Nordstrom’s Stock Price Rose 20% This Year

Finally, after the closing of the New York Stock Market on the afternoon of the 2nd (local time), Nordstrom announced the results of the 2020 fiscal year (February 2020 to January 2021).

Nordstrom‘s performance slightly exceeded the market forecast on this day. However, the delay in delivery due to inventory issues has disappointed investors, and the stock price is falling by about 3% over time. Nordstrom said on the day that “there are a lot of products that are irrelevant to the season in stock in question.”

Based on financial information provider Refinitiv, earnings per share for the fourth quarter of last year recorded 21 cents, 7 cents higher than the forecast. Sales were $3.65 billion, $50 million higher than forecast.

Nordstrom, who was hit by a direct pandemic, recorded its worst performance in the first half of last year. The recent decline in sales has been slightly improving.

The decline rates in the first and second quarters of last year were -40% and -53%, respectively, and in the third and fourth quarters, they recorded -16% and -20%, respectively. As you can see from the Macy’s case, you can see that the performance of these luxury department stores is gradually closing.

This earnings recovery is already showing up in the stock price. The stock price, which was only $12 until the beginning of November of last year, has tripled in four months to $37.58 on the 2nd. Unlike companies that have overcome the pandemic, which have recovered since March last year, the stock prices of traditional distribution channels such as Macy’s and Nordstrom have in common that they have soared since the end of last year.

Even this year, Nordstrom’s share price rose 20.4%. Whenever the U.S. Treasury bond rate fluctuates recently, economic cycle stocks are attracting attention. In this respect, it seems necessary to carefully look at Nordstrom’s stock price.

Nordstrom‘s annual sales were $1.75 billion, 61.8% of Macy’s sales ($17.3 billion). Annual sales decreased by 32% compared to the previous year. It was a little bigger than the Macy’s annual sales decline (-27.9%). Ann Bramman, CFO of Nordstrom, predicted that “fiscal year 2021 sales will grow by more than 25%” in the earnings presentation.

Nordstrom, which made a net profit of $496 million in fiscal year 2019, lost a net loss of $690 million in fiscal 2020.

The most notable aspect of the performance of traditional distribution channels such as Nordstrom is the change in the proportion of online distribution.

Online sales in the fourth quarter reached about $2 billion, an increase of 24% year-on-year, accounting for 54% of total sales. This is a significant increase compared to 35% a year ago. Compared to Macy’s online sales increase of 21% over the same period, which accounted for 44% of sales, online conversion speed is faster than Macy’s.

This is because Nordstrom‘s separate discount distribution channel, Nordstrom Rack, has been successful online.

Nordstrom Rack is located in major malls in the United States, and there are two stores in Manhattan, near Koreatown, and Union Square, so it is a place that many Koreans visit. Nordstrom department store sells out-of-season goods at low prices. Despite the decline in overall sales, Nordstrom Rack’s online sales growth was remarkable.

 

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