As retail chains across America continue to struggle in what has been called the ongoing “retail apocalypse,” one of the country’s top brands have announced dismal quarterly results. Nordstrom (NYSE: JWN) fell as much as ten percent in just ten minutes of after-hours trading when the company reported a brutal quarter.
Overall revenues were roughly on par with analyst expectations, reported at $3.44 billion as to the $3.48 billion expected. However, adjusted earnings per share (EPS) was only at $0.23 in contrast to the $0.43 most analysts figured. Even worse, while most experts expected comparable sales to fall by 0.1 percent, they fell by a much larger margin, -3.5 percent.
“While we expected softer trends from the fourth quarter to continue into the first quarter, we experienced a further deceleration. We had executional misses with our customers, and we’re committed to better serving them. This is well within our control to turn around,” said Erik Nordstrom, co-president of Nordstrom. “The strength of our inventory and expense execution helped mitigate a meaningful portion of our sales miss. We ended the quarter with inventories in solid shape, and our financial position remains strong. We’re actively taking steps to drive our top-line, and we’re focused on delivering on our financial goals.”
Nordstrom expects their full-year 2019 net sales, which they previously thought would grow by a percent or two, to increase fall by two percent. It’s credit-card revenue, another staple for the company, is now re-evaluated and is only expected to see single-digit growth, whereas the company previously said they’d see a high-single-digit increase in 2019.
Even before this news came out, some analysts had warned the public that Nordstrom could be facing a difficult year. Credit Suisse analysts led by Michael Binetti sounded the alarm bells earlier, saying that what they’ve seen so far from the company is flat out “alarming.” The broader analyst community remains cautious of the company, with 16 out of 24 analysts surveyed saying they will “hold” the stock for now.
The retail brand plans to expand its operations in New York City, which is the company’s largest market for online sales. Nordstrom also says that it is on track to open its flagship store in New York by October 24th.
When news broke out, shares of Nordstrom plunged almost 10 percent on Tuesday’s after-hours trading market. Over the past six months, Nordstrom’s shares have been tumbling, falling from $55 per share down to below $38. So far, the stock is down 19 percent this year, while most major stock indexes saw significant increases in Q1 2019.
Nordstrom Company Profile
Nordstrom is a fashion retailer that operates approximately 140 department stores in the U.S. and Canada and approximately 240 outlet stores under the names Nordstrom Rack and Last Chance.
The company also operates e-commerce sites and a personalized styling service called Trunk Club. Nordstrom’s largest merchandise categories are women’s apparel (32% of sales) and shoes (24% of sales). Nordstrom, which traces its history to a shoe store opened in Seattle in 1901, continues to be partially owned and managed by members of the Nordstrom family. – Warrior Trading News