Insiders Are Selling Nordstrom

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 |  About: Nordstrom Inc. (JWN), Includes: DDS, KSS, M
by: Markus Aarnio

In this article, I will feature one apparel store that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Nordstrom (NYSE:JWN), a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States.

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Insider selling during the last 30 days

Here is a table of Nordstrom's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Tricia Smith EVP Oct 1 6,439 Yes 2,599 shares + 7,240 options 39.6%
Margaret Myers EVP Sep 18 8,670 No 23,608 shares 26.9%
Delena Sunday EVP Sep 16 30,576 Yes 40,262 shares + 14,215 options 35.9%
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There have been 45,685 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Nordstrom's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
October 2013 6,439 0
September 2013 39,246 0
August 2013 0 0
July 2013 129,261 0
June 2013 49,603 0
May 2013 191,494 0
April 2013 0 0
March 2013 24,965 0
February 2013 0 0
January 2013 0 0
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There have been 441,008 shares sold and there have been zero shares purchased by insiders this year.

Financials

Nordstrom reported the second-quarter financial results on August 15 with the following highlights:

Revenue $3.1 billion
Net income $184 million
Cash $1.1 billion
Debt $3.1 billion
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Outlook

On August 15 Nordstrom reduced its full-year earnings per diluted share outlook to $3.60 to $3.70 compared to its prior outlook of $3.65 to $3.80. This reflects full-year same-store sales expectations of 2 to 3 percent compared to its prior outlook of 3 to 5 percent.

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Competition

Nordstrom's competitors include Kohl's (NYSE:KSS), Macy's (NYSE:M) and Dillard's (NYSE:DDS). Here is a table comparing these companies.

Company DDS JWN KSS M
Market Cap: 3.51B 11.08B 11.17B 16.04B
Employees: 27,740 61,000 30,000 175,700
Qtrly Rev Growth (yoy): -0.01 0.06 0.02 -0.01
Revenue: 6.75B 12.46B 19.32B 27.88B
Gross Margin: 0.37 0.37 0.36 0.40
EBITDA: 832.73M 1.80B 2.74B 3.73B
Operating Margin: 0.08 0.11 0.10 0.10
Net Income: 363.66M 759.00M 970.00M 1.37B
EPS: 7.69 3.79 4.28 3.46
P/E: 9.98 15.01 12.02 12.34
PEG (5 yr expected): 1.91 1.39 1.88 0.92
P/S: 0.52 0.89 0.58 0.58
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Nordstrom has the highest P/S ratio among these four companies, which could explain some of the insider selling.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
M 7,125 1,569,559
KSS 5,068 582,764
DDS 0 58,464
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Only Nordstrom has seen intensive insider selling during the past 30 days.

Conclusion

There have been three different insiders selling Nordstrom and there have not been any insiders buying Nordstrom during the past 30 days. All three of these insiders decreased their holdings by more than 10%. Nordstrom has an insider ownership of 3.60%.

Nordstrom is trading at a P/E ratio of 15.01 and a forward P/E ratio of 13.79. Nordstrom has a book value of $10.39 per share and the stock has a dividend yield of 2.11%.

Nordstrom has a $48 price target from the Point and Figure chart. I believe there is an opportunity for a short entry with the $48 price target. I would place a stop loss at $63, which is the all-time high. The two main reasons for the proposed short entry are bearish Point and Figure chart and the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in JWN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.