JWN Stock Gains 7% as Nordstrom Shakes Off Inflation

  • Nordstrom (NYSE:JWN) reported strong earnings and bullish forward guidance that have its stock rising today
  • The company also announced a new deal with sneaker maker Allbirds (NASDAQ:BIRD)
  • Nordstrom’s results go against the trend of U.S. retailers downgrading their outlook this year as economic conditions deteriorate
A Nordstrom (JWN) storefront in Toronto, Canada.
Source: Jonathan Weiss / Shutterstock.com

Nordstrom (NYSE:JWN) stock is up 7% today after the retailer posted better-than-expected financial results and raised its full-year earnings and revenue guidance.

Nordstrom’s earnings and bullish outlook go against the grain of many other retailers, such as Walmart (NYSE:WMT) and Target (NYSE:TGT). In general, retailers are lowering their outlooks amid rising inflation and higher interest rates. Nordstrom’s results indicate that affluent shoppers are continuing to spend despite the current inflationary environment.

Prior to today, JWN stock had fallen 14% this year to trade at $20.68 a share.

What Happened With JWN Stock

Nordstrom said that its net sales rose nearly 20% to $3.57 billion in Q1, above estimates for $3.28 billion. This provided a nice upside surprise in otherwise dismal earnings season for American retailers.

Nordstrom also said that it sees revenue growth, including credit card sales, of 6% to 8% this year. This is a full percentage point higher than its forecast from March 2022. And, Nordstrom raised its forecast for earnings per share (EPS) this year to a range of $3.38 to $3.68.

JWN stock jumped as much as 12% immediately after Nordstrom released its results.

Why It Matters

Nordstrom’s strong results highlight a divide between retailers catering to high-end, wealthy clients and those selling to average consumers. In recent weeks, multiple retailers have cut their expectations for the year as higher costs erode their profit margins and inflation hurts the purchasing power of shoppers.

Dick’s Sporting Goods (NYSE:DKS) became the latest such company to lower its forward guidance. That company’s stock is down 5% today as a result. Dick’s gloomy outlook has added to the negative investor sentiment toward the retail sector.

That Nordstrom is bucking the downward trend is impressive and has its share price rising today as a result. The company also announced that it will become a retail partner of Allbirds (NASDAQ:BIRD). Nordstrom will sell Allbirds products in some stores starting on June 1, with plans to sell its sneakers online later this year. Investors also view the Allbirds deal as a positive.

What’s Next for Nordstrom

JWN stock rises today on strong earnings and a positive outlook. It suggests that the company’s niche catering to wealthy clients is helping it to weather the current economic headwinds. With its latest financial results, Nordstrom has separated itself from the retail pack, and investors and analysts are applauding.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.


Article printed from InvestorPlace Media, https://investorplace.com/2022/05/jwn-stock-gains-7-as-nordstrom-shakes-off-inflation/.

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