The start of the second quarter retail earnings season has been a mixed bag.
Macy’s, for example, reported on Aug. 12 and reported a revenue and sales dip — attributed to a drop in tourist spending, overall consumer spending and a delay at the shipping ports. Macy’s, of course, isn’t alone in the slumping retail sales, but compared to Nordstrom’s earnings figures, the major retailer might be falling behind.
Nordstrom’s Q2 earnings, reported yesterday (Aug. 13) show that the company is seeing a significant sales growth of 9.2 percent, with comparable sales increasing 4.9 percent. While Macy’s earnings fell below expectations, Nordstrom’s were in line with what was expected. In fact, this quarter brought the fourth consecutive quarter for high-single-digit-growth.
So what’s Nordstrom’s secret? eCommerce.
The company’s decision to launch an eCommerce version of Nordstrom Rack has helped tremendously, as that drove in more than a third of total sales growth for Q2. Nordstrom also jumped into Canada, and had a major acquisition of Trunk Club during the quarter.
Nordstrom’s net earnings for the quarter rang in at $211 million, which was 10.5 percent of net sales. Total net sales hit $3.6 billion, which was a jump from 2014’s Q2 of $3.3 billion. Overall, profit was $1.3 billion, or 35.3 percent of its net sales.
Nordstrom.com net sales also saw a major boost, growing 20 percent in the quarter, which was attributed to the expanded merchandise selection offered online. Nordstrom Rack sales also increased 13 percent to $0.9 billion. Nordstromrack.com/HauteLook net sales also saw a 50 percent sales increase for the quarter.
Another high point for the retailer has been its loyalty program, which Nordstrom says continues to deliver. In fact, the company reported that its loyalty members shop three times more than non-loyalty members and, on average, spend four times more.
While its focus has been on driving sales up online to help its overall performance, Nordstrom is still focused on growing its bricks-and-mortar presence. In the second quarter, the retailer opened up two full-line stores and 11 Nordstrom Rack stores. It also plans to open three more full-line stores in the current quarter.
JC Penney Sees Improvement — But Still Posts Loss
JC Penney might want to take a page out of Nordstrom’s book. The retailer’s second quarter results showed that it is continuing to improve (as it did last quarter), but it still posted a loss. Still, that loss was better than expectations.
JC Penney is still in its transition stage after former CEO Ron Johnson implemented some retail strategies that proved to be damaging to its brand. Interim CEO Mike Ullman started to turn the company around before handing off the reins to its current CEO Marvin Ellison — who took over Aug. 1.
Johnson has taken his experience to a new venture called ENJOY, which launched in May in the San Francisco Bay area and New York City. ENJOY is a personal commerce platform designed to create a more personalized touch to the eCommerce experience.
The retailer’s loss for Q2 was $138 million, which was down from last year’s Q2 loss of $172 million. But on the bright side, sales for the quarter role 2.7 percent to $2.8 billion, and sales at existing stores rose 4.1 percent. Just last week the company announced it had secured a $50 million funding round.
JC Penney’s sales growth for the quarter was attributed to its Sephora division, which produced a double-digit same-store sales increase.
“We are pleased to report another quarter of improved performance thanks to the commitment and diligence of the JC Penney team. Although we have significant work to do as a company to regain our status as a world-class retailer, I am pleased with the resilience and the efforts of our associates. I also remain confident in our ability to achieve the long-term financial targets we have laid out,” Ellison said.