Nordstrom Rack, Anniversary Sale Lift Nordstrom’s Q2 Revenue
Nordstrom posted better-than-expected second-quarter earnings but issued cautious guidance going forward.
Net income fell 10.9% to $122 million, or $0.72 per share, for the quarter ended Aug. 3, compared to $137 million, or $0.84 per share in the year-ago period. Excluding one-time items related to supply chain impairments, the retailer posted adjusted earnings of $0.96 per share, far ahead of analysts’ estimates of $0.71 per share.
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Nordstrom’s adjusted EBIT was $244 million compared to $192 million last year. The EBIT excluded a charge primarily related to supply chain asset impairment involving a decision to cease build-out and planning of a leased omnichannel center on the West Coast.
On the company’s earnings call, CEO Eric Nordstrom told analysts that the company decided not to go through with the center because it had found that it could serve it West Coast customers more efficiently from its existing supply chain network while avoiding additional costs to build out the facility.
“Logistics networks have recovered from the supply chain challenges that began during the pandemic, and we’ve improved our supply chain operations over the last few years,” he said.
(Also on the call, Nordstrom executives said there was no update on efforts to take the company private.)
Total company net sales rose 3.4% to $3.89 billion, just a bit ahead of estimates, and comparable sales increased 1.9%. Nordstrom noted that the timing shift of its Anniversary Sale, with one day falling in the third quarter of 2024 versus eight days in 2023, had a positive impact on net sales of approximately 100 basis points compared with the second quarter of 2023.
Nordstrom banner net sales and comparable sales each increased 0.9%. Net sales for Nordstrom Rack increased 8.8% and comparable sales increased 4.1 percent. The company opened five new Rack stores during the quarter, bringing its year-to-date total to 11, with plans to open 12 more locations ahead of the holidays.
Women's apparel, beauty and kids had the strongest growth versus 2023. During the Anniversary Sale, the top growing categories were beauty, active and home.
Digital sales increased 6.2% compared with the same period in fiscal 2023, and sales represented 37% of total sales during the quarter. The company ended the second quarter with $1.5 billion in available liquidity, including $679 million in cash.
“Our second quarter results were solid, and we’re encouraged by the continued topline strength in both banners and the progress we’re making to expand gross margin and increase profitability,” said Eric Nordstrom. “We’re confident in our outlook for the remainder of the year and look forward to sustaining the momentum we’ve built.”
Nordstrom expects full-year sales will be in a range of a 1% decline to 1% increase from the prior year, compared to its previous forecast of down 2% to up 1%. It expects adjusted earnings per share to be between $1.75 and $2.05, compared to a previous range of $1.65 to $2.05.
Nordstrom ended the quarter with 370 stores, including 269 Rack stores, two Last Chance clearance outlets, 93 Nordstrom stores and six Nordstrom Local service hubs.
This article was originally covered in sister publication Chain Store Age.