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If you own shares of Nordstrom, Inc. (JWN), I assume you were pretty pleased with the Q4 report. The retailer, whose mall cohorts include The Gap Inc. (GPS) and JCPenney Company, Inc. (JCP), grew the top line by over 10%. Per-share profit increased over 150% to 77 cents. Gross margin expanded, as there was a reduction in the need for markdowns. And, perhaps most awesome of all, same-store sales roared higher by 6.9%.
All of that is great, but here's the thing that is probably inhibiting a big buying response for the stock. According to our earnings preview, Wall Street was expecting a little more on the bottom line. Two pennies more, in fact. Even with all those great stats, management missed projections.
Too bad, huh? Today's trading session could have been a lot better had Nordstrom been able to beat by at least a penny. What's done is done, though.
Another negative element that might be responsible for the slight weakness in the stock today (at the time of this writing, shares were off by less than 0.5%) is the issue of credit card delinquencies, as highlighted by Reuters. That is a legitimate concern.
But I don't believe Nordstrom is in such a bad state. In fact, I like the fiscal year guidance, I approve of management's financial focus on growing cash flow and maintaining a strong balance sheet, the expansion plans seem exciting, and the outlook for same-store sales not only appear doable, but conservative as well (hopefully, anyway).
I wouldn't be in a rush to buy the stock this afternoon. Maybe a cheaper price is in order for purposes of getting a margin of safety. On a fundamental basis, compared to other mall entities, Nordstrom, to me, is solid and full of potential.
Disclosure: I don't own any company mentioned; positions can change without notice.
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