Will Nordstrom’s Fiscal 2018 Earnings See a Strong Rise?



Company’s optimistic outlook

Last month, Nordstrom (JWN) raised its guidance for fiscal 2018 following strong performance in the first half of the year. The company’s adjusted EPS (earnings per share) grew 18.6% in the first quarter of fiscal 2018, followed by impressive 46.2% growth in the second quarter of fiscal 2018.

Article continues below advertisement

Recap of recent performance

Nordstrom’s adjusted EPS of $0.95 in the second quarter of fiscal 2018 easily beat analysts’ expectation of $0.84. The company’s adjusted EPS grew 46.2%, compared to $0.65 in the second quarter of fiscal 2017. This growth was driven by a strong sales increase, a lower effective tax rate, and the impact of a new revenue recognition standard. Nordstrom’s effective tax rate was 25.7% in the second quarter of fiscal 2018, compared to 41.8% in the second quarter of fiscal 2017.

Earnings guidance

Following its fiscal second-quarter results, Nordstrom raised its fiscal 2018 EPS guidance to the range of $3.50–$3.65 from $3.35–$3.55. The company’s reported EPS were $2.59 in fiscal 2017, and its adjusted EPS were $2.90.

Nordstrom has been aggressively investing in its growth initiatives over the past few years, which has hurt its bottom line. The company’s growth investments included expansion in Canada, strengthening digital capabilities, and the opening of its Manhattan full-line Men’s store. Nordstrom expects fiscal 2018 to be an inflection point for its long-term profitability. The company expects its investments in marketing, technology, and the supply chain to boost its performance in the coming years.

We’ll look at analysts’ expectations for Nordstrom’s fiscal 2018 earnings and the company’s valuation in the next part of this series.


More From Market Realist