Nordstrom increased its revenue in the last quarter despite a dip in same-store sales. Its strong brand is also helping to protect its dividend as consumers do more online shopping.
The rise in online shopping has weighed on the stock price of this high-end retailer, but its well-known brand should continue to pay off.
NORDSTROM INC. (New York symbol JWN; www.nordstrom.com) owns and operates 329 stores in the U.S. and Canada, which mainly sell upscale clothing and footwear.
In its fiscal 2017 first quarter, which ended April 30, 2016, revenue (including credit card fees) rose 1.1%, to $3.25 billion from $3.22 billion a year earlier. Same-store sales fell 1.7%, as declines at its full-price stores largely offset gains at its discount outlets.
Earnings fell 64.1%, to $46 million from $128 million; due to fewer shares outstanding, per-share earnings fell 60.6%, to $0.26 a share from $0.66. That’s mainly due to fraudulent credit card charges and severance costs related to a restructuring plan. The job cuts should save it $60 million this year.
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Many large clothing retailers are struggling as shoppers buy goods online instead visiting their stores. As a result, Nordstrom now expects flat same-store sales growth for all of fiscal 2017, down from its earlier forecast of 0.0% to 2.0%.
It also cut its 2017 full-year earnings outlook, to $2.60 a share from $3.23. The stock trades at 15.8 times the new estimate. That’s reasonable in light of Nordstrom’s strong brand and potential for international expansion. The $1.48 dividend yields 3.6%.
Recommendation in Wall Street Stock Forecaster: BUY.
Nordstrom needs its brand strength to do well in the Toronto market when it enters this fall. I think online competition will be less of a factor here because of the exchange rate, which has limited the amount of online shopping we do as Canadians.
Just read that they’re planning to open more stores in Calgary and Toronto. Unlike Target, they seem to be taking their time to get the right mix of products and prices.
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Nordstrom needs its brand strength to do well in the Toronto market when it enters this fall. I think online competition will be less of a factor here because of the exchange rate, which has limited the amount of online shopping we do as Canadians.
Just read that they’re planning to open more stores in Calgary and Toronto. Unlike Target, they seem to be taking their time to get the right mix of products and prices.