Nordstrom on Tuesday beat Wall Street's quarterly sales expectations, as revenue grew about 4% year over year as shoppers snapped up clothing, shoes and sportswear at both the company's namesake department store and its retail chain. discount.
However, despite its better-than-expected quarter, the Seattle-based retailer gave only a slightly more optimistic full-year sales forecast, taking a conservative stance as it prepares for the busiest weeks of the holiday season. The company said it now expects full-year revenue, which includes retail sales and credit card revenue, to range between flat and up 1% for the full year. That compares with its previous range of a 1% drop to 1% growth. However, it maintained its adjusted earnings outlook for the year of between $1.75 and $2.05 per share.
In a news release, CEO Erik Nordstorm said the company's results show that efforts to attract selective buyers are paying off. Sales of women's and sports clothing soared year after year by double digits. Shoes, menswear and children's clothing grew year over year at a mid to high single digit rate.
Compared with the second quarter, sales of women's clothing, shoes and men's clothing in the fiscal third quarter also grew sequentially.
“Our clients have many options and our results encourage us that we are on the right path,” he said. “Looking ahead, we will continue to improve our shopping experience as we strive to maintain the positive momentum we have worked toward all year.”
However, on the company's earnings call, he said Nordstrom saw “a notable drop in sales trends toward the end of October.” He factored that slowdown into his Christmas expectations, he said.
Here's how Nordstrom fared in the three-month period ending Nov. 2 compared to what Wall Street anticipated, according to a survey of analysts by LSEG:
- Earnings per share: 33 cents adjusted, it was not immediately clear whether it was comparable to analysts' estimates.
- Revenue: $3.46 billion vs. $3.35 billion expected
Nordstrom's net income for the fiscal third quarter was $46 million, or 27 cents per share, compared with $67 million, or 41 cents per share, in the same period a year earlier. Revenue rose from $3.32 billion in the same quarter a year earlier.
After excluding a charge related to accelerated technology depreciation, Nordstrom reported adjusted earnings per share of 33 cents.
Comparable sales rose 4% at Nordstrom's two brands, its namesake and its discount chain, Nordstrom Rack. That easily beat analyst expectations for a 0.7% gain in comparable sales, according to StreetAccount.
Nordstrom's sales growth, while modest, is notable at a time when sales of discretionary merchandise and the luxury category have been under pressure. Retailers such as Walmart, Best Buy and Target reported over the past week that customers remain picky when it comes to purchasing items they want, not needs, and have paid more attention to price.
Nordstrom's sales growth also increased, despite a calendar change with its Anniversary Sale. In the year-ago quarter, eight days of sales fell in the three-month period, but only one day fell in this year's quarter. This had a negative impact on net sales of around 1%.
Macy's, which postponed its full earnings, said third-quarter sales fell 2.4% and comparable sales for its owned and licensed businesses plus online fell 1.3%.
Nordstrom has leaned on its discount chain, Nordstrom Rack, to drive both sales growth and new store locations. However, in the third quarter, the two brands reported similar comparable sales, with the namesake store up 4% and Nordstrom Rack up 3.9%.
So far this year, Nordstrom has opened 23 new Nordstrom Rack stores, which aligns with the company's plans to open 20 to 25 new Rack stores per year.
At the end of the quarter, the company launched online order fulfillment at Nordstrom Rack in more than 100 stores nationwide, CEO Erik Nordstrom said on the company's earnings conference call. He said the company also launched a new feature that allows customers to buy online and pick up in store, at the same stores.
Digital sales increased 6.4% year over year and in the quarter, e-commerce accounted for approximately one-third of total sales.
Erik Nordstrom said the company added better search and discovery features to its website and app, which supported online growth in the quarter. It said it also added more items priced under $100 and expanded its third-party marketplace business, which now has more than 300 sellers.
Nordstrom's latest quarterly update comes about two months after Nordstrom's founding family made a new offer to take the company private. According to a document filed in September, CEO Erik Nordstrom, President Peter Nordstrom and Mexican retailer El Puerto de Liverpool sent a non-binding letter to form an entity that would buy the chain for $23 per share.
The company's shares have soared since Reuters reported in March that Nordstrom's founding family wanted to take the company private. As of Tuesday's close, the company's shares had risen 32% so far this year, outpacing the S&P 500's gains of 26%.
