Nordstrom beats Q4 estimates, but shipping delays cause stock to fall

Nordstrom earnings

Although shares of Nordstrom had fallen a lot during 2020, the retailer has staged a pretty impressive comeback so far over the past few months. With that in mind, many investors were looking forward to Nordstrom’s fourth-quarter results, which were anticipated to be quite positive considering how well the stock has done recently. While Q4 results were still pretty strong overall, shipping delays and the corresponding inventory buildups are pushing shares down a bit.

Nordstrom’s revenue came in at $3.65 billion, slightly edging out over the $3.60 billion Wall Street was expecting. However, where Nordstrom really shrined was in its earnings per share (EPS). Q4 EPS was 21 cents, 50% higher than the 14 cents per share that analysts were expecting on average. While net income is down a bit to $33 million, it’s still better than anticipated for the retailer during the holiday quarter.

“We’re proud of our team’s efforts to generate another quarter of improved sales trends and positive operating cash flow in what remains an uncertain environment. Heading into 2021, we’re taking steps to improve our inventory position,” said Nordstrom CEO Erik Nordstrom. “As we execute our long-term growth strategy to get closer to our customers than ever before, we’re confident in our ability to unlock the full potential of our digital-first platform to gain market share and drive profitable growth.”

The one snag for Nordstrom was that it had recently been impacted by shipping delays which stopped holiday merchandise from arriving in time for the holidays. As such, the company now needs to offload this extra holiday merchandise during a non-holiday period, which will be tough. If anything, the company might need to mark down this inventory and sell it at a loss before it continues to take up space.

Management stayed relatively quiet on the topic, simply promising that it will work hard to fix its inventory problem. While it’s definitely a piece of bad news, it’s not that big of a deal, considering the rest of the results were so solid.

Shares of Nordstrom were down around 1.0% on Tuesday, followed by an additional 2.6% loss in pre-market trading right now. While the inventory buildup isn’t the best piece of news for Nordstrom, it’s a relatively small setback in comparison to how well the fashion retailer has done recently.

Since November, shares of Nordstrom have shot up by more than 300%, making it one of the best-performing retailers over the past quarter. The future outlook going into 2021 remains quite strong as well, although the same could be said for other retailers as people return to shopping in person again.


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