Nordstrom, Inc. (JWN) Stock | A Slowdown in Nordstrom’s Earnings

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Nordstrom, Inc. (NYSE: JWN)

 

Shares of the upscale fashion retailer, Nordstrom, fell sharply in after-hours Thursday after reporting lower than expected third quarter earnings in addition to a cut in guidance.  Shares were down more than 20% to $50.20 in after-hours after closing at $63.47.

 

JWN Earnings

 Nordstrom reported earnings of 57 cents per share on $3.33 billion in revenue.   Analysts expected 72 cents per share on $3.37 billion in revenue.  Net sales increased 6.6% and comparable sales increased 0.9% from year over year.  Analysts expected 3.6% increase in same store sales growth.   Nordstrom also cut its full year forecast for adjusted earnings to a range between $3.40 and $3.50 per share from a range between $3.70 and $3.80 per share.

Nordstrom experienced six straight quarters of mid-single-digit comp increases. However, in August they began to experience a slowdown in sales across the board.  From their brick and mortar business to their online business, sales were down. While the slowdown appears to have hit other retailers, Nordstrom management was quick to note how they have responded and plan to move forward.

 

 CFO Comments

Mike Koppel said,

 “In August, we began to see a slowdown that progressed throughout the quarter, remaining relatively steady at a 1% comp sales trend. As these lower trends persisted, we immediately began to adjust our operating plans, including aligning our inventories with expected sales. Our results reflect those efforts, which included increased markdowns and a reduction in sales plans for the remainder of the year.” Nordstrom Conf. Call

 

Technical Analysis

JWN chart

Since the beginning of the year, JWN is down 20% and following the close of trading on Thursday when shares closed at $63.49, JWN has dropped 13% in the last 12 months.  After-hour lows in JWN have not been seen since July 2012.  While a number of analysts have a mean price target of $77.48  (Yahoo! Finance) JWN had received a number of downgrades prior to Thursday’s earnings.  Expect more analysts to cut their price target on JWN along with other retailers as more reaffirm concerns of a slowdown in retail.

 

Nordstrom, Inc. Company Profile

 Nordstrom, Inc., a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for men, women, and children in the United States and Canada. It operates through two segments, Retail and Credit. The Retail segment offers a selection of brand name and private label merchandise through various channels, including Nordstrom branded full-line stores and online store at Nordstrom.com; Nordstrom Rack stores; Nordstromrack.com and HauteLook; and other retail channels, including Trunk Club showrooms and TrunkClub.com, Jeffrey boutiques, and clearance store that operates under the name Last Chance. The Credit segment operates Nordstrom fsb, a federal savings bank, which provides a private label credit card, two Nordstrom VISA credit cards, and a debit card. Its credit and debit cards feature a shopping-based loyalty program. As of November 5, 2015, the company operated 323 stores in 39 states, including 121 full-line stores in the United States, Canada, and Puerto Rico; 194 Nordstrom Rack stores; 2 Jeffrey boutiques; and 1 clearance store. Nordstrom, Inc. also sells its products through catalogs. The company was founded in 1901 and is based in Seattle, Washington.  Yahoo! Finance

 

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