Nordstrom Shares Down as Earnings Decline

Nordstrom (NYSE: JWN) announced its earnings results on Thursday for the fourth quarter 2015, with revenues and earnings missing expectation. Nordstrom’s shares declined about 6.6% this morning, currently trading at $49.23 as of this writing.

Nordstrom (NYSE:JWN) Three-Month Stock Chart

Financials

 “Clearly this was a difficult period with industry sales declines and increased promotional activity resulting in compressed merchandise margins”, said Michael G. Koppel, the CFO of Nordstrom.  

The American fashion retailer’s net earnings were $180 million in total for the quarter, with a decline of 29% year-over-year. Adjusted earnings were $1.17 per share, missing the analysts’ consensus estimate of $1.24 according to Yahoo Finance.  Net revenue was $4.1 billion, 5.2% increase from the previous quarter and 1% increase for comparable sales. Full-price net sales increased 0.7%, within which full-line stores net sales decreased 2.5% and comparable sales decreased 3.2%, while Nordstrom.com net sales was up by 11%. Off-price net sales increased 12% with the discount stores Nordstrom Rack net sales increasing 6.9% and online sales soaring 50%.  

For the fiscal year 2015, the company reported net earnings of $600 million, 17% down from the previous year, despite a 7.5% increase in net sales.

Although the current retail environment is not favorable due to the warmer-than-expected weather that affects sales, leading the retailers to offer larger discounts, the company claimed that it gained market share and considered 2015 “a peak investment year”.

“In evolving with our customers, we made significant investments to enable customers to shop in multiple ways. This has resulted in market share gains, but also structural changes to our operating costs,” said the CFO.  

Guidance

Looking forward, the company expects to have an increase of 3.5% to 5.5% in total sales and up to 2% increase in comparable sales in 2016, with earnings per share to be $3.1 to $3.35.

Blake Nordstrom, Co-president & director indicated that the company planned to “reduce expense and capital spending in 2016 and in the coming years” in order to improve profitability.

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