Shoppers leave Nordstrom at King of Prussia Mall on December 11, 2022 in King of Prussia, Pennsylvania.
Marc Makela | Getty Images
Nordstrom said Tuesday that sales fell nearly 7% year-over-year, echoing comments from other retailers about weaker demand and consumers under budget pressure.
The department store operator nevertheless reiterated its sales outlook for the full year, saying it expects revenue to fall between 4 and 6 percent compared to last year, including including retail sales and credit card revenue.
It reduced its forecast for adjusted earnings per share, saying it expected between $1.90 and $2.10, excluding the impact of the closure of its stores and online operations in Canada and any possible buybacks. ‘actions.
Here are the retailer’s fiscal third-quarter results compared to what analysts expected, based on an analyst survey by LSEG, formerly known as Refinitiv:
- Earnings per share: 25 cents, adjusted versus 13 cents expected
- Revenue: $3.32 billion versus $3.40 billion expected
In the three months ended Oct. 28, Nordstrom’s net income rose to $67 million, or 41 cents per share, compared with a loss of $20 million, or 13 cents, in the same quarter of the previous year. The company incurred an impairment charge related to supply chain technology and related assets in the prior-year quarter.
Nordstrom is looking for growth after three straight years of sales at or below pre-pandemic levels. The high-end department store did not benefit from the dramatic sales gains other retailers experienced during the Covid pandemic, when consumers had extra cash and fewer ways to spend it during the pandemic.
As part of the initiative, the retailer opened more off-price Nordstrom Rack stores and revamped merchandise in those stores to highlight top-selling brands.
Still, Nordstrom’s efforts have been more difficult in an environment where shoppers aren’t buying as many discretionary goods, like clothing, and, in some cases, are prioritizing experiences, like concert tickets.
Other retailers also reported lower sales and were cautious about the holiday season. Weak retail profits weighed on the stock market on Tuesday. Best buy And Lowes reduced their fiscal sales forecast for the fourth quarter, and American Eagle Outfitters And Abercrombie & Fitch Investors were also disappointed with their holiday prospects.
Nordstrom’s quarterly results also reflect this. The company’s total revenue fell to $3.32 billion from $3.55 billion a year ago. At Nordstrom’s namesake banner, net sales fell 9.4% and at its off-price banner, Nordstrom Rack, net sales fell 1.8%.
CEO Erik Nordstrom said during an earnings conference call that customer traffic had remained low, even as the company’s average order size increased. He said the company has tried to attract more visits to stores and the website by offering additional rewards on beauty purchases and expanding free two-day shipping to more markets.
Digital sales were down 11.3% from the same period last year as the company was hurt by the elimination of Nordstrom Rack’s in-store digital orders but helped by a week-long anniversary sale of the company as it approaches the third fiscal quarter.
During the quarter, online sales accounted for about a third of Nordstrom’s total sales.
Still, on the earnings call with investors, Nordstrom highlighted the progress it’s made and some improving trends it’s seen.
Most retailer categories were stronger in the third quarter than the second quarter in terms of year-over-year trends, according to chief brand officer Pete Nordstrom. He said beauty continues to be Nordstrom’s “key travel driver,” but accessories and sportswear-related products are also strong, with shoppers flocking to new shoes from brands like New Balance and Hoka.
The company saw lower markdowns in the three-month period than a year ago and its inventory was down nearly 9% compared to the same period in 2022.
Nordstrom Rack, while still down in sales, showed improvement during the quarter. The company opened 11 new Rack stores during the third quarter and one early in the fourth quarter, bringing the year’s total to 19 new stores, CEO Erik Nordstrom said.
Nordstrom is undercutting its goals of increasing sales, improving profitability and managing bloated costs, Chief Financial Officer Cathy Smith said on the call. But she also spoke of a complex economic context.
“We continue to see a cautious consumer and it remains to be seen how changes in inflation, rising interest rates and the resumption of student loan payments will affect consumer discretionary spending during the holiday season,” she declared.
As of Tuesday’s close, shares of Nordstrom are down 8% year to date. This underperformed the S&P 500, which posted gains of around 18% during the period.