Shoppers walk into a Nordstrom department store on March 03, 2023 in Austin, Texas.Â
Brandon Bell | Getty Images
Nordstrom‘s fiscal first-quarter sales topped Wall Street’s expectations on Wednesday, even as the retailer reported a spending drop and predicted slower sales in the coming months.
The higher-end department store also reiterated its outlook for the full year. Nordstrom expects revenue to fall 4% to 6% and adjusted earnings per share to range between $1.80 and $2.20 for the fiscal year, excluding the impact of winding down its stores and online business in Canada.
Yet despite declining sales, Nordstrom stressed its progress with managing inventory, cutting costs and drawing shoppers, especially to the off-price brand Nordstrom Rack. Sales at Nordstrom Rack improved late in the quarter, with the strongest performance in April, the retailer said in a news release.
“We’re encouraged by our momentum, especially given the uncertain macroeconomic environment,” CEO Erik Nordstrom said in the company’s earnings release.
Here’s what the company reported for the three-month period ended April 29 compared with what analysts were anticipating, based on Refinitiv estimates:
- Revenue: $3.18 billion vs. $3.12 billion expected
In the fiscal first quarter, Nordstrom’s net loss was $205 million, or $1.27 per share, compared with a net income of $20 million, or 13 cents per share, in the year-earlier period.
Excluding the costs related to winding down Canadian operations, Nordstrom’s adjusted earnings per share were 7 cents. It was unclear not immediately clear how those figures compared to analyst estimates.
Nordstrom is looking for growth after it struggled with stagnant sales and largely missed out on the stimulus-fueled spending boom that benefited other retailers during the Covid pandemic. In the most recent fiscal year, which ended in January, the company’s total revenue was $15.5 billion. The figure was flat compared with the total revenue that it reported in the fiscal year that ended just prior to the start of the pandemic.
Its lagging sales drew interest and scrutiny from activist investor Ryan Cohen, founder of Chewy and chairman of GameStop, who bought a stake of the company earlier this year.
Nordstrom’s sales continued to sag in the most recent three-month period. The company’s total revenue, including credit card sales, fell about 11% from $3.57 billion in the year-ago quarter, but surpassed Wall Street’s expectations.
Sales in most categories in the U.S. declined in the first quarter year over year, the company said in a news release. Nordstrom attributed some of that to difficult comparisons. In the year-earlier period, shoppers flocked to stores for designer shoes, dresses and wardrobe refreshes to attend weddings, reunions and other social gatherings as the world reopened after the pandemic.
Net sales at Nordstrom’s namesake stores decreased 11.4% year over year, while net sales for Nordstrom Rack dropped 11.9%.
Activewear performed best for Nordstrom in the first quarter. Beauty and men’s apparel also did better than average, the company said.
Nordstrom joined Kohl’s and Gap in reporting a surprise profit and better margins in the fiscal first quarter. Nordstrom and Gap posted profits on an adjusted basis. All three companies have struggled with lagging sales, the buildup of unsold inventory, higher markdowns, steeper costs of freight and more.
Declining inventory levels and business costs could be a silver lining for Nordstrom and other retailers in the coming quarters as they face slowing sales.
Inventory for Nordstrom at the end of the three-month period fell nearly 8% year over year.
As the retailer chases a turnaround, it has shuttered parts of its business. It wound down personal styling service Trunk Club last year, and announced the end of Canadian operations earlier this year.
Digital sales fell 17.4% year over year, partially due to Trunk Club’s closure.
In the coming year, Nordstrom is looking to its off-price chain to drive growth. The retailer plans to open 20 Nordstrom Rack locations this fiscal year, with plans to open more in the longer term.
In an interview with CNBC, Chief Stores Officer Jamie Nordstrom said the stores, which offer brand names at lower prices, are the company’s “single-largest vehicle for new customer acquisition” and could resonate during an inflationary time.
Shares of Nordstrom have fallen about 5% this year, lagging behind the S&P 500’s 9% gain. The company’s stock closed at $15.30 on Wednesday, bringing the company’s market value to $2.47 billion.
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This story originally appeared on CNBC
