Britain's top clothes seller Next lifts profit guidance again

Nordstrom, Inc. JWN has been making smart moves to enrich consumers’ experience. The company is focused on driving Nordstrom banner growth, optimizing operations and building momentum at the Rack banner. Its digital moves are also quite impressive.

In addition, the company’s long-term targets, which build on its market strategy to capitalize on its digital-first platform to better serve customers, gain market share and deliver profitable growth, bode well.

Let’s delve deeper.

JWN’s Strategic Endeavors Bode Well

We note that the Rack banner is on track to increase productivity throughout its network, lower transportation costs, reduce delivery times and enhance services via faster delivery. The company looks forward to introducing more premium brands and better assortment at Rack and increasing brand awareness. It introduced five Rack stores in the second quarter of fiscal 2024, bringing its year-to-date total to 11. Going ahead, it intends to roll out to more markets. Management intends to open 12 more Rack stores this year before the holiday season.

Nordstrom’s active, women's apparel, beauty and kids categories have been performing well. The active category was a top performer for the sixth straight time in the reported quarter. Active experienced growth, with sales rising double digits. Growth in women's apparel was led by contemporary styles with strength in dresses and knit tops. In the Nordstrom banner, well-known brands like Vince, Syncoset and Free People were robust. The kids category has also been performing well, with baby gear being a key contributor.

Nordstrom has been making efforts to enhance customer experience through faster delivery, particularly during the anniversary sale. The supply-chain optimization is delivering significant customer benefits and operational efficiencies. JWN remains focused on operational optimization. It continues seeking additional efficiencies in flow and improved productivity through inventory management initiatives.

The company has been making efforts to drive efficiency and improve customer experience via faster order fulfillment. It is on track to reduce inventory and optimize product mix. Nordstrom looks forward to enhancing customer experience, improving the Nordstrom Rack performance, increasing inventory productivity and progressing on its supply-chain optimization initiatives. Management is confident about the strength of its brands and ability to drive profitable growth and deliver long-term value to shareholders.

Nordstrom’s Digital Efforts Seem Robust

Digital momentum continued during the fiscal second quarter, with sales growth of 6% year over year. Growth at nordstrom.com was backed by an increase in the assortment across a balance of price points, improvements in search and discovery and high in-stock rates of its fastest-turning items. The company has launched its marketplace and added more than 15,000 items to the digital offering of roughly 100 new brands.

The Rack banner's digital channel is a differentiator to the off-price retail, allowing customers to shop when and how they want. The company has been expanding its merchandise offering of brands at reasonable prices along with a focus on in-stock rates. Further, its private brands posted mid-single-digit growth during the anniversary sale with the Nordstrom brand and Zella being the top volume brands of the event.

What’s More for Nordstrom?

Buoyed by the aforesaid initiatives, shares of this Zacks Rank #1 (Strong Buy) company have gained 28.4% over the past six months against the industry’s 4.7% decline.

Recently, a special committee of the board of directors said that it had received a proposal from Erik and Pete Nordstrom, members of the Nordstrom family, along with El Puerto de Liverpool, to buy the entire outstanding shares of the company, except shares held by them. This $3.8-billion buyout offer looks to take the fashion retailer private. It is yet to be seen whether Nordstrom will accept this buyout proposal in the future.

JWN stock is performing well on the bourses and is a smart investment option now.

Other Key Picks

We have highlighted three other top-ranked stocks, namely Boot Barn BOOT, Abercombie ANF and Deckers DECK.

Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company has a trailing four-quarter earnings surprise of 7.1%, on average.

The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and earnings per share indicates growth of 10.7% and 8.9%, respectively, from the year-ago figures.

Abercrombie, a leading casual apparel retailer, currently sports a Zacks Rank of 1. ANF delivered an earnings surprise of 28.9% in the last reported quarter.

The Zacks Consensus Estimate for Abercrombie’s current financial-year sales indicates growth of 11.5% from the year-ago figure.

Deckers, a footwear and accessories dealer, currently carries a Zacks Rank #2 (Buy). DECK delivered an average earnings surprise of 47.2% in the trailing four quarters.

The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 11.5% from the year-ago figure.

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