Signage outside a Nordstrom Rack retail store in New York on August 25, 2022.
Gabby Jones | Bloomberg | Getty Images
Nordstrom On Tuesday, it posted earnings that beat Wall Street expectations, indicating the department store is making progress in its efforts to cut costs and increase efficiency.
Although the Seattle-based retailer posted earnings per share 25 cents higher than expected, it issued tepid guidance for the full year.
Nordstrom now expects adjusted earnings per share to be between $1.75 and $2.05, compared with a previous range of $1.65 to $2.05. It expects sales to be in a range of a 1% decline to a 1% increase from a year ago, compared with a previous forecast of a 2% decline to a 1% increase.
Shares rose more than 10% in extended trading.
Here's how the department store fared in its fiscal second quarter compared with what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: Adjusted 96 cents vs. expected 71 cents
- Revenue: $3.89 billion versus the expected $3.9 billion
The company reported net income for the three-month period ended Aug. 3 of $122 million, or 72 cents per share, compared with $137 million, or 84 cents per share, a year earlier. Excluding one-time items related to supply chain impairments, the retailer posted adjusted earnings of 96 cents per share.
Sales rose to $3.89 billion, up 3.4% from $3.77 billion a year earlier. Revenue was just shy of analysts' expectations.
As consumers continue to cut back on discretionary spending in the face of persistent inflation and high interest rates, retailers have been working to improve operations and cut costs to protect profits against slowing demand.
Nordstrom's earnings fell during the quarter compared to the same period last year, but profits have grown over the past six months. Last year, Nordstrom reported a net loss of $67 million for the six months ended July 29, 2023, but for the same period this year, it posted a profit of $83 million.
Nordstrom has said it is working to improve its supply chain. Last quarter, it said the time it takes for online orders to arrive was 5% faster. It has also improved the way merchandise gets to customers and stores, which it said has helped drive higher conversion and lower return rates.
Another key focus area for the company has been the growth of its discount line, Nordstrom Rack. Over the past two quarters, momentum has been building at Nordstrom Rack and has helped to bolster the company’s overall results. During the quarter, sales at Nordstrom Rack increased 8.8%, while comparable sales increased 4.1% compared to the same period last year.
This compares to Nordstrom's core line, where net sales and comparable sales rose just 0.9%.
Nordstrom has been working to build more Rack locations and has opened 11 new locations so far this fiscal year, with a goal of opening at least 22 by the end of the year.
