Nordstrom (NYSE:JWN) Reports Q2 In Line With Expectations, Stock Soars

Luxury department store chain Nordstrom (NYSE:JWN) reported results in line with analysts’ expectations in Q2 CY2024, with revenue up 3.2% year on year to $3.89 billion. It made a non-GAAP profit of $0.96 per share, improving from its profit of $0.84 per share in the same quarter last year.

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"Our second quarter results were solid, and we're encouraged by the continued topline strength in both banners and the progress we're making to expand gross margin and increase profitability," said Erik Nordstrom, CEO of Nordstrom,

Known for its exceptional customer service that features a ‘no questions asked’ return policy, Nordstrom (NYSE:JWN) is a high-end department store chain.

Department Store

Department stores emerged in the 19th century to provide customers with a wide variety of merchandise under one roof, offering a convenient and luxurious shopping experience. They played an important role in the history of American retail and urbanization, and prior to department stores, retailers tended to sell narrow specialty and niche items. But what was once new is now old, and department stores are somewhat considered a relic of the past. They are being attacked from multiple angles–stagnant foot traffic at malls where they’ve served as anchors; more nimble off-price and fast-fashion retailers; and e-commerce-first competitors not burdened by large physical footprints.

Sales Growth

Nordstrom is larger than most consumer retail companies and benefits from economies of scale, giving it an edge over its competitors.

As you can see below, the company’s revenue was flat over the last five years as it failed to grow its store footprint meaningfully and observed lower sales at existing, established stores.

This quarter, Nordstrom grew its revenue by 3.2% year on year, and its $3.89 billion in revenue was in line with Wall Street’s estimates. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months, a deceleration from this quarter.

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Same-Store Sales

Nordstrom’s demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 2% year on year. This performance is quite concerning and the company should reconsider its strategy before investing its precious capital into new store buildouts.

In the latest quarter, Nordstrom’s same-store sales rose 1.9% year on year. This growth was a well-appreciated turnaround from the 6.7% year-on-year decline it posted 12 months ago, showing the business is regaining momentum.

Key Takeaways from Nordstrom’s Q2 Results

We were impressed by how significantly Nordstrom blew past analysts’ EPS expectations this quarter. We were also excited it lifted its full-year earnings guidance. Zooming out, we think this "beat-and-raise" quarter featured some important positives. The stock traded up 10.2% to $23.31 immediately after reporting.

Nordstrom may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.