Nordstrom Gears Up for Q4 Earnings: Will Investors See a Surprise?

Core Viewpoint - Nordstrom, Inc. (JWN) is anticipated to report a decline in both revenue and earnings for the fourth quarter of fiscal 2024, with revenues expected to be $4.29 billion, reflecting a 2.9% decrease from the previous year [1]. Revenue and Earnings Estimates - The consensus estimate for earnings has decreased to 90 cents per share, indicating a 6.3% decline from 96 cents reported in the same period last year [2]. - The company has a trailing four-quarter negative earnings surprise of 30.03% on average [2]. Earnings Prediction - A positive Earnings ESP of +14.99% and a Zacks Rank of 2 (Buy) suggest a potential earnings beat for Nordstrom this quarter [3]. Digital and Operational Enhancements - Nordstrom is enhancing its digital capabilities to drive growth and improve customer engagement, which is expected to positively impact performance in the upcoming quarter [4]. - The company’s digital-first approach aims to better serve customers and expand market share [5]. Holiday Season Performance - For the holiday season, Nordstrom reported a total company net sales increase of 4.9% and a comparable sales increase of 5.8% for the nine-week period ending January 4, 2025, exceeding cautious expectations [6]. - Based on strong holiday shopping performance, Nordstrom has raised its fiscal 2024 sales outlook, indicating stronger revenue performance in the fourth quarter [7]. Fiscal 2024 Revenue Outlook - The company expects revenue growth of 1.5% to 2.5% for fiscal 2024, with Nordstrom Rack projected to grow 7.6% year over year, while Nordstrom banners are expected to decline by 0.9% [8]. - The absence of a 53rd week this year is expected to negatively impact the top line by 135 basis points [8]. Comparable Sales Growth - For fiscal 2024, comparable sales growth is expected to be between 2.5% and 3.5%, an increase from the prior outlook of 1% to 2% growth [9]. Operational Focus - Nordstrom is focused on enhancing customer experience through faster delivery and operational optimization, which are likely to aid fourth-quarter results [10]. Challenges Faced - The company is facing challenges such as competitive pressures, high operating costs, and inflation, which have led to elevated selling, general, and administrative (SG&A) expenses [11]. Stock Performance and Valuation - JWN shares have increased by 10.5% over the past six months, outperforming the broader industry growth of 4% [12]. - The stock is trading at a forward 12-month price-to-earnings ratio of 12.05x, compared to the industry average of 18.32x, indicating an attractive investment opportunity [12].