JWN’s performance in fiscal 2018
Nordstrom’s (JWN) revenue (including retail net sales and credit card income) rose 2.5% to $15.9 billion in fiscal 2018, which ended on February 2. The company’s net sales rose 2.3% to $15.5 billion, and its credit card revenue rose 11.4% to $380 million. Nordstrom’s fiscal 2018 net sales were driven by a 4.5% rise in its off-price sales partially offset by a 1.5% fall in its full-price sales. The company’s fiscal 2018 top line was adversely affected by the inclusion of an additional week in fiscal 2017.
Nordstrom’s digital sales rose 16% in fiscal 2018 and accounted for 30% of its overall sales in the year compared to 27% in fiscal 2017. Nordstrom’s reported EPS rose 28.2% to $3.32 in fiscal 2018. The company’s adjusted EPS were $3.61 in fiscal 2018.
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Do analysts expect improvement?
Nordstrom expects its fiscal 2019 net sales to rise in the range of 1%–2% and its EPS to rise in the range of $3.65–$3.90. Continued strength in its digital sales and off-price channel are expected to drive its top line growth in fiscal 2019. To improve its full-line business, the company is enhancing its merchandise assortment by using data analytics for inventory and allocation planning.
Analysts expect the company’s fiscal 2019 overall revenue to rise 1.7% to $16.1 billion. Analysts expect its adjusted EPS to rise 4.2% to $3.76 in fiscal 2019.
On April 10, Nordstrom was trading at a 12-month forward PE multiple of 11.8x. On April 10, KeyBanc upgraded its rating on Nordstrom to an “overweight” from a “sector weight,” saying that it felt the company’s valuation didn’t fully reflect the strength of its digital business.
In comparison, Macy’s (M) and Kohl’s (KSS) were trading at 12-month forward PEs of 8.0x and 11.8x, respectively, on April 10. Analysts expect Macy’s fiscal 2019 adjusted EPS to fall 25.6% to $3.11, while they expect Kohl’s adjusted EPS to rise 8.2% to $6.06.
Overall, Nordstrom and its department store peers continue to invest in their digital channels to enhance the consumer shopping experience and survive in a more competitive market, in which online retailers such as Amazon (AMZN) are gaining strength.