Nordstrom stock rises on earnings, full-year guidance

Nordstrom shares opened higher after the retailer reported better-than-expected first quarter results. Yahoo Finance Live's Brad Smith and Diane King Hall breaks down what the results tell us about the consumer.

Video transcript

- Another stock we're looking at today, Nordstrom. Shares jumping about 8.5% after the retailer delivered better than expected, first quarter earnings and sales expectations. Nordstrom managed to cut costs and improve its inventory for the quarter. So again, it's basically about cuts because they did overall post a loss of 205 million. So down obviously from a year ago. But again, better than expected.

I wonder, though, if the bar was lower? We've talked about that with some retailers. Then previously said-- I mean, look, Nordstrom trying to grow and recover some ground because they weren't one of the big beneficiaries during the pandemic of all that stimulus spending, that happened. So they've come back from that. They're still struggling with some sluggish sales and even with their credit card as well.

BRAD SMITH: Across some of the key call outs here; Banner net sales down 11.4%, gross merchandise volume down 11.8% during the quarter. And then the net sales here, this is where it gets interesting. You think about Nordstrom Rack and the position that that has within this portfolio of brands or at least operations for Nordstrom, that was also down by 11.9%. Often seen as the discount play for Nordstrom to really cozy up to consumers across income levels for Nordstrom. You even saw declines in that during the quarter.

And they're continuing to try and point towards some of the key priorities that they're moving forward with, one of which, they're trying to increase their penetration of strategic brands in this merchandise mix. And you've heard about mix shifts over the course of this earnings season, especially from some of the retail players here.

But for Nordstrom, you've got to wonder for the environment of apparel purchases that consumers are making right now, how much that continues to have an outsized impact on the company and shares of JWN, even if the company is saying that they're pleased with the progress that they're making against those key priorities? The broader question is whether or not the street is too as we can continue to track them moving the equity?

- Look, they are being rewarded today for that beat. And they join some of the retailers who actually did perform better than expected like Kohl's, like Gap, which surprisingly performed better than expected. So it's interesting to see that.

And it does remind me of-- I know we're not in a recession, but there has been talk of a recession coming where you had the edges like whether it's the luxury retailer to the down market like a Walmart perform better in the grand scheme of things than those in the middle like a Macy's.

BRAD SMITH: One of the bright spots here, the gross profit for Nordstrom as a percentage of net sales, it was about 33.8%. That increased actually, compared with the same period a year ago. So that particularly coming back to, at least they're calling out, increasing inventory productivity there for Nordstrom.