Yahoo Finance Will Nordstrom’s Rack Stores Rake in Higher Sales in 1Q15?
What's in Store for Nordstrom Investors in 1Q15?
Nordstrom to announce first quarter results on May 14
Nordstrom, Inc. (JWN) is scheduled to announce its first quarter results on May 14, 2015, for the quarter ended May 2. Rival department store Macy’s (M) will be announcing its 1Q15 results on May 13. Nordstrom expects fiscal 2015 net sales to increase 7% to 9%. The company expects its credit card revenue to be up by 5%, driven by higher volumes.
Recent sales performance
Nordstrom’s 4Q14 net sales increased by 8.9% to $4.04 billion, ahead of analysts’ estimates of $4.01 billion. The company also beat analysts’ sales estimates in the first and third quarters of fiscal 2014 and was in line with estimates in the second quarter.
Off-price versus full-line
For fiscal 2014, Nordstrom’s net sales increased by 7.7% to $13.1 billion. Nordstrom’s online business and off-price Rack stores offset the impact of weakness in the company’s full-line stores. Sales of Nordstrom’s full-line stores declined by 0.3% in contrast to sales of off-price Rack stores that increased by 17.4% to $3.2 billion.
Despite improved macro conditions, consumers still prefer to shop at off-price stores that offer merchandise at considerable discounts. Discounts are sometimes as much as 60% off the price of merchandise available at department stores. This trend has helped boost sales at Nordstrom’s Rack stores, which now outnumber the company’s full-line stores.
Online performance
Nordstrom’s online sales continued to register strong growth in fiscal 2014. Online sales for Nordstrom increased by 23.1% to $1.9 billion. Nordstrom Rack and HauteLook also registered growth for online sales. Nordstrom has been spending aggressively to enhance the consumer shopping experience through its digital channels.
Sales growth outperforms peers
The company’s sales growth rate in fiscal 2014 ending January 31, 2015, outperformed peers like Macy’s and TJX Companies (TJX), which posted sales growth rates of 0.6% and 6.0%, respectively. However off-price retailers Ross Stores (ROST) and Burlington Stores (BURL) registered higher sales growth rates of 7.9% and 8.7%, respectively.
Analysts’ sales expectations
Analysts expect Nordstrom’s 1Q15 net sales to come in at $3.2 billion, an 8.2% increase over 1Q14. Analysts expect net sales of $14.6 billion in fiscal 2015.
Nordstrom accounts for ~1.0% of the portfolio holdings of the SPDR S&P Retail ETF (XRT).
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