Nordstrom (JWN 58.66, +6.38, +12.20%) is up after the company reported its best
same-store sales growth in three years.
Second quarter earnings grew 46% to $0.95/share. Comparable store sales grew 4% on top of 1.7% growth last year.
Comp sales were expected to grow just under 1%. Sales growth accelerated in the full-price (+4.1%) and off-price (+4.0%) segments.
Digital sales grew 23% which was up 300 basis points from a year ago and accounted for 34% of sales, up from 29% last year.
Following strong results from the first half of the year, Nordstrom raised guidance for fiscal 2019:
- Sales to $15.4-15.5 bln from $15.2-15.4 bln; comparable sales to +1.5-2.0% from +0.5-1.5%, EBIT to $925-960 mln from $895-940 mln and EPS to $3.50-3.65 from $3.35.
Management said it was on track for an inflection point in
profitable growth after years of investing in its business.
EBIT has fallen four years in a row after peaking at $1.36 bln in fiscal 2014 (2013) but is now expected to grow 2% this year.
At its Investor Day last month, the company said EBIT (profit) would grow 5-6% on average through 2022 as net sales grow 3-4% and free cash flow would reach $1 bln by 2022 from $0.6 bln last year.
The stock has broken out to a 20-month high.
In a retail environment that has parsed winners from losers, Nordstrom stands out as the leading high-end department store with a strong discount segment in Nordstom Rack.
Therefore, investors are willing to give pay a higher earnings multiple for the stock: JWN trades at 16x EPS estimates versus Macy's (M) at 9x and Kohl's (KSS) at 14x.