Nordstrom, Inc. JWN posted third-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate and improved year over year.
However, the Anniversary Sale timing, which led to the shift of one week from the third quarter to the second quarter, affected results.
This Seattle, WA-based company posted adjusted earnings of 33 cents a share, which surpassed the Zacks Consensus Estimate of 23 cents and improved 32% from the 25 cents reported in the year-ago period. Total revenues of $3,464 million rose 4.3% year over year and beat the consensus estimate of $3,331 million.
JWN’s Quarterly Performance: Key Metrics & Insights
JWN’s net sales improved 4.6% year over year to $3,347 million, with comparable sales growth of 4%. The timing of the Anniversary Sale event, which shifted one week from the reported quarter to the second quarter, hurt sales by nearly 100 basis points (bps) year over year. The gross merchandise value (GMV) rose 5.3%.
In the reported quarter, women's apparel and active registered double-digit growth. Shoes, men's apparel and kids increased in mid to high single-digits year over year. The company saw accelerated growth sequentially in women's apparel, shoes and men's apparel categories.
Nordstrom, Inc. Price, Consensus and EPS Surprise
Nordstrom, Inc. price-consensus-eps-surprise-chart | Nordstrom, Inc. Quote
Credit card net revenues declined 2.5% to $117 million.
Net sales for the Nordstrom banner rose 1.3% from the year-ago quarter's figure to $2,077 million, faring better than our estimate of $1,989.8 million. Nordstrom banner’s comparable sales inched up 4%, while GMV jumped 2.4%. The Anniversary Sale event had an adverse impact of about 200 basis points on Nordstrom banner net sales.
Sales at the Nordstrom Rack banner advanced 10.6% to $1,270 billion, faring better than our estimate of $1,210.5 million. Comparable sales rose 3.9%.
Digital sales grew 6.4% from the year-ago period. The timing shift of the Anniversary Sale hurt digital sales by about 100 basis points. During the reported quarter, digital sales accounted for 34% of the total sales.
The gross profit, representing 35.6% of net sales, rose 60 basis points from the same period in fiscal 2023. This increase was driven by strong regular price sales. We had expected the gross margin to expand 70 basis points . Adjusted selling, general and administrative expenses, as a percentage of net sales, were 36.2%.
Adjusted earnings before interest and taxes (EBIT) were $97 million, up from $77 million in the prior-year quarter. We note that the EBIT margin was 2.9%, up 50 basis points from 2.4% registered in the year-ago period.
JWN’s Financial Health Snapshot
Nordstrom ended the quarter with cash and cash equivalents of $397 million, long-term debt of $2.6 billion and total shareholders’ equity of $987 million. JWN had an available liquidity of $1.2 billion as of Nov. 2, 2024.
During the nine-month period, the company generated $371 million in net cash from operating activities. JWN’s ending inventory rose 5.9% year over year.
The company’s board announced a quarterly cash dividend of 19 cents a share, payable on Dec. 18, 2024, to shareholders of record as of Dec. 3.
What to Expect From JWN in FY24?
The company looks forward to continue enriching the shopping experience for customers. It is well-poised for a successful holiday season.
Nordstrom has updated its financial expectations for fiscal 2024. This reflects the accelerated technology depreciation impacts, which are likely to be seen in the fourth quarter of fiscal 2024. It now expects total revenues, including retail sales and credit card revenues, to be in the range of flat to increase 1% compared with the prior estimate of down 1% to up 1%. This view includes about 135 basis point adverse impacts of the 53rd week. The extra week benefited fourth-quarter sales by 460 basis points in the prior fiscal year.
Management now envisions comparable sales to be up 1-2% compared with 52 weeks in fiscal 2023. Earlier, it anticipated the metric to be flat to increase 2%. The company expects adjusted EBIT to be between 3% and 3.4% compared with the prior estimate of 3.6-4%. The tax rate is likely to be 27% for the fiscal year. Nordstrom still anticipates earnings to be in the range of $1.75-$2.05 per share.
Shares of this Zacks Rank #3 (Hold) company have risen 16.2% in the past six months compared with the industry’s 2.3% growth.
Key Picks
We have highlighted three better-ranked stocks, namely Deckers DECK, Boot Barn BOOT and Abercombie ANF.
Deckers, a footwear and accessories dealer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 13.6% from the year-ago figure. DECK delivered an average earnings surprise of 41.1% in the trailing four quarters.
Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, presently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 6.8%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales indicates growth of 13.4% from the year-ago figure.
Abercrombie, a leading casual apparel retailer, currently carries a Zacks Rank of 2. ANF delivered an earnings surprise of 16.8% in the last reported quarter.
The consensus estimate for Abercrombie’s current financial-year sales indicates growth of 13% from the year-ago figure.
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