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Poor comp sales hurt Nordstrom despite strong Q1 results

Nordstrom (JWN) reported better-than-expected first quarter results. The company is reporting its quarterly results for the first time since the founding family’s bid to take the company private was rejected by the Board citing insufficient valuations. Shares of the specialty retailer is down 6% after the bell due to weak comparable store sales.

First quarter results topped analyst consensus both on the revenue and earnings fronts. Revenue for the quarter increased 5.8% to $3.56 billion, while earnings came in at $0.51 per share compared to $0.37 per share in the prior-year period.

Comp-store sales improved 0.6%, which failed to meet street estimates. Nordstrom’s full-line same-store sales grew 0.7% driven by Kids’ and Men’s segment, while Nordstrom Rack’s comp sales witnessed a growth of 0.4%.

Nordstrom online sales contributed 29% to the total sales
Nordstrom earnings infographic

Shifting its focus on digital side seems to be bearing fruit. E-commerce sales saw 18% growth year-over-year and it contributed 29% to the top-line sales in the quarter, which is a 4% improvement over prior year. The company continues to beef up its investments on the digital side of the business, which is going to bring in long-term benefits.

Return on invested capital (ROIC) improved 1.2% to 9.9% compared to 8.7% reported last year. Adjusted Debt to EBITDAR ratio, which shows the leverage ratio, increased to 2.6 compared to 2.3 reported last year.

E-commerce sales saw 18% growth year-over-year and it contributed 29% to the top-line sales in the quarter, which is a 4% improvement over prior year.

Based on the first quarter results, the fashion retailer is raising its earnings guidance for the year. The company expects its earnings to be between $3.35 and $3.55 per share and EBIT is now projected in the range of $895 million to $940 million.

Yesterday, Macy’s (M) reported better-than-expected results for the first quarter and lifted the outlook for the year, while J. C. Penney Company (JCP) reported a narrower loss in the first quarter helped by lower costs of goods sold and a decline in SG&A expenses.

Nordstrom’s stock is up 8% in 2018 and has increased over 25% over the last 12 months.

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