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Nordstrom Plummets After Abysmal Results, Slashing Guidance
If there were any questions if the US consumer was merely "strong" or "quite strong", after the abysmal results from Macy's first, and moments ago, Nordstrom, they should all be safely swept away now.
Any time a company starts its press release with a blatant mea culpa... run. Like in the case of Nordstrom: "The Company's third quarter performance was below Company expectations, reflecting softer sales trends that were generally consistent across channels and merchandise categories."
What happened was ugly: the company reported revenue of $3.24 billion, a miss to the $3.38 billion expected, and EPS of $0.42, nearly 50% below the expected $72. Q3 EBIT likewise crashed from $262 million to $151 Y/Y, as comp store sales of 0.9% were massively below the 3.6% expected.
Amusingly the retailers are unable to keep their lies straight - on one hand you have Macy's blame the warm weather for plunging sales, and here you have JWN saying costs were among its best sellers: "Nordstrom comparable sales, which consist of full-line stores and Nordstrom.com, increased 0.3 percent. The top-performing merchandise category was Cosmetics. In addition, coats, younger customer-focused departments and dresses continued to reflect strength in Women's Apparel."
Considering we already mocked the "it's the weather" bullshit, there is little we can add.
Where things get really bad though, is when looking at the acceleration in markdowns and the surge in inventory:
Gross profit of $1.1 billion, or 33.9 percent of net sales, decreased 163 basis points compared with the same period in fiscal 2014, primarily due to higher markdowns in addition to the planned impact of higher occupancy costs related to store growth and the increased mix of Nordstrom Rack. Ending inventory increase of 8.0 percent...
But wait, there's more because just before the abysmal earnings report the Company paid a special cash dividend of $900 million, or $4.85 per share of outstanding common stock on October 27. Better to do that when the stock is higher rather then lower, eh?
It gets better: "the Company expects to initiate share repurchase for the remaining net proceeds beginning in the fourth quarter.... . For fiscal 2016, the Company estimates the net financial impact, including the share repurchase impact, to be approximately neutral to earnings per diluted share."
And the punchline:
On October 1, 2015, Nordstrom's board of directors authorized an additional $1.0 billion share repurchase program. During the third quarter, the Company repurchased 3.5 million shares of its common stock for $250 million. A total of $1,486 million remains available under its existing share repurchase board authorizations. The actual number, price, manner and timing of future share repurchases, if any, will be subject to market and economic conditions and applicable Securities and Exchange Commission
And to think it could have waited just a few weeks and gotten 15% more for its money consiering the absolutely collapse in JWN stock after hours.
... but no, its management team had to go ahead and buyback half a billion of its shares in 2015 at an average price of $72, a -26% return that is even worse than that of Bill Ackman.
Finally, and not unexpectedly, JWN slashed its outlook across the board confirming just how "strong" the US economy really is.
Three weeks ago we asked a simple question.
https://twitter.com/zerohedge/status/658427632284008448?lang=en
We now have the answer.
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Didnt they just tank the other day on Q3 earnings. Oh wait. That was Macy's.
Same store, different name.
"God damn it, an entire generation pumping gas, waiting tables; slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don't need. We're the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our Great War's a spiritual war... our Great Depression is our lives. We've all been raised on television to believe that one day we'd all be millionaires, and movie gods, and rock stars. But we won't. And we're slowly learning that fact. And we're very, very pissed off."
Tyler Durden
Oh we'll all be millionaires alright... even trillionaires... but you'll just have to patiently wait a little longer.
Ahem... you rang?
ZH seems to have super-power ability to see things coming a mile away and predict the outcome.
I don't have the super-power of predictability...but I have this strange feeling that one day some corp-gov-scum are going to say something really fucked up about ZH like accusing ZH of actually being the "cause" of stocks crashing because of their evil super-powers. Then they'll try to shut the whole website down.
Just a hunch...hope I'm wrong. But corp-gov-scum do seem to be fairly predictable in always blaming everything and everyone else but themselves for their failures.
There must be alot of that money "sitting on the sidelines."
" Change you can believe in! "
That would be sad if it happened though I could see the .gov weaving the narrative right now.
I remember back in the early days with Marla and ZH radio....good times...
Zimbabwe?????
Great catch, great throw, Alaric Balth.
You know it's bad when the women quit shopping.
They never stop shopping. But it's bad when they stop buying.
Soon they will be fucking again, fucking for food
But they still will not be fucking...you.
(That was just too much of an invitation. It is like wearing a sign that says "Kick me".)
Many are already doing just that....fucking for food. Those are just married whores.
Thats why cosmetics is performing well.
When the going gets tough, the tough go shoplifting. Retail 'shrinkage' will get worse as they keep 'shopping', but not paying.
Most shrinkage is from underpaid employees
Servicing student loan debt is competing with making credit card payments.
Plummeting retail, oil stacking up offshore, bullshit jobs numbers. I think this tune is starting to rhyme with the one from 2008.
dont worry kids....hillary is going to wipe all that student debt off the books and leave you free and clear to get the iPhone 7 before anyone else.
love,
Aunt Janet and her magic checkbook
don't worry about the nordstrom clan
Butt slammed ... Again it must be the warm weather .
That's what they get for delaying Christmas until after Thanksgiving.
The West needs two commercial holidays per month to meet sales expeectations
don't forget the weather
We could add a second Christmas ..
https://youtu.be/KQt9pBSYY5Y
Keep Dec. 25 for the Immaculate Conception ..
BTW, Jesus did celebrate Hanukkah. Why cannot all the rest of his followers?
The masses were driven into consumerism as the new religion - people have no real faith in anything anymore and have a feeling of hopelessness. Humans are instinctively machines of hope - yet now there is an epidemic of depression/anxiety brought about by a loss of hope and spirituality. We have lost our way as to what it really means to be a compassionate humble race.
In a way it is funny because dumb white American males worship their Trayvon thug and rapist ball players. NCAA, NFL, NBA cheering them on like little girls.
Even the idiots at University of Mizzou cheer on their Trayvon thugs while cheering on white genocide. The rest of the US population is even dumber.
Apparently assaults and rapes at Uni of Mizzou by there Trayvon players are among the highest in all of college. only exceeded by Florida State which had a rapist quarterback who also had other scrapes with the law. The white girly fano bois threatened any of the girls calling out these rapists and thugs. Pathetic.
Some sociologist said that we were the first generation in human history that didn't believe in the concept of utopia (like it's a bad thing).
Well... nothing a few meds couldn't help. Long drugs!
Bah humbug !!!
Trying to recall the last time I was in a Nordstrom's...oh yeah, now I remember:
NEVER.
That makes three of us, my wife said the same .
Being from the NW, I have been in them many times. They are nice stores but everything is expensive.
The store in Vancouver, WA where my brother lives shut down this past year, and Nordstroms rarely shuts any of their stores.
An omen of things to come?
remember when NORDSTROM and MACY'S (Nee Bon Marche) used to have double page ads in the centerfold of section A of the daily paper. Not any more
They should have brought a line of stuff with smith and Wesson on it . Be all the rage soon
If Macy's or Nordstrom opened a gun counter in their stores you can bet it would be a big booster....
The fed of course has kept rates too long again, now they'll be raising rates in weakness causing a crisis again. It's almost as if they plan it that way. But they wouldn't do that now would they?
Now that Mr. Depression Bernanke is gone, they don't remember that's exactly what they did in 1937. It did not work well.
This is the plan. The Fed has the button, raising rates at a time when they feel is best. Not best for the economy or Average Joe, but at a time when most of the haves are secure somewhere and most of the have-nots are blind to what is taking place.
It's all about the power of raising rates 0.25%, of all things. So fragile that the propaganda machine is working so hard it's smoking. It's all about he timing of the event they are about to initiate now.
Macy's and Nordstrom's target demographic are middle class to upper middle class. This is where people go to get professional work clothes or kitchen gadgets - but with the loss of professional jobs not many people need a tie and jacket anymore. This is also a place where couples register for their wedding registry and buy furnishings. But with new household formation at an all time low, few are getting married or furnishing the new house.
This is a sign of the times that the american middle class is being hollowed out. With it our consumer economy. Young adults are stalled in their lives - saddled with debt and houses are unaffordable, and there are no jobs anyway.
http://www.zerohedge.com/news/2014-08-21/30-facts-prove-american-middle-...
http://www.thegatewaypundit.com/2015/01/worst-president-ever-obamas-lega...
http://www.washingtontimes.com/news/2013/jul/29/obama-aiming-to-destroy-...
DW, exactly on point. For example, over 200,000 solid paying jobs have been lost in the energy sector alone. Jobless middle and upper class people do not buy a new shirt, sweater, etc.
Most educated Americans in are in "survival mode" and saving every penny to pay their mortgage, feeding their families and working on their kids education so they sind up in a place like MizzU.
I think you mean so they "don't wind up in a place like MizzU."
Right?
Restate that: . . .Nordstrom's target demo are middle and upper middle class women. Hey, lady! The moar you spend, the moar you save!
Plus tons of them are turning lezbo so they're more likely to shop at Dick's Sporting Goods!
The "she-conomy" is rolling over big time, just as it has at the onset of every recession since the early 1980s.
Top 10% females' spending represents at least 35% of GDP, and the top 20% nearly 50% of GDP. If the top 10-20% of women are increasing their spending (SBUX, EL, RL, WSM, WFM, COH, TIF, MOV, PNRA, ETH, BBBY, etc.) 5-6%/year (the average salary/income gains of the top 10-20% for the past 30-40 years), the economy grows ~4.25-5% nominal.
If the top 10-20% women merely slow their growth of spending to 3-3.5%/year, the economy decelerates to "stall speed" and then recession.
This is what has been happening since late 2014 to earlier this year.
What is keeping real final sales from rolling over into outright recession is the spike in ACA-induced "health" care spending (Medicaid) and the persistence of subprime-driven auto sales and extension of loan terms from 3-4 year to 5-7 years.
But the top 10-20% of women are not increasing their spending on "health" care and autos, which results in an air pocket for consumer spending once the accelerating growth of "health" care and subprime auto loans decelerates, which began in Mar-Aug this year.
We're in recession, but, like winter-spring 2008 and spring-summer 2001, we don't yet realize it.
AC/DC: "Flick of the Switch".
Prepare for business leaders saying that someone just "flicked the switch", when the leading signals were apparent since Q3-Q4 2014.
Duke's CFO Survey clearly indicates the cyclical regime flick of the switch having occurred this past spring-summer.
The Fed raising rates here is like when the Fed increased reserve requirements and the Treasury "sterilized" gold in 1937; the Fed raised the discount rate in 1931 to protect the US$ and stem gold outflows after sterling was devalued 24% after the collapse of Creditanstalt; and when monetary gold constraints coincided with bank failures and bank runs in the 1890s.
Rather than the Fed raising rates and restricting reserves, prepare for Auntie Janet to inject more venom of ZIRP, and eventually NIRP.
The middle class is shifting from buying at Macy and Nordstrom to WalMart and JCPenny. The lower class is shifting to buy at the Dollar store. The poor rummage through dumpsters.
The rich still shop at Neiman Marcus.
http://www.marketwatch.com/story/neiman-marcus-reports-q4-net-loss-of-32...
Dollar Tree Swings to a Loss After Deal for Family Dollarhttp://www.wsj.com/articles/dollar-tree-swings-to-a-loss-though-sales-so...
However, Dumpster, Inc seems to have a bright future with Q4 surely to beat estmiates!
I will buy me some calls on them there Dumpster stocks!
Cue up Jim Cramer's truck backing up sound effect, "Beep, Beep, Beep, Boo-YAH!"
Sub 30 previously middle class and educated are buying used, going to thrift stores or going without.
When and if all this changes, who really needs a crystal vase or $500 blender used twice?
ahem, its pronounced needless markup.
This is unlike Nordstrom to shoot itself in the foot with ill-timed buy-backs. They have a pretty strong brand in the NW with customer service. My wife takes her employees to Nordstrom once a year, hands each a $100 and says see you in an hour, and I want a report on what you learned about customer service. Had I not been familiar with the brand, I probably would have run screaming from any upscale retailer in 2009 .. .when JWN traded at about $12.
Obama, what a recovery!!
" If you want to keep your recovery, you can keep your recovery. "
People don't want to overpay for styleless clothes made in China and Vietnam. They can get that sh*t at ROSS
The formerly upper middle class has moved to Kohl's. The formerly middle class has moved to Walmart. The rest are fucked except our dear elite
Forward
used to tease my sister for shopping at ROSS dress for less' while driving a beamer
I am glad to know it is the weather and what-not affecting "consumers", and not the increase in ACA - Health insurance premiums and the like.
No, the cost of that can't POSSIBLY have ANYTHING to do with this at all.
In defense of Nordstrom, many moons ago I was traveling through asia and my watch got stolen at a train station. It was a cheap timex that looked expensive. On a stopever at Seoul airport I bought another timex and 24 hours later when I arrived in the US it started running slow. I looked online and it was a unique model and only nordstrom sold it in america. I went along to nordstrom and asked the salesperson where I could get it repaired and she just gave me a replacement and sent mine back to Timex. The next time I went shopping for shoes and a jacket I went back there and paid the extra dough.
40+ years ago, before the modern MBA micro economics mentality started to screw the world's economies, low to middle class workers used to be proud to earn extra money and pay extra for better service or products. Then came cheap copies that looked like the real thing but didn't work like them. Now everything is made in china and the copies are the actual goods from the same factories. The modern MBA asserted that offshoring jobs would boost a companiy's profits and was therefore good but it was at the expense of the broader country's economy. Reality is finally catching up.
Outsourcing started long before "modern MBA's."
That's true BobbyR and it wasn't necessarily a bad thing. But in order to cater for the changes thrust upon the economy since the early 70s (emphasis on productivity, re-engineering, change management and large scale outsourcing) the make up of the population and work force also needed to change. By encouraging population growth and cheap immigrants at the same time as jobs were disappearing en masse, we are left with massive unemployment. Anyway I wasn't trying to write a mini thesis, more just making a point.
Ya' can't continue consumin' if ya' ain't producin'! - Jethro Bodine
Here are some signs of a coming recession.
1. Business loans for M&A not CAPEX.
http://www.zerohedge.com/news/2015-10-15/there-goes-final-pillar-us-recovery-loan-growth-paradox-explained
2. Factory orders continue to drop
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
3. Default risk spikes
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
4. M&A set record
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
5. Fed sees 2 bubbles
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
o Commercial Property higher than pre-2007 level.
http://nreionline.com/finance-investment/cre-prices-are-now-officially-above-pre-recession-peak
o Global Corporate Debt Market hits $5 trillion.
http://fn.dealogic.com/fn/DCMRank.htm
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!