What happened
Shares of Nordstrom, Inc. (JWN 3.12%) are pushing higher Friday after the retailer bucked the trend among department stores and reported an upbeat fourth-quarter earnings report. As of 11:02 a.m. EST, the stock had gained 5.3%.
So what
While the holiday season was mostly a rough one for peers including Macy's, J.C. Penney, and Kohl's, Nordstrom topped expectations on the bottom line, despite comparable sales slipping 0.9%. Adjusted earnings per share increased from $1.00 a year ago to $1.37 on improved cost control, easily beating estimates at $1.15. On the top line, overall revenue grew 2.4% to $4.32 billion thanks to the addition of new Nordstrom Rack stores, but that was just short of the analyst consensus of $4.35 billion.
Image source: The Motley Fool.
The off-price Rack brand and the e-commerce business continued to drive performance as comparable sales within its full-line stores fell by 6.8% in the quarter.
Now what
While many of its rivals are shuttering stores, Nordstrom continues to expand. It added two new full-line stores in Canada and 21 Rack stores last year, increasing its square footage by about 4% to 29.8 million.
This year the company plans to add one full-line store and 15 Rack locations. Its guidance for 2017 was less encouraging, however, as the company sees total revenue growth of 3% to 4% on flat comparable sales. Earnings per share is expected to come in between $2.75 to $3.00, down from 2016's adjusted EPS of $3.14.
On the earnings call, management also addressed the controversy surrounding the company after President Trump attacked it in a tweet following Nordstrom's decision to pull his daughter's clothing line due to poor sales. Co-President Pete Nordstrom said the effect from Trump's tweet was "negligible," and brushed off the concern.
Though Nordstrom is in a better position than many of its peers, it's hard to be enthusiastic about the stock when comps are plunging close to 7% in its core business and earnings are expected to shrink this year.
