Why Nordstrom, Inc. (NYSE: JWN) stock is crashing

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Nordstrom, Inc. (NYSE: JWN) stock lost over 11% in the pre-market session on 22nd May, 2019 (Source: Google finance). Their reported sales were below expectations and had “executional misses” with customers. JWN for the first quarter of FY 19 has reported the adjusted earnings per share of 23 cents, missing the analysts’ estimates for the adjusted earnings per share of 42 cents. The company had reported 3.5 percent fall in the adjusted revenue to $3.4 billion in the first quarter of FY 19, missing the analysts’ estimates for revenue of $3.6 billion.

Meanwhile, the company has began to take steps to boost improvement, which includes, resolving executional issues associated with the launch of its enhanced loyalty program, further investing in its digital marketing and re-balancing its merchandise assortment to better align with customer expectations. Further, the Company is tracking ahead of its plans in executing efficiency initiatives to achieve savings in the range of $150 to $200 million for 2019.

Why Nordstrom, Inc. (NYSE: JWN) stock is crashing

The Company is enhancing its local market strategy in its top markets by providing customers with greater access to merchandise selection, with faster delivery and at a lower cost to the Company. In the first quarter of 2019, JWN has delivered outsized growth in digital sales and store traffic in the Los Angeles market. Nordstrom plans to expand its presence in New York City, which is its largest market for online sales. The company is on track to open its flagship on October 24 and two Nordstrom Local neighborhood hubs this fall. These physical assets will increase the engagement with customers across multiple touch points, which is expected to contribute a meaningful sales increase for this market.

JWN’s ‘s top-line results were impacted by three areas, that includes loyalty, digital marketing and merchandise, which had led to declines across its Full-Price and Off-Price businesses, in both stores and online. In Full-Price, net sales fell by 5.1 percent compared with the same period in FY18. Off-Price net sales fell by 0.6 percent. Total company digital sales rose 7 percent and represented 31 percent of the business. Gross profit margin is of 33.5 percent decreased 60 basis points compared with the same period in fiscal 2018.

JWN has cut its net sales forecast for the year 2019 to between down 2% and flat, from the 1% to 2% increase it had been expecting. The company had cited issues with its loyalty program, digital marketing and merchandise.

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