Post Earnings Coverage as Nordstrom's Quarterly Revenue Increased 2.4%
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LONDON, UK / ACCESSWIRE / March 15, 2017 / Active Wall St. announces its post-earnings coverage on Nordstrom, Inc. (NYSE: JWN). The company released its financial results for Q4 FY16 and full year 2016 on February 27, 2017. Nordstrom reported earnings that exceeded expectations, reflecting continuous improvements to its operating model. Register with us now for your free membership at:
One of Nordstrom's competitors within the Apparel Stores space, Urban Outfitters, Inc. (NASDAQ: URBN), reported on March 07, 2017, its financial results for the three months and year ended January 31, 2017. AWS will be initiating a research report on Urban Outfitters in the coming days.
Today, AWS is promoting its earnings coverage on JWN; touching on URBN. Get our free coverage by signing up to:
Nordstrom reported net sales of $4.2 billion for Q4 2016, up 2.4% compared with net sales of $4.1 billion during Q4 2015. Total Company comparable sales for the reported quarter decreased 0.9%. Total Company's net sales were $14.5 billion for FY16, increasing 2.9% compared with net sales of $14.1 billion during FY15. Total Company's comparable sales for FY16 decreased 0.4%. Retail gross profit, as a percentage of net sales, was 34.9%, decreasing 7 basis points compared with FY15.
In 2016, the Company reached record sales of $14.5 billion, achieving the following milestones in executing its growth plans: continued market expansion into Canada for a total of five full-line stores, including two Toronto store openings in fall 2016, which contributed $300 million in total sales.
Nordstrom's Q4 2016 net earnings were $201 million and earnings before interest and taxes (EBIT) was $424 million, or 10.0% of net sales, compared with net earnings of $180 million and EBIT of $324 million, or 7.8% of net sales for Q4 2015. The Company's earnings per diluted share for the quarter ended January 28, 2017, were $1.15, and when excluding the fourth quarter tax effect of the Trunk Club goodwill impairment, adjusted earnings per diluted share was $1.37, surpassing analysts' expectations for adjusted earnings of $1.15 per share.
For FY16, Nordstrom's earnings per diluted share of $2.02 exceeded the Company's expectations driven by continued operational efficiencies in inventory and expense execution. Excluding the Trunk Club impairment charge, adjusted earnings per diluted share was $3.14, which was above the Company's outlook of $2.85 to $2.95. Full year net earnings were $354 million and EBIT was $0.8 billion, or 5.6% of net sales, compared with net earnings of $600 million and EBIT of $1.1 billion, or 7.8% of net sales, for the same period in FY15.
During the quarter, Nordstrom repurchased 4.0 million shares of its common stock for $189 million. A total of approximately $1.0 billion remains under the Company's existing share repurchase board authorizations, including the recent February 2017 authorization.
The Company generated $1.6 billion in operating cash flow and $0.6 billion in free cash flow.
Retail Insights
For Q4 2016, Nordstrom's Retail EBIT increased $84 million compared with the same quarter last year, reflecting non-operational items in 2016 and 2015. Excluding these items, Retail EBIT increased $12 million, or 3.3%. Credit EBIT increased $16 million, primarily due to higher credit card revenues.
In the Nordstrom brand, including the US and Canada full-line stores and Nordstrom.com, net sales when combined with Trunk Club, decreased 1.1% and comparable sales decreased 2.7%. Nordstrom.com sales reached over $2.5 billion, representing approximately 25% of Nordstrom full-price sales. Nordstrom Rack sales grew 11% to $4.5 billion driven by 21 new store openings and 32% online growth; Nordstromrack.com/HauteLook reached $700 million, representing over 15% of off-price sales. Nordstrom Rewards active customers increased by 56% to 7.8 million; sales from Nordstrom Rewards customers represented 44% of sales.
In the Nordstrom Rack brand, which consists of Nordstrom Rack stores and Nordstromrack.com/HauteLook, net sales increased 10.7% and comparable sales increased 4.3%. The East was the top-performing geographic region. In the Nordstrom brand, including the US and Canada full-line stores and Nordstrom.com, net sales when combined with Trunk Club, decreased 1.1% and comparable sales decreased 2.7%.
Retail gross profit, as a percentage of net sales, was 36.0%, increasing 112 basis points compared with the same period in FY15, reflecting strong inventory execution in addition to reduced competitive markdowns. Inventory declined 2.5% which reflected a positive spread of 5% relative to sales growth.
Nordstrom's return on invested capital (ROIC) for the 12 months ended January 28, 2017, was 8.4% compared with 10.7% in the prior 12-month period. This decrease was primarily due to the non-cash goodwill impairment of Trunk Club. Excluding this impairment, adjusted ROIC of 11.7% increased 97 basis points, benefiting from the sale of the credit card receivables.
Expansion Update
Nordstrom has announced plans to open the following stores in fiscal 2017: one new full-line store, 15 new Nordstrom Rack stores, two full-line store relocations, and one Nordstrom Rack store relocation.
Stock Performance
At the closing bell, on Tuesday, March 14, 2017, Nordstrom's stock rose slightly by 0.41%, ending the trading session at $43.78. A total volume of 1.83 million shares were traded at the end of the day. The stock is trading at a PE ratio of 21.71 and has a dividend yield of 3.38%.
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