Nordstrom has surprised Wall Street by beating quarterly sales expectations, reporting a 4% revenue growth year over year. Shoppers flocked to its department stores and Nordstrom Rack for clothing, shoes, and activewear, propelling the Seattle-based retailer’s performance despite broader discretionary and luxury spending challenges.
A Closer Look at the Numbers
For the fiscal third quarter ending November 2, Nordstrom reported revenues of $3.46 billion, exceeding analysts’ estimates of $3.35 billion. Adjusted earnings per share stood at 33 cents. The company also posted a net income of $46 million, or 27 cents per share, compared to $67 million, or 41 cents per share, in the same quarter last year. Comparable sales increased by 4%, significantly outpacing expectations of just 0.7%.
Nordstrom CEO Erik Nordstrom emphasized the company’s commitment to its customers, stating, “Our customers have a lot of choices, and our results give us encouragement that we’re on the right path.” Sales in women’s apparel and activewear saw double-digit growth, while shoes, men’s apparel, and kids’ categories also performed well.
Digital Growth and Strategic Moves
Digital sales rose 6.4% yearly, making up approximately a third of total revenue. Erik Nordstrom attributed this to enhancements in the company’s website and app, including improved search functionality and a more comprehensive range of items priced under $100. Additionally, the retailer expanded its third-party marketplace, which now boasts over 300 sellers.
Another boost came from Nordstrom’s efforts to integrate its online and offline shopping experiences. Over 100 Nordstrom Rack stores now offer store fulfillment for online orders, and a new buy-online-pickup-in-store feature was launched, further enhancing customers’ convenience.
Challenges and Conservative Forecasting
Despite the strong quarter, Nordstrom took a cautious approach to its holiday sales forecast. CEO Erik Nordstrom noted a “noticeable decline in sales trends towards the end of October,” which was factored into the company’s outlook. Full-year revenue growth is now expected to range from flat to 1%, slightly improving on the prior forecast of a 1% decline to 1% growth.
The retailer’s ability to grow sales despite a calendar shift in its Anniversary Sale, which reduced its impact on the quarter, highlights its resilience. This is especially notable as competitors like Macy’s reported a 2.4% decline in sales for the same period.
Nordstrom Rack’s Role and Future Plans
Nordstrom Rack continues to be a key driver of growth. The off-price chain saw a 3.9% increase in comparable sales, nearly matching the flagship store’s 4% growth. The company also opened 23 new Nordstrom Rack locations this year, aligning with its plan to launch 20 to 25 new stores annually.
Private Takeover and Stock Performance
The founding Nordstrom family and Mexican retailer El Puerto de Liverpool have expressed interest in taking the company private at $23 per share. This renewed bid, coupled with solid performance, has buoyed investor confidence. As of Tuesday’s close, Nordstrom’s stock is up 32% year to date, outpacing the S&P 500’s 26% gain.
Maintaining Positive Momentum
Nordstrom’s quarterly solid performance underscores its ability to adapt to evolving consumer preferences and enhance its omnichannel offerings. Erik Nordstrom concluded, “Looking ahead, we’ll continue to improve our shopping experience as we strive to maintain the positive momentum we’ve worked towards all year.” The retailer is well-positioned for the critical holiday season with strategic investments in digital growth and customer convenience.
