Impact of 4Q17 results
Nordstrom (JWN) stock rose 5.1% to $53.04 on March 2, 2018, in reaction to the company’s fiscal 4Q17 results. Nordstrom announced its fourth-quarter results after the close of the financial markets on March 1, 2018. It exceeded analysts’ revenue estimate but lagged on earnings expectations.
As of March 2, Nordstrom stock has risen 11.9% on a YTD (year-to-date) basis. In comparison, Macy’s (M), Kohl’s (KSS), and JCPenney (JCP) have risen 20.7%, 17.4%, and 22.6%, respectively, since the start of the year. The S&P 500 Index (SPX-INDEX) has risen 0.7% YTD. On February 23, 2018, Nordstrom stock rose 6.5% on news that the company was close to completing a deal to go private.
Nordstrom’s decision to go private comes amid a challenging retail market where online retailers are gaining more power at the expense of brick-and-mortar department stores and retailers. Department stores delivered strong numbers in the 2017 holiday season, driven by higher consumer spending and improved consumer sentiment. However, intense competition from online retailers and off-price retailers such as TJX Companies (TJX) continues to be a threat to the growth of department stores.
Share repurchases enhance earnings per share by bringing down the number of shares outstanding. In fiscal 2017, which ended on February 3, 2018, Nordstrom repurchased 4.6 million shares for $206 million. The company has about $414 million of authorization remaining under its share repurchase program. However, Nordstrom specified that it doesn’t intend to repurchase any shares since the Nordstrom family is exploring the possibility of going private.
We’ll look at Nordstrom’s earnings in the next part of this series.