Shoppers leave Nordstrom at the King of Prussia Mall on December 11, 2022 in King of Prussia, Pennsylvania.
Marcos Makela | fake images
Nordstrom on Tuesday said sales fell nearly 7% year over year, echoing comments from other retailers about weaker demand and budget-pressed consumers.
However, the department store operator reiterated its full-year sales outlook, saying it expects revenue to decline 4% to 6% from a year ago, including retail sales and credit card revenue.
It lowered its adjusted earnings per share forecast, saying it expects between $1.90 and $2.10, excluding the impact of the closure of its stores and online businesses in Canada and any potential share buybacks.
Here’s how the retailer fared in the fiscal third quarter compared to what analysts were anticipating, according to a survey of analysts by LSEG, formerly known as Refinitiv:
- Earnings per share: 25 cents, adjusted from 13 cents expected
- Revenue: $3.32 billion vs. $3.4 billion expected
In the three months ended Oct. 28, Nordstrom’s net income rose to $67 million, or 41 cents a share, compared with a loss of $20 million, or 13 cents, in the year-ago quarter. last year. The company had 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 that have been at or below pre-pandemic levels. High-end department stores missed out on the spectacular sales gains other retailers experienced during the Covid pandemic when consumers had extra money and fewer ways to spend it during the pandemic.
As part of that push, the retailer opened more discount stores, Nordstrom Rack, and revamped merchandise in those stores to emphasize best-selling brands.
However, Nordstrom’s efforts have been tougher in an environment where shoppers are not purchasing as many discretionary goods, such as clothing, and in some cases, prioritizing experiences, such as concert tickets.
Other retailers also reported weaker sales and signaled caution about the holiday season. Weak retail earnings dragged down the stock market on Tuesday. Best Buy and Lowes cut their sales forecasts for the fiscal fourth quarter, and American Eagle Outfitters and Abercrombie & Fitch It also disappointed investors with its Christmas outlook.
Nordstrom’s quarterly results reflected that as well. The company’s total revenue decreased to $3.32 billion from $3.55 billion in the same period a year ago. At Nordstrom’s namesake brand, net sales fell 9.4% and at its discount brand, Nordstrom Rack, net sales fell 1.8%.
Digital sales decreased 11.3% compared to the same period last year as the company was affected by the elimination of in-store fulfillment for Nordstrom Rack’s digital orders, but was helped by a week of sales anniversary of the company that moved into the third fiscal quarter.
During the quarter, online sales generated about a third of Nordstrom’s total sales.
However, on the earnings conference call with investors, Nordstrom highlighted the progress it has made and some improving trends it has seen.
Most retail categories were stronger in the third quarter than in the second quarter in terms of year-over-year trends, according to chief brand officer Pete Nordstrom. He said beauty remains Nordstrom’s “main driver of the journey,” but accessories and sportswear-related merchandise were also strong as shoppers sought out new footwear from brands like New Balance and Hoka.
The company had 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 is scaling back its goals of driving higher sales, improving profitability and managing inflated costs, Chief Financial Officer Cathy Smith said on the call. But he also referred to a complex economic context.
“We continue to see a cautious consumer and it remains to be seen how changes in inflation, higher interest rates and the resumption of student loan payments will impact discretionary consumer spending during the holiday season,” he said.
As of Tuesday’s close, Nordstrom shares have fallen 8% so far this year. That underperformed the S&P 500, which posted gains of about 18% during the period.