Earnings Preview: Nordstrom

Nordstrom (JWN) is expected to report Q2 earnings after market close Thursday, August 14, with a conference call scheduled for 4:30 p.m. ET.

Guidance

Analysts are looking for a profit of 64c on revenue of $2.32B. The consensus range is 60c to 65c for EPS, and revenue of $2.27B to $2.39B, according to First Call. In May, Nordstrom forecast FY08 EPS $2.65 to $2.80, down from a previously forecast range of $2.75 to $2.90, vs. First Call consensus of $2.68. On August 7, Nordstrom reported July same-store sales were down 6.1% vs. consensus of down 6.2% and preliminary sales of $840M for the four weeks ended August 2. Preliminary Q2 sales were $2.29B, down 4.3% from Q207; Q2 SSS decreased 6%.

Analyst Views

Analyst Dan Geiman of McAdams Wright Ragen said that sales during this year's July anniversary sale event were in line with expectations, and represented a small improvement from recent trends, according to management. While Geiman generally views this as a positive, he believes that the broader macro trends remain under pressure. Between the faltering economy, soaring food and gas prices, limited credit, slumping home prices and worries about jobs, shoppers remain unnerved and have cut back spending on discretionary items. Instead of spending at department stores, consumers are flocking to wholesale clubs and discount apparel chains.

In May, Nordstrom began testing a new buy-online pick-up-in-store option for certain departments and will look to offer the service for all of its merchandise by September, which Forrester Research analyst Brian Walker believes can drive revenue. Next event: Nordstrom is expected to release its August sales on September 4.

Comments

[MyHaberdasher:]

My tailor who also works at Nordstrom’s in Downtown Seattle (their flagship store) had told me earlier in the summer that sales were strong at that store but lagging in others. Recently he told me that sales were starting to lag a bit downtown as well. Hopefully they will continue to have boosts during the Anniversary and other sales.

On my retail front, custom clothing is still selling well, however more so in the opening price points than before. Custom suits used to average $1,500 to $1,600 just months ago while customers are now inclined to purchase in the $1,000 to $1,100 range.

Consumers are currently more concerned with value than luxury. It's less a matter of 'what I want' and more 'what do I need.' In a slower economy, with fewer clients to pursue, business professionals must use every advantage they can to win over new & existing customers. Their personal appearance and that of their employees (see my site for corporate logo wear) must be at its best. If you look successful then you will instill confidence in your clients about your service and products. On the flip side, if you look broke, if you look like you really NEED the business, you are not as likely to get it. You have to dress the part if you want the lead role.

The value in custom clothing is that it leaves nothing to chance. The fit is perfect, the style is your own and if you can find it at the right price you will earn dividends because of how you are perceived by clients and prospects.

My Best,

Jeff Collins
Professional Haberdasher
www.MyHaberdasher.com

2008 Aug 13 06:08 PM