Signage outside a Nordstrom Rack retail store in New York on August 25, 2022.
Gabby Jones | Bloomberg |
Nordstrom reported earnings on Tuesday that beat Wall Street expectations, suggesting the department store is making progress in its efforts to chop costs and increase efficiency.
Although the Seattle-based retailer reported earnings per share 25 cents higher than expected, it gave only a cautious forecast for the complete 12 months.
Nordstrom now expects adjusted earnings per share to be between $1.75 and $2.05, in comparison with a previous range of $1.65 to $2.05. The company expects revenue to say no 1% to grow 1% 12 months over 12 months, in comparison with previous guidance of a 2% decline to a 1% increase.
In a press release, Nordstrom CEO Erik Nordstrom said the corporate was optimistic concerning the second half of the 12 months despite cautious forecasts.
“Our second quarter results were solid and we are encouraged by the continued sales strength in both areas and the progress we are making in expanding gross margin and increasing profitability,” Nordstrom said. “We are confident about our outlook for the remainder of the year and look forward to maintaining the momentum we have built.”
Shares rose about 5% in prolonged trading.
Here’s how the department store performed within the second fiscal quarter in comparison with Wall Street expectations, based on an analyst survey conducted by LSEG:
- Earnings per share: 96 cents adjusted in comparison with 71 cents expected
- Revenue: $3.89 billion in comparison with expected $3.90 billion
The company’s net income for the three-month period ended Aug. 3 was $122 million, or 72 cents per share, compared with $137 million, or 84 cents per share, a 12 months earlier. Excluding one-time items related to produce chain disruptions, the retailer reported adjusted earnings of 96 cents per share.
Sales rose to $3.89 billion, a rise of three.4 percent over the previous 12 months’s figure of $3.77 billion. Sales were slightly below analysts’ expectations.
Across the corporate, comparable sales increased 1.9%, while gross merchandise value increased 3.5%. It is unclear how much of this increase in gross merchandise value was as a result of price increases versus volume increases.
With inflation and rates of interest continuing to rise, consumers proceed to chop spending on non-essential goods, so retailers are working on operational improvements and price reductions to guard their profits from falling demand.
During the quarter, Nordstrom’s profits fell in comparison with the identical period last 12 months, but over the past six months, profits have increased. Last 12 months, Nordstrom reported a net lack of $67 million for the six months ended July 29, 2023, but through the same period this 12 months, it reported a profit of $83 million.
Nordstrom has announced that it’s working to enhance its supply chain. Last quarter, the corporate announced that it had reduced delivery times for online orders by over 5%. It also improved the best way goods get to customers and stores, resulting in higher sales and lower return rates.
Another focus for the corporate is expanding its off-price assortment, Nordstrom Rack. Over the past few quarters, Nordstrom Rack has gained momentum and helped improve the corporate’s overall results. During the quarter, Nordstrom Rack sales increased 8.8%, while comparable sales increased 4.1% in comparison with the identical period last 12 months.
In comparison, Nordstrom’s core product line saw net sales and comparable sales increase by just 0.9%.
Nordstrom is working to open more Rack locations and has opened 11 recent locations thus far this fiscal 12 months. Its goal is to open not less than 22 recent locations by 12 months’s end. The give attention to Rack has been critical to Nordstrom’s ability to compete with the off-price giant. TJX Cos.Owners of TJ Maxx and Marshall’s, and capture consumers who still spend money but crave cheaper options and deals.
The off-price sector has been experiencing explosive growth for over a 12 months, but Rack missed the start of this trend. To reverse the slump, the corporate has focused on opening more stores, hiring experienced off-price staff and sharpening its give attention to well-known brands.
