Nordstrom On Tuesday, it beat Wall Street's quarterly sales expectations, with revenue growing about 4% year over year from shoppers buying clothing, shoes and sportswear at both the company's namesake department store and its off-price chain.
However, despite a better-than-expected quarter, the Seattle-based retailer offered only a slightly rosier sales forecast for the full year — 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 from flat to 1% for the full year. This compares to its previous range of 1% decline to 1% growth. However, it stuck to its revised earnings forecast for this year of between $1.75 and $2.05 per share.
In a press release, CEO Eric Nordstrom said the company's results show that efforts to attract selective shoppers are paying off. Sales of women's apparel and sportswear rose by double digits year over year. Men's and children's footwear and apparel grew in mid-to-high single digits year over year.
Compared to the second quarter, sales of women's clothing, footwear and men's clothing in the third fiscal quarter grew sequentially.
“Our customers have a lot of options, and our results encourage us that we are on the right track,” he said. “Looking to the future, we will continue to improve our shopping experience as we strive to maintain the positive momentum we have worked toward all year.”
However, he said on the company's earnings call that Nordstrom saw a “noticeable decline in sales trends toward the end of October.” He said it took this slowdown into account in its holiday forecasts.
Here's how Nordstrom fared in the three-month period that ended Nov. 2 compared to what Wall Street expected, based on a poll of analysts conducted by LSEG:
Earnings per share: 33 cents, adjusted. It was not immediately clear whether it was comparable to analysts' estimates. Revenue: $3.46 billion versus $3.35 billion expected.
Nordstrom's net income for the fiscal third quarter was $46 million, or 27 cents per share, compared to $67 million, or 41 cents per share, in the same period last year. Revenues rose from $3.32 billion in the same quarter last year.
After excluding charges related to the accelerated consumption of technology, Nordstrom reported adjusted earnings per share of 33 cents.
Comparable sales were up 4% across Nordstrom's two brands, its namesake brand and its budget chain, Nordstrom Rack. That easily beat analysts' expectations of a 0.7% gain in comparable sales, according to StreetAccount.
Nordstrom's sales growth, although modest, is notable at a time when discretionary and luxury category sales are under pressure. Retailers, including Walmart, Best Buy and Target, reported over the past week that customers remain selective when it comes to buying items they want, not needs, and have paid more attention to price.
Nordstrom's sales growth also grew, although the calendar changed with the anniversary sales. In the year-ago quarter, eight selling days fell in the three-month period, but only one day fell in this year's quarter. This had a negative impact on net sales by about 1%.
Macy's, which delayed its full earnings, said third-quarter sales fell 2.4% and comparable sales at its owned and franchised businesses as well as its online marketplace fell 1.3%.
Nordstrom has relied on its off-price chain, Nordstrom Rack, to fuel sales growth and new store locations. However, in the third quarter, the two brands posted 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 is in line with the company's plans to open 20 to 25 new racks annually.
At the end of the quarter, the company launched Nordstrom Rack's online order fulfillment service in more than 100 stores nationwide, CEO Eric Nordstrom said on the company's earnings call. He said the company has also launched a new feature that allows customers to buy online and pick up in store at the same stores.
Digital sales rose 6.4% year over year, and in the quarter, e-commerce accounted for about a third of total sales.
The company added better search and discovery features to its website and app, which supported online growth in the quarter, Eric Nordstrom said. It has also added more items under $100 and expanded its third-party marketplace business, which now has more than 300 sellers, he said.
Nordstrom's latest quarterly update comes about two months after Nordstrom's founding family submitted a new bid to take the company private. According to a September filing, 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 risen since a Reuters report last March stated that Nordstrom's founding family wanted to take the company private. As of Tuesday's close, the company's stock was up 32% so far this year, outpacing the S&P 500's gain of 26%.
