Categories Analysis, Retail

Earnings preview: Q3 marks a key point in the Nordstrom revival saga

Come retail earnings season and investors are all ears for Nordstrom’s third-quarter results. And why not. Nordstrom is an inspiring retail story of defying death predictions and getting gradually back on track with customer-centric strategies.

The department store chain had reported impressive second-quarter results in August, sending its shares up 10%. Investors were especially pleased to see a jump in comp sales to 4%, handsomely beating the street estimate of a modest 0.8%. Earnings had surged 46% on a revenue spike of 7%.

JWN earnings preview
Courtesy: Wikimedia Commons

JWN shares have rallied 23% since the second quarter results, spawning theories of a revival.

As the company reports third-quarter results on Thursday, November 15, after the closing bell, investors will be looking deep into the numbers to figure out whether the revival theories are indeed true.

Part of the reason why Nordstrom reported such brilliant figures in the second quarter was a shift in its annual sale event from Q3 to Q2. The Anniversary Sale is a huge revenue-generating factor for the company. Hence lack of this massive sale event is definitely going to bite the department store’s top line in Q3.

Nordstrom is expected to post earnings of 64 cents per share on a revenue of $3.68 billion during the third quarter. During the prior-year quarter, the company had reported earnings of 67 cents per share on a revenue of $3.63 billion. During last year’s Q3, results were hurt by hurricanes in Puerto Rico, Florida, and Texas.

The company is clearly buoyed by the solid second-quarter results, due to which it raised EPS for fiscal 2018 to $3.50-$3.65 from $3.35-$3.55. Nordstrom has been aggressively investing in store expansion, with a focus on the Canadian market. It has also been bumping its e-commerce platform and supply-chain channels, all of which is expected to bear results in the long term.

Two retail winners to buy ahead of holiday season

However, the company may feel the pinch in the short term due to these additional expense burden.

In the retrospect, the third quarter will give a clearer picture of the theories sparked in the prior sequential quarter. Analysts remain cautious on the stock, with five out of 10 covering the stock recommending a HOLD rating. Four others have BUY rating on the stock and one has a SELL rating.

 

Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text 

Most Popular

Cost reduction has become a priority for FedEx (FDX) after a challenging quarter

Shares of FedEx Corporation (NYSE: FDX) were up 1% on Tuesday. The stock has dropped 44% year-to-date and 34% over the past 12 months. The company delivered mixed results for

Prime Medicine is the next big biotech to pursue IPO. Here’s all you need to know

After a soft start to the year, the IPO market has witnessed muted activity so far though a few big companies entered the stock market. On the heels of AIG

Stock Watch: Is Darden Restaurants a good buy after earnings?

After a prolonged slowdown, the restaurant industry is returning to normal patterns but macroeconomic uncertainties and high inflation are currently playing spoilsport for it. While the pandemic-related slump forced many

Tags

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top