It looks like there will be some joy in retail’s Mudville after all, as Nordsrtom managed to bring in earnings that beat most of the analysts’ expectations. The store’s stock was up 3 percent in after hours trading post-release, thus freeing it from the retail dip that followed lackluster releases from Kohl’s and Macy’s.
“In a day of muted results clouded by continued sales declines, Nordstrom has provided a ray of sunshine,” GlobalData Retail Managing Director Neil Saunders wrote in a note to clients. “The company has, for a long time, invested in its retail proposition and has taken sound strategic decisions like the diversification into off-price and the development of an omnichannel plan.”
By the numbers, Nordstrom managed to lock in 65 cents of EPS as opposed to the 64 cents analysts were expecting. Revenue came in at $3.79 billion as opposed to the anticipated $3.75 billion. Same store sales were up 1.7 percent — as opposed to dropping by .4 percent as expected.
Net income was down — at $110 million from $117 million a year ago — though net sales are up 3.5 percent to $3.72 billion
Nordstrom noted that its Anniversary Sale this year, historically one of the company’s biggest sales events of the year, “performed better than recent trends.”
Also big for Nordstrom last quarter were digital sales — online sales grew 20 percent at Nordstrom.com and 27 percent at Nordstromrack.com and HauteLook. Off-price sales at Nordstrom Rack were up 3.1 percent, while sales at full-line stores in the U.S. fell 4.4 percent. That actually marks an improvement — last year, losses were 6.5 percent at its American full-line stores.
“Our Rack business is an important way to attract new customers to Nordstrom,” Co-President Blake Nordstrom said on a call with analysts and investors. As the company opens new off-price locations, “these stores incorporate our latest store designs with improvements to the layout and fitting room experience,” he added.
Nordstrom should have 232 Rack locations open, in total, by year end.
The best-performing merchandise categories for Nordstrom this quarter were women’s apparel and beauty.
For the year, Nordstrom believes net sales will increased by about 4 percent, a tad better than a previous forecast for 3 to 4 percent growth. Nordstrom still expects comps to be flat, but it has increased the low end of its range for profit.
Also of note during the latest earning reports was data from the store’s new loyalty program- which now has 9.4 million active users in the U.S. and Canada. Sales from Nordstrom Rewards customers represented 56 percent of second-quarter sales, compared with 48 percent a year ago.
“It remains clear to us that Nordstrom is on a much better trajectory than most other players in the department store segment,” GlobalData Retail’s Saunders said.
“The Nordstrom family knows this, which is one of the reasons why they looked into taking the company private. Whatever the outcome of that process, Nordstrom should not be tarred with the same brush as other department stores.”