We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Nordstrom (JWN) Bounce Back on Strategic Growth Efforts?
Read MoreHide Full Article
Nordstrom (JWN - Free Report) has been witnessing drab demand across the Nordstrom and Nordstrom Rack banners. This led to a year-over-year total revenue decline of 8.3% in the second quarter of fiscal 2023, including 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.
Notably, 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.
Going into fiscal 2023, management expects total revenues to decline 4-6% year over year, in line with our estimate of a 5% decline. 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.
Image Source: Zacks Investment Research
Consequently, shares of JWN have plunged 28.8% in the past three months compared with the industry's decline of 3.3%.
Efforts to Counter Hurdles
Nordstrom has been making efforts to drive efficiency and improve customer experience via faster order fulfillment. It is also on track to reduce inventory and optimize product mix. Also, increased focus on Nordstrom Rack bodes well. The company witnessed an improvement in the Nordstrom Rack banner, driven by strategic brand penetration increases. The brand boasts eight new stores at the end of the fiscal second quarter as part of its efforts to expand its reach. It plans to open 11 stores by this year.
In the fiscal second quarter, Nordstrom Rack expanded brand offerings, including MAC, Too Faced and Clinique, did well. Strength across accessories, especially handbags, acted as a tailwind. Going ahead, it intends to roll out in more markets. With an improved assortment and more new stores, Nordstrom Rack’s performance is expected to sequentially improve throughout 2023. The Rack banner also remains on track to increase productivity throughout its network, reduce transportation costs and delivery times, and enhance services via faster delivery. It continues to focus on introducing more premium brands at Rack, better assortment and increased brand awareness.
The company’s long-term strategy, which builds on its market strategy to capitalize on its digital-first platform to better serve customers, gain market share and deliver profitable growth, bodes well. It has also been focused on the closer-to-you strategy, which 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.
Conclusion
Although inflation-led dismal demand is concerning, Nordstrom seems well-placed to drive further growth on the back of an improved Rack performance, expansion efforts and its long-term strategy.
Analysts also seem optimistic about the stock. The Zacks Consensus Estimate for JWN’s 2023 earnings for the current financial year has moved up 3.6% in the past 60 days.
The PEG ratio for Nordstrom is just 0.86, a level that is lower than the industry average of 1.24. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, this Zacks Rank #3 (Hold) stock is a solid choice on the value front from multiple angles. Topping it, a VGM Score of A speaks volumes.
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. It has a trailing four-quarter earnings surprise of 121.2%, on average.
Urban Outfitters, which engages in retail and wholesale of general consumer products, currently flaunts 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 implies an improvement of 4.2% from the year-ago period’s actual. WMT has a trailing four-quarter earnings surprise of 12%, on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Can Nordstrom (JWN) Bounce Back on Strategic Growth Efforts?
Nordstrom (JWN - Free Report) has been witnessing drab demand across the Nordstrom and Nordstrom Rack banners. This led to a year-over-year total revenue decline of 8.3% in the second quarter of fiscal 2023, including 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.
Notably, 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.
Going into fiscal 2023, management expects total revenues to decline 4-6% year over year, in line with our estimate of a 5% decline. 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.
Image Source: Zacks Investment Research
Consequently, shares of JWN have plunged 28.8% in the past three months compared with the industry's decline of 3.3%.
Efforts to Counter Hurdles
Nordstrom has been making efforts to drive efficiency and improve customer experience via faster order fulfillment. It is also on track to reduce inventory and optimize product mix. Also, increased focus on Nordstrom Rack bodes well. The company witnessed an improvement in the Nordstrom Rack banner, driven by strategic brand penetration increases. The brand boasts eight new stores at the end of the fiscal second quarter as part of its efforts to expand its reach. It plans to open 11 stores by this year.
In the fiscal second quarter, Nordstrom Rack expanded brand offerings, including MAC, Too Faced and Clinique, did well. Strength across accessories, especially handbags, acted as a tailwind. Going ahead, it intends to roll out in more markets. With an improved assortment and more new stores, Nordstrom Rack’s performance is expected to sequentially improve throughout 2023. The Rack banner also remains on track to increase productivity throughout its network, reduce transportation costs and delivery times, and enhance services via faster delivery. It continues to focus on introducing more premium brands at Rack, better assortment and increased brand awareness.
The company’s long-term strategy, which builds on its market strategy to capitalize on its digital-first platform to better serve customers, gain market share and deliver profitable growth, bodes well. It has also been focused on the closer-to-you strategy, which 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.
Conclusion
Although inflation-led dismal demand is concerning, Nordstrom seems well-placed to drive further growth on the back of an improved Rack performance, expansion efforts and its long-term strategy.
Analysts also seem optimistic about the stock. The Zacks Consensus Estimate for JWN’s 2023 earnings for the current
financial year has moved up 3.6% in the past 60 days.
The PEG ratio for Nordstrom is just 0.86, a level that is lower than the industry average of 1.24. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, this Zacks Rank #3 (Hold) stock is a solid choice on the value front from multiple angles. Topping it, a VGM Score of A speaks volumes.
Key Picks
Some better-ranked stocks 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. It has a trailing four-quarter earnings surprise of 121.2%, on average.
Urban Outfitters, which engages in retail and wholesale of general consumer products, currently flaunts 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 implies an improvement of 4.2% from the year-ago period’s actual. WMT has a trailing four-quarter earnings surprise of 12%, on average.