Nordstrom Lags Estimates in 3Q15, Cuts Forecasts, Stock Falls 15%
Unimpressive same-store sales
After reporting same-store sales growth of 4.4% and 4.9% in 1Q15 and 2Q15, respectively, Nordstrom (JWN) disappointed its investors with a same-store sales growth of 0.9% in 3Q15. This has been the lowest same-store sales growth reported by the company since the third quarter of fiscal 2013.
Tough retail environment
In 3Q15, Macy’s (M) same-store sales fell by 3.9%, while Kohl’s (KSS) reported same-store sales growth of 1%. JCPenney (JCP) showed remarkable improvement and reported same-store sales of 6.4% in 3Q15 compared to flat same-store sales in 3Q14.
We’ll discuss Nordstrom’s outlook in part seven of this series. Nordstrom and Macy’s together account for 0.4% of the holdings of the iShares Russell MidCap Index Fund (IWR).
Despite improved economic conditions, consumers are still cautious about their spending. The latest data released by the US Census Bureau indicated flat retail sales at clothing and clothing accessories stores in October, and a 0.3% month-over-month growth in the retail sales of department stores, excluding leased departments. Sales at non-store retailers or online retailers rose by 1.4% in October compared to September 2015.
Initiatives to boost same-store sales
Department stores are taking several initiatives to boost their same-store sales, especially to attract more consumer traffic in the crucial holiday season. In August 2015, Nordstrom launched SPACE, an in-store boutique for emerging and advanced designers.
On October 1, Kohl’s announced the launch of the Madden Girl collection at all of its stores nationwide and its website. This collection includes cold weather boots, accessories, and outerwear. To capitalize on the demand for consumer electronics, Macy’s entered into an agreement with Best Buy (BBY) to open licensed consumer electronics departments within ten of Macy’s stores.
We’ll discuss the performance of Nordstrom’s off-price business in the next part of this series.
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