Nordstrom (JWN) Q4 Earnings Beat Estimates, Revenues Rise Y/Y

Nordstrom, Inc. JWN posted fourth-quarter fiscal 2023 results, wherein both revenues and earnings surpassed their respective Zacks Consensus Estimate. The company posted adjusted earnings of 96 cents per share, up 29.7% from the year-ago quarter’s reported figure of 74 cents. The figure also surpassed the consensus estimate of 90 cents per share.

Total revenues of $4,420 million rose 2.3% year over year and surpassed the Zacks Consensus Estimate of $4,403 million. Sales were aided by growth across the Nordstrom Rack, somewhat offset by a decline in the Nordstrom banner.

Shares of JWN have risen 31% in the past three months compared with the industry’s 18.5% growth.

Quarterly Highlights

Net sales rose 2.2% year over year to $4,293 million and beat the consensus estimate of $4,206.6 million. Credit Card net revenues grew 6.7% year over year to $127 million and beat our estimate of $120.1 million.

Nordstrom, Inc. Price, Consensus and EPS Surprise

Nordstrom, Inc. Price, Consensus and EPS Surprise

Nordstrom, Inc. price-consensus-eps-surprise-chart | Nordstrom, Inc. Quote

In fourth-quarter fiscal 2023, net sales for the Nordstrom banner decreased 3% from the year-ago quarter's figure to $2,866 million and missed our estimate of $2,960.3 million. This includes 410 basis points (bps) related to the 53rd week. GMV's shares lost 3.4% year over year for the Nordstrom banner in the fiscal fourth quarter. The Nordstrom banner’s net sales included a negative impact of 355 bps related to the wind-down of the Canada operations.

Sales at the Nordstrom Rack banner jumped 14.6% year over year to $1,427 million and outdid our estimate of $1,246.3 million. This includes 580 bps related to the 53rd week.

Digital sales fell 1.7% year over year in the fiscal fourth quarter, accounting for 38% of the quarterly net sales.

Nordstrom's gross profit margin expanded 125 bps year over year to 34.4% for the reported quarter mainly due to lower markdowns, reduced buying and occupancy costs, and increased sales.

Adjusted SG&A expenses, as a percentage of sales, rose 10 bps year over year to 31.6% due to higher labor costs.

Adjusted earnings before interest and taxes (EBIT) of $247 million rose 32.1% year over year in the fiscal fourth quarter and beat our estimate of $217.7 million. The adjusted EBIT margin expanded 120 bps in the quarter to 5.7%.

Other Financials

This currently Zacks Rank #3 (Hold) company ended fourth-quarter fiscal 2023 with available liquidity of $1.4 billion, including $628 million of cash and cash equivalents. The company had a long-term debt (net of current liabilities) of $2.6 billion and total shareholders’ equity of $848 million as of Feb 3, 2024.

As of Feb 3, 2024, JWN’s net cash provided for operating activities was $621 million. The company spent $569 million on capital expenditures for the aforementioned period. Nordstrom recently approved a dividend of 19 cents per share, payable on Mar 27, to shareholders of record as of Mar 12.

Outlook

Management expects fiscal 2024 to be a year of strong momentum for growth and profitability, including the introduction of Rack stores, expansion of the Nordstrom banner digital sales and comparable-store sales boost across the banners.

For fiscal 2024, revenues, comprising retail sales and credit card revenues, are predicted in the range of 2% decline to 1% growth versus the 53-week fiscal 2023. Comparable sales are likely to come in the band of 1% fall to 2% increase year over year. It projects an EBIT margin of 3.5-4% of sales. Nordstrom envisions earnings per share of $1.65-$2.05, excluding any share repurchase impacts.

Stocks to Consider

We have highlighted three better-ranked stocks, namely Gap GPS, American Eagle AEO and Hibbett HIBB.

Gap, a fashion retailer of apparel and accessories, currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter average earnings surprise of 137.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Gap’s current financial-year earnings per share indicates growth of 387.5% year over year.

American Eagle, a leading apparel retailer, currently sports a Zacks Rank of 1. AEO delivered an earnings surprise of 23% in each of the trailing four quarters.

The Zacks Consensus Estimate for American Eagle’s current financial-year sales implies growth of 5% from the year-ago reported figure.

Hibbett, a key sporting goods retailer, currently carries a Zacks Rank #2 (Buy). HIBB delivered an earnings surprise of 24.2% in each of the trailing four quarters.

The Zacks Consensus Estimate for Hibbett’s current financial-year sales implies growth of 1.8% from the year-ago reported figure.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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