Here's How Nordstrom (JWN) is Positioned Ahead of Q1 Earnings
Nordstrom, Inc. JWN is scheduled to release first-quarter fiscal 2024 numbers on May 30, after the closing bell. This fashion specialty retailer is expected to have witnessed revenue growth. The Zacks Consensus Estimate for revenues is pegged at $3.20 billion, which indicates a rise of 0.5% from the figure reported in the year-ago quarter.
The consensus estimate for earnings is pegged at a loss of 8 cents per share, against earnings of 7 cents per share delivered in the year-ago quarter. The consensus mark has been stable in the past 30 days.
In the last reported quarter, the company posted an earnings surprise of 6.7%. Also, it delivered an earnings surprise of 86%, on average, in the trailing four quarters.
Key Factors to Note
Nordstrom’s top-line results in first-quarter fiscal 2024 are likely to benefit from its robust strategic efforts including the expansion of the reach of Nordstrom Rack and the enhancement of digital capabilities. The company remains focused on the closer-to-you strategy, which aims to link stores and services to expedite deliveries, expand online offerings and add cheaper merchandise at its Rack off-price stores to enrich customers' shopping experiences.
Increased focus on distribution facilities and improved connectivity of physical and digital capabilities are other tailwinds. The company has been introducing more premium brands and better assortment at Rack, and increasing brand awareness. These efforts are expected to have driven Rack’s performance and overall sales. Our model estimates a sales rise of 3% for the Nordstrom Rack segment in the fiscal first quarter.
However, the company remains susceptible to the impacts of muted customer demand due to uncertainties in the macroeconomic environment. Reduced consumer spending amid lower income groups, stemming from a tough macroeconomic environment, and the impacts of the winding down of Canada operations are likely to hurt results.
These factors, along with the higher SG&A expense on increased labor costs, are likely to have weighed on the company’s bottom-line performance. SG&A expenses are expected to increase 2.3% year over year while the SG&A expense rate is likely to be up by 60 basis points in the fiscal first quarter.
What Does the Zacks Model Say?
Our proven model predicts an earnings beat for Nordstrom this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Nordstrom, Inc. Price and EPS Surprise
Nordstrom, Inc. price-eps-surprise | Nordstrom, Inc. Quote
Nordstrom has an Earnings ESP of +41.67% and a Zacks Rank of 3, at present. You can uncover the best stocks before they're reported with our Earnings ESP Filter.
Valuation Picture
From a valuation perspective, Nordstrom offers an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 8.99x, which is below the five-year median of 9.8x and Retail - Apparel and Shoes industry’s average of 16.74x, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the current Value Score of A adds weight to this optimistic view.
The recent market movements show that Nordstrom shares have gained 16.6% in the year-to-date period compared with the industry's 14.8% growth.
Other Stocks to Consider
Here are a few companies, which according to our model, also have the right combination of elements to post an earnings beat in their upcoming releases.
Deckers Outdoor Corporation DECK currently has an Earnings ESP of +8.29% and a Zacks Rank of 3. The company is likely to register top-line growth when it reports first-quarter results. The Zacks Consensus Estimate for quarterly revenues is pegged at $777.9 million, which indicates an increase of 15.1% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for the quarterly earnings per share of $3.03 suggests an increase of 25.7% from the year-ago quarter.
Dollar Tree DLTR currently has an Earnings ESP of +0.16% and a Zacks Rank of 3. The company is likely to register top-line growth when it reports first-quarter fiscal 2024 results. The consensus mark for DLTR’s quarterly revenues is pegged at $7.6 billion, which suggests growth of 4.2% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Dollar Tree’s earnings has moved down by a penny to $1.43 per share in the past seven days. The consensus estimate indicates a drop of 2.7% from the year-ago quarter’s actual.
Ulta Beauty ULTA presently has an Earnings ESP of +0.12% and a Zacks Rank of 3. The company is likely to register growth in the top line when it reports first-quarter results. The consensus mark for ULTA’s quarterly revenues is pegged at $2.7 billion, which suggests 3.2% growth from the figure reported in the prior-year quarter.
The consensus mark for ULTA’s quarterly earnings has moved down by a penny in the past seven days to $6.23 per share. The consensus estimate suggests a decline of 9.5% from the year-ago quarter’s actual.
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