Nordstrom Gains 32% on Stellar Q4 Beat & Upbeat FY22 Outlook

Nordstrom, Inc. (NYSE: JWN) gained over 32% during the after-hours trading session on March 1, after the American omnichannel retailer reported impressive Q4 results and also provided its FY2022 guidance well above analysts’ expectations.

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The quarterly beat was driven by positive impact from strategic initiatives leading to sales growth and higher profitability.

Q4 Outperformace

Notably, adjusted earnings of $1.23 per share more than quintupled year-over-year, and massively beat analysts’ expectations of $1.02 per share. The company reported earnings of $0.21 per share for the prior-year period.

Further, revenues jumped 23% year-over-year to $4.38 billion and exceeded consensus estimates of $4.36 billion.

The increase in revenues reflected a 24% surge in Gross Merchandise Value (GMV) driven by Nordstrom banner net sales as well as Nordstrom Rack sales growth of 23%.

Driven by improved merchandise margins from reduced markdowns, and higher leverage on buying and occupancy costs, gross profit margin improved by 500 bps to 38%.

Upbeat FY2022 Outlook

Based on robust Q4 results, management issued financial guidance for FY2022.

The company now forecasts adjusted earnings in the range of $3.15 per share to $3.50 per share, exceeding the consensus estimate pegged at $2.01 per share. Revenues are forecast to grow in the range of 5% – 7% year-over-year.

CEO Comments

Nordstrom CEO, Erik Nordstrom, commented, “Our team continues to work with urgency to accelerate our progress and invest in our capabilities to better serve customers and profitably grow sales.”

He further added, “Our primary focus is on three areas: improving Nordstrom Rack performance, increasing profitability and optimizing our supply chain and inventory flow. Our progress has given us line of sight to achieve in the coming year the financial targets we presented at our 2021 Investor Event.”

Wall Street’s Take

Overall, the stock has a Hold consensus rating based on 1 Buy and 5 Holds. At the time of writing, the average Nordstrom price target of $27.25 implies 39.46% upside potential from current levels.

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