-down of Canada operations. JWN anticipates total revenues to decline 4-6% year over year in fiscal 2023. Revenues are expected to include a 250-bps impact of the closing of the Canada operations and a nearly 130-bps gain from the 53rd week.
The EBIT margin is expected to be 1.5-2% of sales, including the impacts of the charges related to the closing of the Canada business. The adjusted EBIT margin is likely to be 3.7-4.2% of sales.
The company predicts an income tax rate of 6% for fiscal 2023, including a 2,100-bps impact of the one-time charges for the Canada business wind-down. Adjusted earnings are envisioned to be $1.80-$2.20 per share, excluding the charges related to the Canada business wind-down. Earnings per share, including the wind-down-related charges, are expected to be 60 cents to $1.00. The company’s earnings guidance excludes any potential share repurchase.
Stocks to Consider
Some better-ranked companies are BJ's Restaurants (BJRI - Free Report) , Urban Outfitters (URBN - Free Report) and Walmart (WMT - Free Report) .
BJ's Restaurants, which operates a chain of high-end casual dining restaurants in the United States, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS indicates 5.6% and 405.9% growth, respectively, from the year-ago period’s reported levels. The company has a trailing four-quarter earnings surprise of 121.2%, on average.
Urban Outfitters, which engages in the retail and wholesale of general consumer products, currently sports a Zacks Rank #1. The expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year earnings suggests growth of 57.1% from the year-ago reported number. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 5.5%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period’s actual. WMT has a trailing four-quarter earnings surprise of 12%, on average.