Nordstrom, the upscale apparel and footwear retailer, has exceeded analyst expectations with its projected strong full-year results. As a result, Nordstrom’s shares saw a significant jump of 38% in extended trading. This positive forecast indicates a strong demand for Nordstrom’s products as Americans gradually return to normal life.
One area in which Nordstrom has faced criticism in the past is its underperforming off-price Rack division and inadequate store inventory. However, CEO Erik Nordstrom has addressed these concerns, stating that the company is focusing on improving Nordstrom Rack’s performance, increasing profitability, and optimizing the supply chain and inventory flow.
Investor worries about Nordstrom’s ability to navigate global supply chain disruptions were alleviated by the positive forecast. The company intends to reduce its inventory levels relative to sales in the current quarter, demonstrating a proactive approach to managing its stock.
Furthermore, Nordstrom plans to return cash to shareholders in the first quarter, which highlights its confidence in its financial position. This move is significant considering the company had suspended dividends and share repurchases in 2020 due to pandemic-related challenges.
In terms of financial projections, Nordstrom expects a revenue growth rate between 5% and 7% for fiscal year 2022, exceeding the average analyst forecast of 3.66% growth. Additionally, the company estimates earnings per share, excluding potential share repurchases, to range between $3.15 and $3.50, surpassing the average analyst expectation of $2.01 per share.
Nordstrom’s positive outlook aligns with its larger competitors, Kohl’s Corp and Macy’s Inc, both of which also predict strong sales and profits for 2022.
Overall, Nordstrom’s strong full-year projection and impressive fourth-quarter performance have instilled confidence in investors. The company’s focus on improving operational aspects, along with its ability to adapt to changing market conditions, positions it for continued success in the upscale retail industry.
Useful links:
1. Nordstrom Investor Relations: https://investor.nordstrom.com/
2. Nordstrom Rack: https://www.nordstromrack.com/
