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Nordstrom Lowers Outlook after Poor Q1 Results

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Lower-than-expected results

Department stores Kohl’s (KSS) and JCPenney (JCP) reported dismal results for the first quarter of fiscal 2019 on May 21, and Nordstrom (JWN) further crushed investors’ hopes when it reported its results after the markets closed yesterday. Nordstrom stock fell 9.3% in after-market hours on May 21 and was down 10.7% as of 9:00 AM EST today.

Nordstrom’s revenue (comprises retail sales and credit card revenue) fell 3.3% to $3.44 billion and lagged analysts’ estimate of $3.58 billion. Nordstrom’s net sales fell 3.5% to $3.35 billion. The company cited the continuation of soft sales trends and execution missteps related to the company’s enhanced loyalty program as the reasons for the decline in its top line. The company also experienced lower traffic as it cut down its digital marketing to focus on its loyalty program.

Kohl’s net sales declined 3.3% to $3.82 billion in the first quarter. JCPenney continued to disappoint investors and reported a 4.3% decline in first-quarter revenue (retail net sales plus other income) to $2.56 billion, while net sales fell 5.6% to $2.44 billion.

The company’s first-quarter EPS declined 54.9% on a year-over-year basis to $0.23 and was way behind analysts’ outlook of $0.43. Nordstrom’s first-quarter EPS was adversely impacted by lower sales, higher markdowns, and increased expenses.

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Guidance lowered

Following the weak performance in the first quarter, Nordstrom lowered its outlook for full-year fiscal 2019. Nordstrom now expects its fiscal 2019 net sales growth in the range of -2.0% to 0.0% compared with the previous outlook of growth in the range of 1% and 2%. Nordstrom expects its fiscal 2019 EPS to be between $3.25 to $3.65 compared to the prior guidance of $3.65 to $3.90.

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