Time to Ditch Nordstrom Stock?
Shares of Nordstrom, Inc. (NYSE:JWN) stock are getting crushed this morning (Friday), signaling the decline of the American retail industry could be worse than anyone expected.
Same-store sales, which measure the performance of stores that have been opened for at least one year, dropped 1.7%. Nordstrom’s earnings per share came in at $0.26 in the first quarter, falling well short of the Street’s expectations of $0.46 per share.
“Our first quarter results were impacted by lower than expected sales,” said Blake Nordstrom, co-president of Nordstrom, in a press release accompanying earnings. “In response we have made further adjustments to our inventory and expense plans.” (Source: “Nordstrom Reports First Quarter 2016 Earnings,” Nordstrom, Inc. Investor Relations, May 12, 2016.)
Shares of Nordstrom stock were crushed after the report. As of 9:00 a.m. EST, JWN stock was down nearly 15% in pre-market trading.
The earnings come as another disappointment in a string of terrible results for the retail industry after Macy’s and Kohl’s posted worse-than-expected profits earlier in the week.
Nordstrom’s report is just the latest sign the economy is really suffering.
On Thursday, shares of Dillard’s, Inc., Kohl’s Corporation, and J C Penney Company Inc were hammered after posting abysmal financial results. Earlier this week, shares of bellwether retailer Macy’s, Inc. plunged after reporting a huge drop in quarterly sales and slashed its forecast.
Smaller companies are closing shop. Earlier this month, teen retailer Aeropostale Inc (OTCMKTS:AROPQ) filed for bankruptcy after losing money for 13 consecutive quarters. The company issued a statement saying that it would be closing 113 of its United States stores as well as another 41 in Canada. (Source: “Aéropostale, Inc. Takes Next Steps In Business Transformation,” Aéropostale Investor Relations, May 13, 2016.)
Nordstrom executives only see things getting worse.
Executives now expect same-store sales to come in between negative one percent and one percent for full-year 2016, versus the zero-percent to two-percent increase previously forecasted. Earnings per shares are expected to come in between $2.50 to $2.70, far short of the $3.10 to $3.35 per share estimate issued in the prior quarter.