News

Nordstrom Inc.’s second-quarter sales gains lifted its stock price 6.5 percent after the closing bell Tuesday and encouraged the retailer to raise its forecast for the year.

While net earnings were down somewhat due to an asset impairment charge, net sales increased 3.4 percent to $3.89 billion and comparable sales increased 1.9 percent, compared with the same period in fiscal 2023. The results were better than department store peers including Macy’s and Dillard’s, which earlier this month reported negative sales in the second quarter impacted by consumers holding back on spending and feeling pinched by inflation.

More from WWD

Based on its second-quarter results, the Seattle-based retailer raised slightly its comparable sales forecast for 2024 to flat to 2 percent ahead, from its previous projection of negative 1 percent to positive 2 percent.

Wall Street, impressed by Nordstrom ’s second-quarter top line and improved forecast for the year, pushed the retailer’s stock price up 6.5 percent, or $1.38, to $22.52 in after-hours trading.

Nordstrom executives said its best-performing categories were activewear, women’s apparel, beauty and kids across both the Nordstrom and Nordstrom Rack banners.

They also said the business was driven by improved merchandise flow; greater full-price selling; rolling out radio frequency identification, which provides faster inventory data; private brands gaining traction following a refresh unveiled earlier this year, and continued momentum at Rack, which is opening 23 stores this year.

“Our second-quarter results were solid, and we’re encouraged by the continued top-line strength in both banners and the progress we’re making to expand gross margin and increase profitability,” said Erik Nordstrom, chief executive officer of Nordstrom, Inc. “We’re confident in our outlook for the remainder of the year and look forward to sustaining the momentum we’ve built as we execute on our 2024 priorities.”

Second-quarter net earnings came to $122 million, or 72 cents per diluted share. Earnings before interest and taxes reached $190 million. That compares to net earnings of $137 million, or 84 cents per share, and EBIT of $192 million in the year-ago period.

Adjusted EBIT, which excludes a charge primarily related to supply chain asset impairment involving a decision to not open a new fulfillment center on the West Coast, reached $244 million last quarter, beating the year-ago EBIT of $192 million.

Explaining that decision during a conference call with investors and analysts, Erik Nordstrom said, “During the second quarter, we made the strategic decision to cease build-out and planning of a leased omnichannel center, intended for future use in the Pacific Northwest. Logistics networks have recovered from the supply chain challenges that began during the pandemic, and we’ve improved our supply chain operations over the last few years. We found that we can serve West Coast customers more efficiently from our existing supply chain network, while avoiding additional costs to build out the facility. Therefore, we have taken an asset impairment charge that is reflected in our results.”

Gross merchandise value increased 3.5 percent. The timing shift of the Anniversary Sale, with one day falling in the third quarter of 2024 versus eight days in 2023, had a positive impact on net sales of about 100 basis points compared with the second quarter of 2023.

“We’re pleased with the Anniversary Sale and the enthusiastic response from our loyal customers. They were highly engaged throughout the event and responded favorably to our assortment, experiences and service,” Pete Nordstrom, president and chief brand officer, said in his statement.

Nordstrom banner net sales and comparable sales each increased 0.9 percent compared with the same period in fiscal 2023. Gross merchandise value increased 1.1 percent. The timing shift of the Anniversary Sale had a positive impact on Nordstrom banner net sales of about 200 basis points compared with the second quarter of 2023.

Nordstrom Rack banner net sales increased 8.8 percent and comparable sales increased 4.1 percent compared with the year-ago period.

Digital sales increased 6.2 percent compared with the same period in fiscal 2023. Digital sales represented 37 percent of total sales during the quarter.

Gross profit, as a percentage of net sales, of 36.6 percent increased 155 basis points compared with the same period in fiscal 2023, primarily due to strong regular price sales and leverage on higher total sales.

Ending inventory increased 8.3 percent compared with the same period in fiscal 2023, versus a 3.4 percent increase in sales.

During a conference call with investors and retail analysts, Erik Nordstrom said that in the second quarter customers responded positively to newness and their favorite brands. He said Nordstrom has displayed “more consistent offerings of the brands wanted the most, newness, and depth.”

With its marketplace format launched last April, Nordstrom.com added 15,000 new items and 100 new brands, though Erik Nordstrom noted that marketplace is not yet a material driver.

The Nordstroms provided no update on the Nordstrom brothers’ (Pete and Erik) intention to take the company private. A special committee of the board continues to evaluate the plan and other possible plans that could raise shareholder value.

Erik Nordstrom also pointed out the Manhattan flagship is the top seller in the fleet and among the fastest growing.

Pete Nordstrom said the Anniversary Sale met its plan, and is beneficial for getting an early read on how categories could perform for fall. There was a particularly good performance in outerwear and sweaters, as well as strength across all categories in private brands, particularly women’s private brand apparel.

In designer apparel generally, “It’s been a consistent theme for awhile. It’s been challenging,” Pete Nordstrom said.

Best of WWD