Nordstrom’s stock value falters in after-hours trading after lack of Q1 2020 earnings, efficiencies

Investor reaction to Nordströmit is (NYSE: JWN) The Q1 2020 earnings report looks mixed, at least as indicated by after-hours trading, with stock prices swinging rapidly between positive and negative territory. The high-end retailer released its first-quarter results today, revealing a sharp decline in COVID-19-related sales and earnings per share (EPS) and revenue significantly below investor consensus.

The company’s earnings per share missed both GAAP and non-GAAP Wall Street expectations, at -$2.25 and -$0.96, respectively. Analysts expect revenue to be $2.27 billion, which is $150 million more than the $2.12 billion that Nordstrom actually managed to deliver. Just yesterday, investors upped the ante on the company share nearly 15% depending on expectations.

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The quarter got off to a strong start, according to Nordstrom’s earnings release, but sales slumped under the impact of the coronavirus pandemic. Overall, sales were down 40% year over year. Net loss for the quarter was $521 million.

By balancing these negatives, Nordstrom reports that it has increased efficiency, reducing costs and inventory. Inventory is 25% lower, and the company has also reduced overhead costs by 20% and cash burn by 40%. Emphasizing the retailerof the strong liquidity position, CEO Erik Nordstrom also said he “entered the second quarter from a position of strength, which reinforces our confidence that we have sufficient liquidity to successfully execute our strategy in 2020 and longer term”.

The report also notes continued momentum in e-commerce and the “off-price” segment, leading the company to take “proactive steps” to address “the acceleration of these longer-term customer trends.” However, the data also shows that Nordstrom Rack, its off-price chain, lost 45% of sales, compared to just 36% at Nordstrom’s main high-end sites.

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