Shoppers exit Nordstrom on the King of Prussia Mall on December 11, 2022 in King of Prussia, Pennsylvania.
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Nordstrom on Tuesday said sales slid by nearly 7% 12 months over 12 months, echoing other retailers’ comments about weaker demand and budget-pressured consumers.
Yet the department store operator reiterated its full-year sales outlook, saying it expects revenue to say no by between 4% and 6% versus a 12 months ago, including retail sales and bank card revenues.
It narrowed its adjusted earnings per share forecast, saying it anticipates $1.90 to $2.10, excluding the impact of winding down its stores and online business in Canada and any potential share buybacks.
Here’s how the retailer did within the fiscal third quarter compared with what analysts were anticipating, based on a survey of analysts by LSEG, formerly generally known as Refinitiv:
- Earnings per share: 25 cents, adjusted vs. 13 cents expected
- Revenue: $3.32 billion vs. $3.40 billion expected
Within the three-month period that ended Oct. 28, Nordstrom’s net income rose to $67 million, or 41 cents per share, in comparison with a lack of $20 million, or 13 cents, within the year-ago quarter. The corporate had an impairment charge related to provide chain technology and related assets within the year-ago quarter.
Nordstrom is searching for growth after three straight years of sales which were at or below pre-pandemic levels. The upper-end department store missed out on the dramatic sales gains that other retailers experienced throughout the Covid pandemic when consumers had extra money and fewer ways to spend it throughout the pandemic.
As a part of that push, the retailer has opened more of its off-price stores, Nordstrom Rack, and revamped merchandise in those stores to emphasise best-selling brands.
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Yet Nordstrom’s efforts have been tougher in an environment where shoppers aren’t buying as many discretionary goods, reminiscent of clothing, and in some cases, prioritizing experiences, reminiscent of concert tickets.
Other retailers have also reported softer sales and signaled caution concerning the holiday season. On Tuesday, weak retail earnings dragged down the stock market. Best Buy and Lowe’s cut their fiscal fourth-quarter sales forecasts, and American Eagle Outfitters and Abercrombie & Fitch also disenchanted investors with their holiday outlooks.
Nordstrom’s quarterly results reflected that, too. The corporate’s total revenue declined to $3.32 billion from $3.55 billion within the year-ago period. At Nordstrom’s namesake banner, net sales dropped 9.4% and at its off-price banner, Nordstrom Rack, net sales decreased 1.8%.
Digital sales decreased by 11.3% compared with the year-ago period, as the corporate was hurt by eliminating store success for Nordstrom Rack digital orders but helped by one week of the corporate’s Anniversary Sale moving into the fiscal third quarter.
In the course of the quarter, online sales drove roughly a 3rd of Nordstrom’s total sales.
Yet on the earnings call with investors, Nordstrom stressed progress it’s made and a few improving trends that it has seen.
A lot of the retailers’ categories were stronger within the third quarter than the second quarter when it comes to year-over-year trends, in accordance with Chief Brand Officer Pete Nordstrom. He said beauty continues to be Nordstrom’s “top trip driver,” but accessories and activewear-related merchandise were also strong as shoppers sprang for brand spanking new footwear from brands like Recent Balance and Hoka.
The corporate had lower markdowns within the three-month period than a 12 months ago and its inventory was down nearly 9% compared with the identical period in 2022.
Nordstrom is chipping away at its goals of driving higher sales, improving profitability and managing inflated costs, Chief Financial Officer Cathy Smith said on the decision. But she also referred to a fancy economic backdrop.
“We proceed to see a cautious consumer and it stays to be seen how changes in inflation, higher rates of interest, and the resumption of student loan repayments will affect discretionary consumer spending throughout the holiday season,” she said.
As of Tuesday’s close, shares of Nordstrom have fallen 8% thus far this 12 months. That underperformed the S&P 500, which has posted gains of about 18% throughout the period.
