Nordstrom (JWN 44.15, -3.10, -6.57%) is down more than 6% after the company reported
disappointing holiday results last night.
Comparable store sales for the nine weeks ended January 5, 2019 were up 1.3%. While that is roughly in-line with the growth expected for the fourth quarter, it marks a slowdown from the 2.4% growth reported through the first three quarters of fiscal 2019.
In the Full-Price category, holiday comp sales increased 0.3% versus a year-to-date increase of 1.9%, reflecting softer traffic in stores. In Off-Price, comparable sales increased 3.9%, which was consistent with year-to-date trends and with expectations. Digital sales for the company increased 18% relative to the same period last year, representing 36% of sales.
So full-price sales at Nordstom disappointed while Nordstrom Rack continued to do well in the fourth quarter. Discounters continue to be the sweet-spot in retail while retailers at the high end fall short in the face of lower traffic and increased competition online.
As a result, the company said adjusted EPS for the year will be around the low end of its $3.55-3.65 guidance due to higher markdowns taken during the holiday period and to correct its inventory position.
Nordstrom is the latest department store to succumb to lower in-store traffic during the holiday period.
The comparable store sales growth of near 2% isn't very impressive given the broader strength we saw from the consumer last year. Recall, Mastercard SpendingPulse reported holiday sales up 5%. December retail sales were not reported by the Census Bureau this morning due to the ongoing government shutdown.
What's more, investors are questioning what 2019 will look like as consumer spending is likely to slow.
Nordstrom says it remains committed to achieving its long-term financial targets. At its Investor Day last July, the company guided for EBIT (profit) growth of 5-6% on average through 2022 with net sales growth of 3-4% as free cash flow hits $1 bln by 2022, up from $0.6 bln in 2017.
The stock now trades at ~12x EPS, which is roughly in-line with Kohl's (KSS) but a notable premium to Macy's (M).
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