Will Nordstrom Stock Rise on 2Q17 Results?



Recent changes

Nordstrom (JWN) stock fell 5.0% on August 2 following a report by Women’s Wear Daily, which indicated that the company’s buyout looked less likely. Nordstrom’s stock surged 10.3% on June 8 in reaction to news that the Nordstrom family was exploring opportunities to go private. Further, on July 27, Reuters reported that the Nordstrom family members were offering preferential terms to equity partners willing to fund the buyout. However, now the chances of a buyout look bleak. Overall, Nordstrom’s stock has declined 3.0% on a YTD (year-to-date) basis as of August 2.

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Comparison with peers

On a YTD basis, the stock prices of Nordstrom’s peers Macy’s (M), JCPenney (JCP), and Kohl’s (KSS) have fallen 35.3%, 34.9%, and 16.8%, respectively. These stocks have lagged the S&P 500 Index, which has risen 10.7% since the start of the year.

Nordstrom stock fell 10.8% on May 12 following the company’s results for fiscal 1Q17, which ended on April 29, 2017. Nordstrom beat analysts’ earnings expectations in fiscal 1Q17 and delivered higher revenue in the quarter. However, the company disappointed investors with a 0.8% decline in its fiscal 1Q17 same-store sales.

Department stores have been under significant pressure due to the persistent weakness in their sales. Intense competition from Amazon (AMZN) and off-price retailers like TJX Companies (TJX), as well as tepid consumer spending are impacting the performance of department stores.

Nordstrom’s upscale full-price stores have not been performing well. In contrast, the company’s off-price Nordstrom Rack stores and online channels are delivering good results.

Series overview

Nordstrom is scheduled to announce its fiscal 2Q17 results after the close of financial markets on August 10. In this series on Nordstrom’s upcoming results, we’ll discuss analysts’ expectations for the company’s revenue and earnings. We’ll also discuss analysts’ recommendations for Nordstrom’s stock and valuation later in this series.

We’ll look at analysts’ expectations for Nordstrom’s fiscal 2Q17 revenue in the next part of this series.


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