Earnings

Nordstrom Misses Big On Earnings And Digital Shift

Department stores face steep risk for defaulting.

The digital shift hasn’t quite found its way to Nordstrom, but the company said it’s getting there.

Second quarter earnings, announced Tuesday (Aug. 25), showed the expected sales decline from pandemic-related store closures, however Nordstrom did not capture anywhere near the eCommerce sales momentum that other retailers have seen in Q2.

By the numbers, net sales decreased 53 percent from the quarter ending Aug. 1 compared to 2019, which reflected store closures for approximately 50 percent of the quarter due to the pandemic. The company estimated that it lost an additional 10 percent in sales by moving its annual anniversary sale from the second to the third quarter. The sale is currently in progress.

By its own admission, Nordstrom was in a defensive position for much of the quarter, with CEO Erik Nordstrom saying that the company was focused on “protecting and enhancing liquidity,” which executives said they achieved.

Total company digital sales decreased 5 percent during the quarter compared to 2019, but the company reported that eCommerce has increased 20 percent on a year-to-date basis. It pointed to potential new growth online, reporting that eCommerce has seen a 50 percent growth in new customers year-to-date. According to the CEO, the company has seen success with the digital component of its anniversary sale. Anniversary sale customers have created 20 million wish lists so far.

“There are plenty of categories that we've been able to adjust our investment, and we're seeing great signals from customers and can adjust into that so there is some effect on our inventory,” Nordstrom said on an earnings call. “We’ve seen it in our digital businesses, certainly, and as inventory flow improves, and it is improving the last couple of weeks, it gives us confidence going forward. That coupled with the investments we've made in digital, not only in our site but also the digital connections to our physical assets, we're leaning into this digital first, and we're getting a lot of very clear signals about what's relevant and meaningful to our customers in this moment.”

While the CEO was confident about the future of the online business, the drop in sales for Q2 was far away from what other retailers, although not in exactly the same category, have reported. Target reported 195 percent growth in eCommerce, and Walmart saw 97 percent.

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