Topics Growth Stocks

Nordstrom Inc. $41 - New York symbol JWN

NORDSTROM INC. $41 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 173.4 million; Market cap: $7.1 billion; Price-to-sales ratio: 0.5; Dividend yield: 3.6%; TSINetwork Rating: Average; 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.

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%.

Nordstrom is a buy.

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