Nordstrom Earnings Preview – Analyst Blog

The earnings outlook for Nordstrom Inc. (JWN) remains strong; ahead of its quarterly results on Thursday. While the prospects of many of its peers continue to be weighed down by the challenging macroeconomic environment, the premium fashion retailer has reported robust same-store sales in April 2010. Same-store revenue increased 7.5% in April, well surpassing the Wall Street estimates of a 6.2% rise in monthly same-store sales.

 

The improved sales result of Nordstrom indicates stabilization of the overall market as shoppers are gradually opening up their wallets and unleashing the discretionary spending. Industry experts further anticipate continued sales improvement in the coming months with inventories remaining lean and sales of high-margin accessories having improved recently.

 

The current Zacks Consensus Estimate for fiscal 2010 first quarter is $0.55, which represents a year-over-year growth of 71.88%. Estimates are clearly going up, with 10 of the 20 analysts covering the stock raising their quarterly EPS estimates in the last seven days, while only 2 having moved in the opposite direction.

 

For fiscal 2010, the current Zacks Consensus Estimate is $2.60 per share, which represents a 33.33% increase over fiscal 2009 earnings. About 8 of the 21 analysts covering the stock have raised their fiscal EPS estimates in the last seven days, while only 2 have lowered the same.

 

With respect to earnings surprises, Nordstrom has performed across a wide span of earnings expectations over the last four quarters in the range of approximately negative 1.3% to positive 23.1%. The average remained positive at 7.2%; meaning that Nordstrom has beaten the Zacks Consensus Estimate by an average of 7.2% in the last four quarters.

 

The company’s positive earnings momentum, owing to its robust same-store sales performance in April 2010, has resulted in an upgrade to Zacks # 2 Rank. The Zacks Rank is the short-term recommendation (1-3 months) on the stock. Our long-term recommendation on Nordstrom shares remains Neutral, though the outlook is clearly improving.