Read on Twitter
The more $FTCH research I do, the more I believe $JWN business (especially E-comm) is very mispriced. E-comm has grown, as a % of net sales, at 10.5% pa from 15'-19'. E-comm understandably reached 54% of sales last Q, a 37% increase QoQ.
Because consumer preferences are changing, I assume online run-rates stick at 40% of sales from here (not a heroic assumption).
"Digital Business
Our third driver of growth is to increase the velocity of our digital business. In 2019, digital made up 33% of sales and accelerated to 54% this quarter. We view this as a fundamental shift in shopping behavior, and we are well-positioned to support our
Our third driver of growth is to increase the velocity of our digital business. In 2019, digital made up 33% of sales and accelerated to 54% this quarter. We view this as a fundamental shift in shopping behavior, and we are well-positioned to support our
customers across both Nordstrom and Rack with a scalable platform that has been built to support many years of growth. We also know that we must translate the heritage of service that defines us more effectively in this digitally connected world. This means delivering
personalization at scale by creating greater linkages between the digital and the physical experience. During the quarter, virtual styling accounted for roughly 30% of all styling appointments, and sales from personalized looks created by our salespeople tripled in volume" 10Q
At 40% of sales on FY22 #'s, that's about $5.5B in sales for E-comm, $JWN current market cap. Not sure what multiple of sales the B&M should trade at. Anyone have an idea?
But assuming B&M should trade at .75x sales as a standalone we get $11.5B in value or about 15% above the current EV. Now, should $JWN E-comm really trade at 1x sales? Sounds a bit absurd based on comps and recent customer adoption.
Like $TGT, the pull-forward demand from consumer preference changes has made category-leading omni's more robust. JWN's B&M should achieve higher ROIC's due to the following:
-Renewed focus on experiential A-class locations ($RH playbook)
-In-store pickup/dropoff
-Tailoring
-Styling appointments/personalized looks
-F&B business in most full-line locations
-"See You Tomorrow" resale business
-In-store pickup/dropoff
-Tailoring
-Styling appointments/personalized looks
-F&B business in most full-line locations
-"See You Tomorrow" resale business
"Covid has changed all of these dynamics for category-leading brick and mortar retailers. If most e-commerce companies have been pulled 1–3 years into the future in terms of their revenue, then the e-commerce businesses of most category-leading brick and mortar retailers have
been pulled 5–10 years into the future." @GavinSBaker
It's unbeknownst to me what JWN e-comm take-rates are, but let's assume they're similar to $FTCH 32% take-rate on their Platform GMV (likely inaccurate). $FTCH currently trades at about 8x run-rate GMV, and likely justified due to the stickiness of its B2B platform and the
ascending growth it continues to experience, especially in EM. For $FTCH, sales are approximately 65% of GMV. Using those assumptions we get GMV of $8.5B for JWN, meaning JWN E-comm is trading at a GMV of .64x.
Is $JWM E-comm 8% of the business $FTCH is? $FTCH grew about 60% last Q and $JWN E-comm about 37%. While $FTCH likely has better economics, I'm just not sure how much better.
If I were to shoot from the hip, I'd guess that $JWN E-comm should trade between 2-3x GMV. And based on other comp economics that doesn't seem outlandish.
At that multiple, and assuming JWN B&M gets a .75x sales multiple (conservative), we get a value between $23b-$32B. That's on a $10B EV/$5.5B m-cap business. Looks like a debt paydown could lead to asymmetric returns for equity holders.
Even $AMZN has taken a page from $JWM customer-centric playbook.
Would love to get feedback from people who know the consumer luxury market and respective platforms. I don't see much of a surface level reason I'd use $FTCH over $JWN.
Would love to get feedback from people who know the consumer luxury market and respective platforms. I don't see much of a surface level reason I'd use $FTCH over $JWN.
