Canada exit impacts Nordstrom Q2 sales as profits rise

Nordstrom Inc. cited the winddown of its Canadian operations and a shift in the timing of its Anniversary Sale as impacting sales during its second quarter.

The upscale department store retailer reported second quarter net earnings of $137 million, or earnings per diluted share ("EPS") of $0.84, up 9% year-over-year from $126 million, or $0.77.

For the quarter, net sales decreased 8.3% to $3.66 billion vs. $3.99 billion in the same period in fiscal 2022. Second quarter net sales include a 2.75 percentage point negative impact from the winddown of Canadian operations. Anniversary Sale timing, with one week shifting from the second quarter to the third quarter, had a negative impact of approximately two percentage points on net sales compared with 2022.

Excluding the impacts of the Canadian winddown and Anniversary Sale timing shift, net sales would have been down approximately 4%. During the quarter, Nordstrom banner net sales decreased 10.1% and net sales for Nordstrom Rack decreased 4.1%.

During the quarter, Nordstrom appointed Cathy R. Smith as CFO. To date in fiscal 2023, the company has opened or relocated nine stores:

Nordstrom reaffirmed its revenue and adjusted financial outlook for fiscal 2023, which includes a 53rd week:

• Revenue decline, including retail sales and credit card revenues, of 4 to 6% from fiscal 2022, including an approximately 2.5 percentage point negative impact from the winddown of Canadian operations and an approximately 1.3 percentage point positive impact from the 53rd week
• EPS (including the negative impact of charges related to the wind-down of Canadian operations) of $0.60 to $1, excluding the impact of share repurchase activity, if any
• Adjusted EPS (excluding charges related to the wind-down of Canadian operations) of $1.80 to $2.20, excluding the impact of share repurchase activity, if any.                         

"We've worked hard to improve our operating model, and our solid results reflect the continued progress we made against our top priorities to improve Nordstrom Rack performance, increase inventory productivity and deliver efficiencies through supply chain optimization," said Erik Nordstrom, CEO of Nordstrom, Inc. "These 2023 priorities improve the way we operate and drive profitability in the near term, and better position us to succeed and deliver value to our shareholders in the long-term. Looking ahead, we remain confident in our ability to deliver on these priorities, all while keeping the customer at the center of everything we do."

"Our annual Anniversary Sale was a successful event, especially among our most loyal customers. We were pleased by strong sell-through of new merchandise from the best brands, both in stores and online," said Pete Nordstrom, president and chief brand officer of Nordstrom, Inc. "In the second quarter, we were also encouraged by sequential improvement in sales trends at both Nordstrom and Rack."

Seattle-based Nordstrom Inc. operates more than 350 Nordstrom, Nordstrom Local and Nordstrom Rack locations or digitally through the Nordstrom and Rack apps and websites.