Spotting Winners: Nordstrom (NYSE:JWN) And Department Store Stocks In Q2
As we reflect back on the just completed Q2 department store sector earnings season, we dig into the relative performance of Nordstrom (NYSE:JWN) and its peers.
Department stores emerged in the 19th century to provide customers with a wide variety of merchandise under one roof, offering a convenient and luxurious shopping experience. They played an important role in the history of American retail and urbanization, and prior to department stores, retailers tended to sell narrow specialty and niche items. But what was once new is now old, and department stores are somewhat considered a relic of the past. They are being attacked from multiple angles–stagnant foot traffic at malls where they’ve served as anchors; more nimble off-price and fast-fashion retailers; and e-commerce-first competitors not burdened by large physical footprints.
The 4 department store stocks we track reported a solid Q2; on average, revenues beat analyst consensus estimates by 3.41%, There has been a stampede out of high valuation technology stocks as raising interest rates encourage investors to value profits over growth again and department store stocks have not been spared, with share prices down 19.9% since the previous earnings results, on average.
Nordstrom (NYSE:JWN)
Known for its exceptional customer service that features a ‘no questions asked’ return policy, Nordstrom (NYSE:JWN) is a high-end department store chain.
Nordstrom reported revenues of $3.77 billion, down 7.89% year on year, beating analyst expectations by 2.14%. It was a decent quarter for the company, with an impressive beat of analysts' earnings estimates. On the other hand, revenue continues to decline year on year and margin performance was roughly flat year on year, meaning no improvement in gross or operating margins.
"We've worked hard to improve our operating model, and our solid results reflect the continued progress we made against our top priorities to improve Nordstrom Rack performance, increase inventory productivity and deliver efficiencies through supply chain optimization," said Erik Nordstrom, chief executive officer of Nordstrom,
Nordstrom delivered the weakest performance against analyst estimates of the whole group. The stock is down 15.2% since the results and currently trades at $14.25.
Is now the time to buy Nordstrom? Access our full analysis of the earnings results here, it's free.
Best Q2: Kohl's (NYSE:KSS)
Founded as a corner grocery store in Milwaukee, Wisconsin, Kohl’s (NYSE:KSS) is a department store chain that sells clothing, cosmetics, electronics, and home goods.
Kohl's reported revenues of $3.9 billion, down 4.7% year on year, beating analyst expectations by 4.96%. It was a decent quarter for the company, with an impressive beat of analysts' earnings estimates. On the other hand, the company reconfirmed its full-year revenue guidance, which came in below Wall Street's estimates.
Kohl's delivered the strongest analyst estimates beat among its peers. The stock is down 27.1% since the results and currently trades at $18.77.
Is now the time to buy Kohl's? Access our full analysis of the earnings results here, it's free.
Weakest Q2: Macy's (NYSE:M)
With a storied history that began with its 1858 founding, Macy’s (NYSE:M) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Macy's reported revenues of $5.28 billion, down 9.5% year on year, beating analyst expectations by 3.33%. It was a weaker quarter for the company, with its full-year revenue guidance missing analysts' expectations. Like in the previous quarter, Macy's management team called out the uncertain macro environment, causing investors to worry.
Macy's had the slowest revenue growth in the group. The stock is down 23.6% since the results and currently trades at $11.25.
Read our full analysis of Macy's's results here.
Dillard's (NYSE:DDS)
With stores located largely in the Southern and Western US, Dillard’s (NYSE:DDS) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Dillard's reported revenues of $1.6 billion, down 1.27% year on year, beating analyst expectations by 3.19%. It was a solid quarter for the company, with an impressive beat of analysts' earnings estimates. On the other hand, same-store sales missed (although again, revenue beat), and the company called out a "cautious consumer" in the press release.
Dillard's scored the fastest revenue growth among the peers. The stock is down 10.1% since the results and currently trades at $302.16.
Read our full, actionable report on Dillard's here, it's free.
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The author has no position in any of the stocks mentioned
