Nordstrom Announces Huge Same Stores Sales Decline – Stock Rallies In The After Hours

May 15, 2008 at 2:14 pm  ·  Category: Macro Economics, Stocks

This is just getting dumb. 

Nordstrom (JWN) announced after the close 1st quarter EPS of 54 cents a share on a 6.5% same store sales declineNet income declined by 24%

After a long string of impressive same store sales increases, Nordstrom’s same store sales turned negative in the Jan08 quarter and were just crushed this quarter (Nordstrom Same Store Sales Chart).  Their forecast for the current quarter (Jul08) is for -5% to -7% same store sales (JWN Earnings Release).

The stock is up 3% in the after hours – I guess because they beat analyst estimates for 49 cents EPS.

What can I say?  This is not a good report.  But it doesn’t matter – for now.

Disclosure: Top Gun has no position in Nordstrom (JWN) shares.

Posted by Greg Feirman  ·  Trackback URL  ·  Link
No Responses to “Nordstrom Announces Huge Same Stores Sales Decline – Stock Rallies In The After Hours”
  • Hi Greg,

    I think that what you are seeing is a bit of elction year politcs at work coupled with people’s wishful hope that the worst is over/behind us. Most Wall Streeters cannot look forward to an Obama admin. due to his clear message on taxes and possible regulatory increases. An analyst i respect authored an article today “envisioning” the case for domestic stocks rebounding due to the contraction of worldwide commodity pricing because of a weakening global demand coupled with a drop in interest rates over in Europe………whatever the rationale, most of us want the financial markets to do well regardless of the underlying realities………. who needs realities when fantasy suits our needs much better?
    If in fact there are billions on the sidleines, this could go for a while…….gold is up to 880, after touching 850 a couple of days ago…………….it is crazy ou there!

    Can this surge (see surges do work) be sustained until November? I doubt it!!


    Joe  ·  May 15, 2008 at 10:41 pm  ·  Permalink
  • Joe,

    It’s a lot more straightforward then that. People believe the bottom is in. They believe a shallow and short lived recession is what we are going to have – and that that was priced in at the January and March lows. And so they believe that stocks represent good value here and therefore you put money to work.

    It doesn’t have anything to do with the election.

    A drop in commodity prices would actually just scare people because it would be interpreted, rightly, as a decrease in demand for raw materials as a consequence of a global economic slowdown. I’m sure his argument is that it would reduce costs for companies and gas prices for consumers and so help profit margins. But, really, a drop in commodity prices would almost certainly be correlated with a drop in stock prices.

    The thing you have to realize is this kind of thing happens all the time. In bull markets, people get scared that it’s over and stocks sell off for awhile before recovering. There were a number of major corrections during the 2003-2007 bull. And same for the 2000-2002 bear. As we saw from Tim Knight’s excellent post, there were a number of bear market ralliess that had many prematurely believing the bear was over.

    The key thing to realize is that this rally still hasn’t done enough to be thoroughly convincing. We’re up 160 points off the lows – 1260 to 1420. But we’re still 155 points from the highs (1575 intraday, October 11). So we’ve really only retraced half of the decline.

    Volume has been notably weak this entire rally as many technicians point out.

    Further, the fundamentals continue to be terrible – as this post on Nordstrom’s results clearly demonstrates.

    Put together the still much to be proven character of this rally with the underlying reality of a bad economic fundamentals, and it suggests to me it won’t last.

    When it will end I don’t know. But it feels like its running out of gas already.

    Greg Feirman  ·  May 16, 2008 at 2:57 am  ·  Permalink

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