Shares of Nordstrom (JWN) slipped in after-hours trading after the retailer reported earnings for its third quarter of Fiscal Year 2024 that was accompanied by a soft outlook. Earnings per share came in at $0.33, which beat analysts’ consensus estimate of $0.22 per share. In addition, sales increased by 4.2% year-over-year, with revenue hitting $3.46 billion. This also beat estimates of $3.34 billion.
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The slight year-over-year growth in revenue makes sense when looking at Nordstrom’s website traffic. As the image below shows, the number of visitors rose slightly during the most recent quarter. In fact, total estimated visits increased by almost 2% when compared to the same quarter of last year. This demonstrates that interest in the company increased during the quarter. It is also worth noting that digital sales made up 34% of total sales in the quarter, unchanged from the previous year.
However, the main driver of sales growth was the firm’s Nordstrom Rack segment, which grew 10.6% year-over-year to $1.27 billion. This compares to the 1.3% growth seen in the regular Nordstrom segment that totaled $2.077 billion.
2024 Outlook
Looking forward, management has provided the following guidance for FY 2024:
- Revenue growth of 0% to 1% versus analysts’ estimates of 0.9%
- Adjusted EPS in the range of $1.75 to $2.05 compared to analysts’ estimates of $1.90
As we can see, the company’s outlook is worse than expected (at the midpoint) when it comes to revenue growth and in line with estimates in terms of adjusted EPS. This likely led to the after-hours move in the stock price.
Is Nordstrom Stock a Buy?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on JWN stock based on eight Holds and three Sells assigned in the past three months. After a 66% rally in its share price over the past year, the average JWN price target of $21.60 per share implies 12% downside risk. However, it’s worth noting that estimates will likely change following today’s earnings report.
