Nordstrom’s 1Q16 Earnings Fell on Subdued Sales and Markdowns
Nordstrom Lowered Fiscal 2016 Outlook after Dismal 1Q16 Results
Earnings miss estimates
Nordstrom’s (JWN) earnings in 1Q16 ended April 30, 2016, were $0.36 per share, excluding the impact of one-time items. The company’s 1Q16 adjusted EPS (earnings per share) was significantly below the consensus analyst estimate of $0.46. This is the third consecutive quarter in which the company’s earnings missed analysts’ estimates.
Earnings decline in 1Q16
Nordstrom’s adjusted EPS fell by 45.5% in 1Q16 due to the impact of subdued sales and higher markdowns. The company stated that it had to take additional markdowns to better align its inventory to current trends. Nordstrom’s adjusted EPS declined by 11.4% in 4Q15 and by 8.3% in 1Q15.
Nordstrom’s 1Q16 earnings were also impacted by investments in its growth initiatives like the company’s expansion in Canada. The adjusted EPS in 1Q16 excludes the impact of charges of $0.10 related to higher credit chargeback expenses and severance charges associated with the realignment of corporate support functions. The higher credit chargeback expenses were associated with an industry change in liability rules effective October 2015.
Peers under pressure too
The earnings of Nordstrom’s department store peers also declined in 1Q16, primarily due to the impact of weak sales and higher markdowns. The adjusted EPS of Macy’s (M), Kohl’s (KSS), and Dillard’s (DDS) declined by 28.6%, 50.8%, and 18.6%, respectively, in 1Q16. For more information about the 1Q16 performance of Macy’s and Kohl’s, read Macy’s Stock Falls 15% on Dismal 1Q16 Results and Sinking Outlook and What Caused a 51% Drop in Kohl’s 1Q16 Earnings?
Nordstrom, Macy’s, and Dillard’s together account for 0.4% of the iShares Russell Mid-Cap Growth ETF (IWP).
In the next part of this series, we’ll discuss Nordstrom’s margins in 1Q16 and the company’s productivity measures.
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