Nordstrom Shares Tumble After Q2 Results, FY22 Outlook Cut

Nordstrom, Inc. JWN reported second-quarter sales growth of 12% year-over-year to $4.09 billion, beating the consensus of $3.95 billion. GMV increased 12.2Y Y/Y; Nordstrom banner net sales increased 14.7%, and GMV increased 14.9% Y/Y.

Digital sales increased 6.3% Y/Y, and Digital sales represented 38% of total sales in Q2.

Adjusted EPS was $0.81, beating the consensus of $0.79.        

The company ended the second quarter with $1.3 billion in available liquidity, including $494 million in cash and the full $800 million available on its revolving line of credit. Ending inventory increased 9.9% Y/Y.

The gross margin expanded by 65 bps to 35.2%. Adjusted EBITDA was $341 million, compared to $290 million in 2Q21, and the margin expanded by 41 bps to 8.5%.

Nordstrom generated cash from operating activities year-to-date of $373 million, compared to $ 545 million a year ago. Free cash flow was $194 million.

The company repurchased 1.5 million shares for $35 million under its $500 million share repurchase program. A total capacity of $465 million remains under the share repurchase authorization.

Erik Nordstrom, chief executive officer of Nordstrom, Inc., commented, "While our quarterly results were consistent with our previous outlook, customer traffic and demand decelerated significantly beginning in late June, predominantly at Nordstrom Rack. We are adjusting our plans and taking action to navigate this dynamic in the short term, including aligning inventory and expenses to recent trends, and we remain confident in our ability to deliver on our long-term strategic and financial goals."

FY22 Outlook, lowered: Nordstrom expects revenue growth of 5% to 7% year-over-year (prior expectations 6% to 8%), EPS of $2.45 to $2.75 (prior $3.38 to $3.68), and Adjusted EPS of $2.30 to $2.60 (prior $3.20 to $3.50), versus consensus of $3.05.

It expects an EBIT margin of 4.5% to 4.9% of sales and an Adjusted EBIT margin of 4.3% to 4.7% of sales. Leverage ratio of Below 2.9 times.

Price Action: JWN shares are trading lower by 13.02% at $20.22 during the post-market session on Tuesday.

Photo via Wikimedia Commons