Nordstrom Shares Explode as Company Issues Strong Guidance

Luxury retail department store chain Nordstrom released its earnings report this week, causing shares to skyrocket 35% shortly after as the company made key strides in its off-price Rack business and projected strong guidance.

The company reported better than expected profits and sales for the holiday quarter. Nordstrom also highlighted improvements in its off-price business, Nordstrom Rack, amid a report that the company has been reviewing a potential spinoff of Rack.

For its fiscal fourth quarter, Nordstrom said net sales at Rack were down 5% on a two-year basis, marking a sequential improvement from the prior quarter, when its off-price segment logged an 8% decline compared with 2019.

Nordstrom CEO Erik Nordstrom said in a statement that the department store chain is focused on three key things: improving Nordstrom Rack’s performance, increasing profitability and optimizing
supply chain and inventory flow.

For Q4, Nordstrom reported earnings per share of $1.23. Analysts per Refinitiv had expected $1.02. Revenue at $4.49 billion was also better than the $4.35 billion expected. Net income for the three-month period ended Jan. 29 grew to $200 million, or $1.23 per share, from $33 million, or 21 cents a share, a year earlier. That topped estimates for per-share earnings of $1.02, according to Refinitiv.

Total revenue, including credit card sales, grew to $4.49 billion from $3.65 billion a year earlier. That topped estimates for $4.35 billion. Net sales, which don’t include credit card revenue, increased 23% year over year but decreased 1% compared with 2019 levels.

The company said that its home, active, designer, beauty and kids categories were the strongest performers, as shoppers sought comfortable clothing and more items to spruce up their homes.

Looking at fiscal 2022, Nordstrom sees revenue up 5% to 7% compared with 2021 levels. Analysts were looking for growth of 3.7%.

Nordstrom said that it’s encouraged thus far by consumers’ resumption of travel following the spread of the omicron variant.

For fiscal 2022, Nordstrom sees revenue, including credit card sales, up 5% to 7% compared with 2021 levels. Analysts were looking for growth of 3.7%.

It sees earnings, excluding the impact of any share repurchase activity, in a range of $3.15 to $3.50 per share. Estimates for earnings per share were $2.01.

“We believe we have a meaningful opportunity to improve both the customer experiencer and our financial outcomes,” president and chief brand officer Pete Nordstrom told analysts on an earnings conference call.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.