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Nordstrom Posts Mixed Q4 Results, Gives Upbeat Earnings Outlook

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Mixed Q4 results

As of 8:36 AM, Nordstrom (JWN) had risen 2.0% today. The company announced mixed results for fiscal 2018’s fourth quarter[1.ended February 2] after markets closed yesterday, following which Nordstrom stock rose 1.2% after hours.

Nordstrom’s fourth-quarter revenue (retail net sales and credit card revenue) fell 4.6% to $4.48 billion, missing analysts’ estimate of $4.61 billion. The company’s net sales fell 4.7% to $4.38 billion, and its credit card revenue fell 1.0% to $101 million.

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The company’s same-store sales grew by a mere 0.1% in the fourth quarter, which includes the holiday season, and its full-price same-store sales fell 1.6% due to weak customer traffic. In contrast, Nordstrom’s off-price same-store sales grew by 4.0%. Full-price stores’ softness during and after the holiday season impacted most of the company’s merchandise categories, with women’s apparel being hit the hardest. Nordstrom’s EPS rose YoY (year-over-year) to $1.48 from $0.89, beating analysts’ estimate of $1.42.

Better-than-expected outlook

In fiscal 2018, Nordstrom’s revenue grew 2.5% to $15.9 billion, driven by a 2.3% rise in net sales to $15.5 billion and an 11.4% rise in credit card revenue to $380 million. In fiscal 2019, Nordstrom expects its EPS to rise YoY from $3.32 to $3.65–$3.90, higher at the midpoint than analysts’ average estimate of $3.67. Nordstrom expects its net sales to grow 1%–2% and its credit card revenue to grow by a mid-to-high-single-digit percentage.

Nordstrom’s off-price and digital businesses are expected to drive its top-line growth in fiscal 2019. The company’s off-price business continued to be its largest channel of customer acquisition, attracting ~7.0 million new customers last year. Nordstrom’s digital sales accounted for 30% of its overall business in fiscal 2018.

Nordstrom is improving its full-price merchandise assortment by using data analytics for inventory management. In fiscal 2018, peer Macy’s (M) reported a 0.1% rise in net sales to ~$25 billion. To know more, read Key Takeaways from Macy’s Q4 and Fiscal 2018 Results.

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