Nordstrom misses by $0.20, misses on revs; lowers FY20 below consensus
- Reports Q1 (Apr) earnings of $0.23 per share, $0.20 worse than the S&P Capital IQ Consensus of $0.43; revenues fell 3.3% year/year to $3.44 bln vs the $3.56 bln S&P Capital IQ Consensus. Earnings before interest and taxes were $77 million, or 2.3 percent of net sales, compared with $153 million, or 4.4 percent of net sales, during the same period in fiscal 2018. The decrease was driven primarily by lower sales volume.
- In Full-Price, net sales decreased 5.1 percent compared with the same period in fiscal 2018. Off-Price net sales decreased 0.6 percent. Total company digital sales grew 7 percent and represented 31 percent of the business.
- Gross profit, as a percentage of net sales, of 33.5 percent decreased 60 basis points compared with the same period in fiscal 2018. This was primarily due to planned markdowns to realign inventory to sales trends and deleverage on occupancy expenses. Ending inventory decreased 5.3 percent from last year, reflecting a positive spread between inventory and sales
- Co issues downside guidance for FY20, lowers EPS to $3.25-3.65 from $3.65-3.90 vs. $3.73 S&P Capital IQ Consensus; lowers net sales to down 0-2% from up 1-2%; credit card rev low to mid single digit grwoth from mid to high single digit growth EBIT to $805-890 mln from $915-970 mln.
- The Company's top-line results were impacted by three areas - loyalty, digital marketing and merchandise - which contributed to declines across its Full-Price and Off-Price businesses, in both stores and online.
- "While we expected softer trends from the fourth quarter to continue into the first quarter, we experienced a further deceleration. We had executional misses with our customers, and we're committed to better serving them. This is well within our control to turn around," said Erik Nordstrom, co-president, Nordstrom, Inc. "The strength of our inventory and expense execution helped mitigate a meaningful portion of our sales miss. We ended the quarter with inventories in solid shape, and our financial position remains strong. We're actively taking steps to drive our top-line, and we're focused on delivering on our financial goals."
- As the Company approaches the end of its heavy generational investment cycle this year, these businesses - Nordstromrack.com/HauteLook, Trunk Club, Canada and New York City - continue to scale and are expected to contribute top-line growth and improved profitability for 2019.