Nordstrom loss wider than expected but sales beat Street; ‘encouraged’ by sales trends
Nordstrom reported mixed results for its first quarter with sales that beat estimates but were down compared to pre-pandemic levels.
The department store company reported a loss of $166 million, or $1.05 per share, for the quarter ended May 1, compared with a loss of $521 million, or $3.33 a share, in the year-ago period. Analysts were expecting a loss of $0.57 cents per share.
Total revenue rose to $3.01 billion, from $2.12 billion a year earlier and beating expectations for $2.90 billion. Net sales, which do not include credit card revenues, increased 44% from the same period in fiscal 2020, during which stores were temporarily closed for approximately half of the quarter, and decreased 13% from the same period in fiscal 2019. Sales trends reflected broad-based improvement across Nordstrom and Nordstrom Rack, in stores and online, and across regions and merchandise categories.
For the Nordstrom brand, net sales rose 37% compared with the year-ago period, and decreased 13 % compared with the same period in fiscal 2019. For the Nordstrom Rack brand, net sales increased 59% compared with the same period in fiscal 2020, and decreased 13% compared with the same period in fiscal 2019.
Digital sales increased 23% compared with the year-ago period and rose 28% compared with the same period in fiscal 2019. Digital sales represented 46% of total sales during the quarter.
We are encouraged by sales trends both in our stores and our digital business, supported by an improving consumer environment and strong execution," said Erik Nordstrom, CEO of Nordstrom. "Looking ahead to summer, we are well-positioned to continue to capitalize on pent-up demand, and are further strengthening our position as we execute on our strategy to win in our most important markets, broaden the reach of Nordstrom Rack and increase our digital velocity."
Sales benefited from improving trends in categories that included occasion-based apparel, handbags, sunglasses and swimwear. Home, active, designer and beauty categories continued to perform well.
The retailer said it expanded its assortment in both Nordstrom and Nordstrom Rack, while also reducing its inventory overage from the end of the fourth quarter of fiscal 2020 faster than expected. The company also said it is balancing inventory levels with sales while managing receipt flows to mitigate potential supply chain disruptions as the year progresses.
As previously announced, Nordstrom further improved its financial position in April by redeeming $600 million of 8.75% secured notes and issuing lower-coupon unsecured notes due in 2024 and 2031. As a result of these transactions, the company’s bond portfolio is once again entirely unsecured. These transactions will reduce annualized interest expense by approximately $30 million, beginning in the second quarter of fiscal 2021.