Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Wal-Mart Stores, Inc. (WMT), Nordstrom, Inc. (JWN), Macy’s, Inc. (M): Three Retail Stocks To Watch This Year

Page 1 of 2

After a turbulent time on Wall Street, analysts, economists, and traders alike have been in need of R&R of late. As fears of tightening monetary policy surface, it doesn’t appear investors will be getting a break anytime soon either. Moreover, the thought that the Federal Reserve may be ending its historically loose policies at a time of poor economic performance has caused pain to the consumer-discretionary sector.

In recent weeks, a number of the largest retailers reported their second-quarter results. For the most part, these results came in below analyst estimations thus exasperating the downside moves within the sector. In this article, I would like to review a few of the notable retail reports while providing guidance for the second half of the year.

Wal-Mart Stores, Inc. (NYSE:WMT)

Big blue
Wal-Mart Stores, Inc. (NYSE:WMT)
reported second-quarter earnings per share of $1.25 excluding items, inline with analyst consensus estimates. However, all eyes were on revenue as a barometer for the company’s growth and strength of the economy. The company reported revenue short of the $118.4 billion analysts were expecting. Wal-Mart Stores, Inc. (NYSE:WMT) generated only $116.9 billion; higher fuel prices and a shaky employment picture caused consumer push-back.

Management doesn’t feel overly exuberant when it comes to the remainder of the year either. Wal-Mart Stores, Inc. (NYSE:WMT) decided it needed to lower its guidance to reflect changes in the economy. Wal-Mart Stores, Inc. (NYSE:WMT) now expects net sales to rise only 2% to 3% for the year, down from the initial projection of a 5%-to-6% increase. If fuel prices rise even further, I remain afraid the company’s growth will continue to suffer. On the conference call, management was clear to draw the correlation. Longer-term investors must weigh these concerns considering the company’s rise in valuation this year.

High-end pains
Shares of Nordstrom, Inc. (NYSE:JWN) traded lower after what was a disappointing second quarter. Poor comparable-sales data, far below analyst estimates, caused revenue to slump. Nordstrom, Inc. (NYSE:JWN)’s second quarter comparable sales rose 4.4% on a year-over-year basis, below the 6.8% gain analysts were predicting. Sales at its department stores open for at least one year fell 0.7%, a key indicator as this metric takes into consideration the impact of newly opened and closed locations.

Net income for the fiscal second quarter rose to $184 million, or $0.93, from $156 million, or $0.75 per share in the year-ago period. These results were $0.05 better than anticipated as a result of lower selling and administrative costs, which the company did not identify. While the headline results may look fine, it was the updated guidance which raised concerns.

The company is projecting continued weakness through the rest of the year. It now predicts its annual comparable-store sales to increase by only 2% to 3%. Not great guidance for the growth investors who have chosen this name out of the retail sector.

To sustain long-term growth, the company is now looking to diversify its revenue streams. Nordstrom, Inc. (NYSE:JWN) was able to drive its e-commerce sales 37% higher by increasingly pushing customers online.

Going forward, the company plans to focus its attention on “Nordstrom Rack” to reach a greater number of consumers. The discount version of Nordstrom, Inc. (NYSE:JWN) generated a 2.4% increase in comparable sales during the quarter. I will be watching household wealth trends as this metric should align with the company’s revenue over the next couple of quarters. Should the stock market continue to perform well, higher-end spending should rise.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!