nordstrom Tuesday’s sales beat Wall Street’s quarterly sales expectations, with sales from shoppers buying clothing, shoes and sportswear at both the company’s eponymous department stores and off-price chains up from a year earlier. Increased by 4%.
But despite the better-than-expected quarter, the Seattle-based retailer made its full-year sales forecast only slightly more optimistic as it gears up for its busiest weeks of the holiday season. As a result, we have taken a conservative stance. The company said it now expects full-year sales, which include retail sales and credit card revenue, to be in the range of flat to 1% growth. This compares with the previous range of 1% decrease to 1% increase. However, the company maintained its full-year adjusted earnings outlook of $1.75 to $2.05 per share.
CEO Eric Nordstrom said in a news release that the company’s results show its efforts to appeal to selective shoppers are paying off. Sales of women’s apparel and activewear increased by double digits year over year. Sales of shoes, men’s clothing, and children’s clothing showed mid-to-high single-digit growth compared to the previous year.
Compared to the second quarter, sales of women’s clothing, shoes, and men’s clothing also continued to increase in the third quarter.
“Our customers have many options, and the results are encouraging that we are on the right path,” he said. “Looking to the future, we will continue to improve the shopping experience as we strive to maintain the positive momentum we have been working on throughout the year.”
However, during the company’s earnings conference, he said that Nordstrom is experiencing a “noticeable decline in sales trends toward the end of October.” He said this slowdown is factored into forecasts for the holiday season.
Here’s how Nordstrom performed for the three months ended Nov. 2 compared to Wall Street expectations, based on a survey of analysts by LSEG:
Earnings per share: Adjusted 33 cents, not immediately clear if it matches analyst expectations Revenue: $3.46 billion versus expected $3.35 billion
Nordstrom’s third-quarter net income was $46 million, or 27 cents per share, compared with $67 million, or 41 cents per share, in the year-ago period. Revenue increased from $3.32 billion in the same period last year.
After excluding charges related to accelerated technology depreciation, Nordstrom reported adjusted earnings per share of 33 cents.
Comparable sales for Nordstrom’s two brands, its namesake brand and its off-price chain Nordstrom Rack, increased 4%. That easily beat analysts’ expectations for comparable sales growth of 0.7%, according to Street Accounts.
Nordstrom’s sales growth, while modest, is notable amid pressure on sales in the discretionary and luxury categories. Retailers including Walmart, Best Buy and Target reported over the past week that customers are still being selective when it comes to buying products they want rather than needs, and are placing more emphasis on price.
Nordstrom’s sales also increased despite the calendar change due to its anniversary sale. In the same period last year, there were eight sale days in three months, but in this year’s quarter, there was only one. This resulted in a decrease in net sales of approximately 1%.
Macy’s, which postponed its full financial results, reported a 2.4% decline in third-quarter sales and a 1.3% decline in comparable sales from its own and licensed businesses and online marketplace.
Nordstrom has relied on its off-price chain, Nordstrom Rack, to drive both sales growth and new store locations. But in the third quarter, the two banners reported similar sales, with namesake stores up 4% and Nordstrom Rack up 3.9%.
So far this year, Nordstrom has opened 23 new Nordstrom Rack stores. This is in line with the company’s plan to open 20 to 25 new racks a year.
At the end of the quarter, the company began in-store fulfillment of online orders at more than 100 Nordstrom Rack stores nationwide, CEO Eric Nordstrom said on an earnings call. He said they have also introduced a new feature that allows customers to buy online and pick up in-store at the same store.
Digital sales increased 6.4% year-over-year, with e-commerce accounting for approximately one-third of total sales in the quarter.
Eric Nordstrom said the company added better search and discovery capabilities to its website and apps, which supported online growth in the quarter. He also added more items priced under $100 and expanded his 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 another attempt to take the company private. Chief Executive Officer Eric Nordstrom, President Peter Nordstrom and Mexican retailer El Puerto de Liverpool are creating a corporation to acquire the chain for $23 per share, according to a September filing. Sent a non-legally binding letter to establish the company.
Nordstrom’s stock price has soared since March when Reuters reported that Nordstrom’s founding family wanted to take the company private. As of Tuesday’s close, the company’s stock had risen 32% since the beginning of the year, outpacing the S&P 500’s 26% rise.
