Advertisement
Singapore markets close in 33 minutes
  • Straits Times Index

    3,233.30
    -18.41 (-0.57%)
     
  • Nikkei

    40,168.07
    -594.66 (-1.46%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • FTSE 100

    7,952.05
    +20.07 (+0.25%)
     
  • Bitcoin USD

    70,557.95
    +680.68 (+0.97%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,248.49
    +44.91 (+0.86%)
     
  • Dow

    39,760.08
    +477.75 (+1.22%)
     
  • Nasdaq

    16,399.52
    +83.82 (+0.51%)
     
  • Gold

    2,212.70
    0.00 (0.00%)
     
  • Crude Oil

    81.82
    +0.47 (+0.58%)
     
  • 10-Yr Bond

    4.1960
    0.0000 (0.00%)
     
  • FTSE Bursa Malaysia

    1,530.60
    -7.82 (-0.51%)
     
  • Jakarta Composite Index

    7,258.40
    -51.69 (-0.71%)
     
  • PSE Index

    6,903.53
    +5.36 (+0.08%)
     

Nordstrom (JWN) Q3 Earnings & Sales Beat Estimates, Down Y/Y

Nordstrom, Inc. JWN posted impressive third-quarter fiscal 2022 results, wherein both the top and the bottom line surpassed the Zacks Consensus Estimate. However, both metrics fell from the respective year-ago fiscal quarter’s readings. Results gained from strength in core categories in men's and women's apparel and shoes as customers returned to occasions, travel, work and holidays. Also, it remains on track with the Closer to You strategy as well as supply-chain optimization efforts.

Shares of JWN have gained 23.2% in the past three months against the industry’s decline of 0.8%.

However, demand decelerated in late June, inducing Nordstrom to right-size its inventory and expenses in response to the current macroeconomic environment. Shares of this presently Zacks Rank #4 (Sell) declined more than 9% in after-hours trading on Nov 22.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Quarterly Highlights

Nordstrom posted adjusted earnings of 20 cents per share, down from the year-ago fiscal quarter’s 39 cents. However, the metric surpassed the Zacks Consensus Estimate of 14 cents per share.

Total revenues of $3,546 million beat the Zacks Consensus Estimate of $3,521 million for the ninth straight quarter. However, the metric declined 2.5% from the year-ago fiscal quarter’s figure due to the shift in the timing of the Anniversary sale, wherein a day of the sale was part of the third quarter of 2022. This had a 200-bps negative impact on sales.

Net sales fell 2.9% from the year-ago fiscal quarter’s tally to $3,433 million and lagged our estimate of $4,373.1 million. Credit Card net revenues grew 9.7% from the prior-year fiscal quarter’s level to $113 million and came ahead of our estimate of $104.7 million.

For third-quarter fiscal 2022, net sales for the Nordstrom brand decreased 3.4% from the year-ago fiscal quarter’s number to $2,264 million and fell below our estimate of $3,106.7 million.

Sales for the Nordstrom Rack brand dipped 1.9% from the year-ago fiscal quarter’s level to $1,169 million and lagged our estimate of $1,307.9 million. This was mainly due to muted demand, particularly from lower-income customers. As a result, Nordstrom Rack reduced store-based order fulfillment and raised the minimum order amount for free ship-to-store delivery on rack.com. These actions led to lesser order cancellations, simplified rack operations and improved profitability. Going ahead, it continues focusing on introducing more premium brands at Rack, better assortment and increased brand awareness.

Digital sales plunged 16.4% from the year-ago fiscal quarter’s reading due to the shift in the timing of the Anniversary Sale, which had a 300-bps headwind on digital sales. For the fiscal third quarter, digital sales represented 34% of net sales. Also, the metric was hurt by a channel shift as customers return to store shopping.

Nordstrom's gross profit margin contracted 190 basis points (bps) from the year-ago fiscal quarter’s actuals to 33.2% for the reported quarter due to higher markdowns.

SG&A expense, as a percentage of sales, expanded 200 bps to 36.4% due to supply-chain technology and a related asset impairment charge, partly offset by reduced fulfillment expense. Adjusted selling, general and administrative (SG&A) expenses, as a percentage of sales, were flat with the year-ago fiscal quarter’s level at 34.3% for the fiscal third quarter.

Earnings before interest and taxes (EBIT) of $3 million reflected growth from $127 million in the year-ago fiscal quarter. The increase mainly resulted from higher markdowns, supply-chain technology and a related asset impairment charge, offset by fulfillment expense efficiencies. Adjusted EBIT was $73 million, down 42.5% from the year-ago fiscal quarter’s reading in the reported quarter.

Other Financials

Nordstrom ended third-quarter fiscal 2022 with available liquidity worth $993 million as of Jul 30, 2022, including $293 million of cash and cash equivalents. It had long-term debt (net of current liabilities) of $2,855 million and total shareholders’ equity of $606 million.

As of Oct 29, 2022, JWN provided $240 million of net cash for operating activities and spent $325 million as capital expenditure.

Nordstrom recently approved a dividend of 19 cents, payable Dec 14 to its shareholders of record as of Nov 29. In the nine months ending Oct 29, 2022, JWN also bought back 2.3 million shares worth $53 million, as part of its $500-million share repurchase program. Following this, JWN has $447 million available under its share repurchase authorization.

ADVERTISEMENT

Nordstrom, Inc. Price, Consensus and EPS Surprise

Nordstrom, Inc. price-consensus-eps-surprise-chart | Nordstrom, Inc. Quote

Outlook

Management retained the view for fiscal 2022. JWN continues to expect total revenue growth of 5-7% from the last fiscal year’s reported figure. Adjusted earnings are still envisioned to be $2.30-$2.60. The EBIT margin is likely to be 4.1-4.4%, while adjusted EBIT is expected to be 4.3-4.7%.

Stocks to Consider

Here are three better-ranked stocks to consider, namely Wingstop WING, Dollar General DG and Chipotle Mexican Grill CMG.

Wingstop currently sports a Zacks Rank #1 (Strong Buy). WING has a long-term earnings growth rate of 11%. Shares of WING have declined 9.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the corresponding year-ago period’s reported levels.

Dollar General, a discount retailer, currently carries a Zacks Rank #2 (Buy). DG has an expected EPS growth rate of 11.1% for three to five years.

The Zacks Consensus Estimate for Dollar General’s current financial-year revenues and EPS suggests growth of 10.8% and 13.8%, respectively, from the comparable year-ago reported figures. DG has a trailing four-quarter earnings surprise of 2.2%, on average.

Chipotle Mexican Grill, an operator of fast-casual restaurants, currently carries a Zacks Rank of 2. CMG’s expected EPS growth rate for three to five years is 23.4%.

The Zacks Consensus Estimate for Chipotle Mexican Grill’s current financial-year revenues and EPS suggests growth of 15.2% and 30.8%, respectively, from the corresponding year-ago reported figures. CMG has a trailing four-quarter earnings surprise of 4.1%, on average.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Dollar General Corporation (DG) : Free Stock Analysis Report

Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report

Nordstrom, Inc. (JWN) : Free Stock Analysis Report

Wingstop Inc. (WING) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research