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Nordstrom Holiday Comps Up 1.3%, Stock Down on Cautious View

Zacks Equity Research

Shares of Nordstrom Inc. JWN have decreased nearly 3.8% in after-hours trading on Jan 15, after the company envisioned its earnings per share for fiscal 2018 to come in close to the lower end of the prior guided range. Also, the company’s full-price sales fell short of management’s expectations, which further weighed on investors’ sentiments.

The company recorded a 1.3% rise in comparable sales (comps) for the nine-week period ended Jan 5, 2019. Also, off-price comps were up 3.9%, matching the company’s projections and year-to-date trends. Full-price comps grew a mere 0.3% during the holiday period owing to waning traffic at stores. Further, Nordstrom’s digital sales improved 18%, which reflects 36% of total sales.

As mentioned earlier, the company's weak top-line performance in full-price stores compelled management to revisit its earnings projection.

Consequently, adjusted earnings per share are currently estimated to fall at the lower end of the $3.55-$3.65 guided range. Including the non-recurring credit-related costs incurred in the third quarter of fiscal 2018, earnings per share are envisioned to be $3.27-$3.37. The Zacks Consensus Estimate for fiscal 2018 is pegged at $3.60.

Nevertheless, the company posted 2.1% comps growth on a year-to-date basis. This met the company’s guidance of roughly 2% for the fiscal year. In addition, this Zacks Rank #3 (Hold) company is focused on accomplishing its long-term financial goals apart from making robust omni-channel expansion efforts. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nordstrom’s significant progress on its customer-based strategy is also praiseworthy. This strategy focuses on three strategic factors — leveraging the company’s brand strength, providing excellent services and offering compelling products to its customers. Further, it is focused on advancing in the technology space by boosting e-commerce and digital networks, and improving its supply-chain channels and marketing efforts.

We expect that the aforementioned initiatives might provide some cushion to the stock in the future. However, shares of this leading fashion retailer have lost 9.8% in the past six months compared with the industry’s 22.2% decline.

Apart from Nordstrom, other retailers have released their robust sales numbers. Below we name a few.

Here Are 3 Retailers That Had a Successful Holiday Feat

The holiday season marked the strongest seasonal sales in six years, with stellar online sales. Per the Mastercard SpendingPulse, retail sales, excluding automobiles, (from Nov 1 through Dec 24) increased 5.1% compared with 4.9% growth witnessed last year. Retailers like Target Corporation TGT, American Eagle Outfitters, Inc. AEO and Ollie's Bargain Outlet Holdings, Inc. OLLI witnessed superb holiday performance. Notably, these companies reported comps growth of 5.7%, 6% and 7.1%, respectively.

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