Earnings

Despite Website ‘Issues,’ Digital Keeps Growing For Nordstrom In Q2

Nordstrom

Nordstrom continued to make online gains in the second quarter of 2018, with eCommerce accounting for 34 percent of the retailer’s net sales, up from 29 percent during the same period last year. That growth came despite some digital disappointments during Nordstrom’s anniversary sale.

Q2 total revenue increased about 7.2 percent year over year to $4.06 billion, beating analyst expectations. Net income increased to $162 million, up from $110 million. Earnings of 95 cents a share for Q2 beat analyst expectations of 84 cents.

The chain also reported a 4 percent year-over-year sales increase for stores open for at least 12 months, beating analyst expectations of 0.8 percent growth, with both full-price and off-price sales contributing to that increase, according to Blake Nordstrom, the retailer’s co-president, during the post-earnings webcast on Thursday (Aug. 16).

Online Pros — and a Con

The executive also highlighted the retailer’s Q2 eCommerce efforts.

“We had robust digital sales growth for the quarter, reflecting our market-leading presence and significant progress toward our long-term goals. Digital sales grew 23 percent for the quarter — up 300 basis points from a year ago,” he said. “When customers engage with us across stores and online, on average they spend five times more and profitability per customer doubles.”

For the anniversary sale, online accounted for more than 40 percent of sales during the event, Nordstrom said. “On the first day of early access for our Nordstrom cardholders, we had our biggest day ever online, exceeding our previous record by 80 percent at 10 times our average daily demand,” he told investors during the webcast.

That said, problems popped up.

“Despite our efforts, we experienced some website issues as we encountered unprecedented levels of demand on the first day of the event,” he said. “While our team resolved this, we know we disappointed many of our customers, and in response we offered cardholders 10 points per dollar on purchases made on the first day of anniversary” sale run.

Nordstrom also touted the hiring of Edmond Mesrobian as chief technology officer. “Edmond brings nearly three decades of experience from large and complex international companies, including Tesco and Expedia,” Nordstrom said. “He will support all aspects of technology across the company and focus on advancing our capabilities to deliver the best experience to our customers, however they choose to shop with us.”

California Dreaming

The next digital push for Nordstrom will take place in Lost Angeles, the retailer’s largest market, Nordstrom told investors during the webcast.

“We’re bringing all of our digital and physical assets together in a seamless ecosystem,” he said, adding that the merchant is focused on supply chain investment, a “critical enabler of the customer experience.”

More specifically, he said that the company has “identified sites for our West Coast fulfillment center and local omnichannel hub, which are scheduled to open in late 2019. These investments in our supply chain network will help address our opportunities to better serve customers, improve our efficiencies and leverage inventory in our local markets.”

Digital will not do all the lifting in gaining and retaining customers in the months to come.

Los Angeles will also become the home, in autumn, of “two additional Nordstrom Locals,” Nordstrom said. “These neighborhood hubs are one component of our local market strategy to engage with customers through more convenient access to products and services, such as buy online pick up in store, alterations, store reserve and personal styling.”

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