Nordstrom’s Luxury Bet Works

May 25, 2022

Today is Wednesday, May 25, 2022.

New to this newsletter? Sign up here

Nordstrom’s Luxury Bet Works

Shares of Nordstrom (NYSE: JWN) jumped 9.43% in after-hours trading on Tuesday after the luxury department store chain posted mixed financial earnings.

Financials: Nordstrom reported a loss of 6 cents per share, which was below estimates. But its revenue of $3.47 billion was better than expected.

Sales Growth: Gross profit increased 32.8% and net sales grew 18.7% in the quarter. Nordstrom attributed the growth to leverage on buying and occupancy costs plus improved merchandize margins through lower markdown rates. In other words, there’s still strong a market for luxury clothing.

Quote: “We are committed to driving additional merchandise margin improvement and increasing supply chain productivity, to deliver incremental profitability while continuing to elevate the customer experience." - Pete Nordstrom, president and chief brand officer of Nordstrom.

Background: It’s been a rough few weeks for retail stocks, with many players in retail posting negative earnings. Nordstrom bucked the trend with strong sales. The company also raised its guidance.

Numbers: Over the past 12 months, shares of Nordstrom are down 43%.

Final Thoughts: Nordstrom still has to work through some areas, including trying to improve digital sales, but it is on the right path so far.

Notables

Notable Earnings Today: Nvidia (Nasdaq: NVDA), Dick's Sporting Goods (NYSE: DKS), Express (NYSE: EXPR), Snowflake (NYSE: SNOW), SuperGroup (NYSE: SGHC), Splunk (Nasdaq: SPLK), Bank of Nova Scotia (NYSE: BNS), Box (NYSE: BOX), Williams-Sonoma (NYSE: WSM), Nutanix (Nasdaq: NTNX), MakeMyTrip (Nasdaq: MMYT), DXC Technology (NYSE: DXC), Columbus McKinnon (Nasdaq: CMCO), AMERCO (Nasdaq: UHAL), Safe Bulkers (NYSE: SB), Photronics (Nasdaq: PLAB), EnerSys (NYSE: ENS), Dycom Industries (NYSE: DY), Modine Manufacturing (NYSE: MOD), ViaSat (Nasdaq: VSAT), ZTO Express (NYSE: ZTO).

Notable IPOs Today: Brenmiller Energy Ltd Ordinary Shares (Nasdaq: BNRG).

Notable Equity Crowdfunding Campaigns Ending Today: flashpub.io (PicMii).

Notable Economic Events Today: Core Durable Goods Orders (8:30 a.m. ET), Crude Oil Inventories (10:30 a.m. ET), FOMC Meeting Minutes (2:00 p.m. ET).

Wendy's Might Be Acquired

Photo by Batu Gezer / Unsplash

Shares of Wendy's (Nasdaq: WEN) jumped 14.32% in after-hours trading on Tuesday due to a potential private equity deal.

Details: In a filing Tuesday, hedge fund Trian Partners, which is Wendy’s largest shareholder, wrote that it wants to “enhance shareholder value” through a deal such as an acquisition or a merger.

Response: Wendy’s said Tuesday that its board “will carefully review any proposal submitted by Trian Partners.”

Final Thoughts: The stock is down 31% so far this year, but it is also a potential value stock as well.

Why the 2022 Stock Market Selloff Isn’t That Bad

Yes, stocks are down in 2022, but it’s not the end of the world.

Natural: If you look back at history, it is natural and healthy for stocks to occasionally decrease.

Buying Opportunity: Lower stock prices can help investors buy shares at a discount.

Final Thoughts: While some investors are lamenting a stock market crash in 2022, it’s not all doom and gloom.

Trends to Watch

It Must Have Been a Great Tax Season: Intuit Shares Gain as Earnings and Outlook Top Street Estimates (Barron’s)

Thank you for reading!

Forward to a friend and tell them to sign up here.

Want more investing tips? Listen to the podcast.

Questions or comments? Hit reply to reach out.