Nordstrom (JWN) Stock Plunges, Earnings Miss, Jim Cramer's View

Nordstrom (JWN) stock is retreating after the company reported disappointing fiscal 2015 third quarter financial results.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Nordstrom (JWN) - Get Report stock is declining 18.15% to $51.95 in early morning trading on Friday after the company reported lower than expected financial results for the fiscal 2015 third quarter.

After the market close on Thursday, the retailer reported earnings of 42 cents per share on revenue of $3.33 billion for the quarter ended October 31.

Analysts had estimated earnings of 72 cents per share on $3.37 billion in revenue for the latest quarter.

Nordstrom lowered its 2015 fiscal year earnings guidance to $3.40 to $3.50, from the previous outlook of $3.70 to $3.80, after the disappointing quarter.

"We think we are either seeing the impact of one of the warmest fall selling seasons in recent history (more likely) or we are teetering on the precipice of a recession," KeyBanc Capital Markets said in an analysts note.

The firm lowered its price target to $70 from $88 on Nordstrom's stock as the company struggles in a difficult quarter for retailers.

Nordstrom's heavy inventory, which increased 8% during the quarter, is expected to weigh on fourth quarter margins, analysts added.

Insight from TheStreet's Rating Team

TheStreet'sJim Cramer, portfolio manager of the Action Alerts PLUS charitable trust portfolio, has this to say about Nordstrom in a post on Real Money:

The Nordstrom quarter was devastating. Clueless. Just disheartening.

It was like listening to the executives of a personal computer company telling you not to worry about cellphones. Or like listening to dinosaurs telling you not to worry about the ice age.

I write those damning things because Nordstrom didn't even seem fazed by what just happened to them. Management simply accepted the fact that there wasn't a lot of traffic at the mall so they didn't do well. They acted like if they somehow put better merchandise in the stores it would solve the problem. They made a point that they got inventories under control so don't be too worried. They opined that they are merchants not economists and that it was all about fashion.

It's not, though. Not at all. It's about relevance. It's about who is going to the mall. Or more important, who isn't.

Now it is true that not all of Nordstrom is doing badly. The places where they offer the most compelling bargains did well, their off price and their web offerings. But basic Nordstrom? Wow, terrible.

What was really odd was that the downturn had nothing to do with the weather. They didn't mention it once. They simply just talked traffic. They even said that for what it was worth, coats did well!

Jim Cramer's "Asleep in Seattle: Nordstrom's Clueless Quarter" was originally published on 11/13/15 on Real Money.

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