Nordstrom Q1 results tops Street, stands by outlook
Nordstrom reported better-than-expected first-quarter results and reaffirmed its outlook despite declining sales and an “uncertain” economic environment.
The upscale department store retailer’s results took a hit from its decision to shutter its Canadian operations.
Similar to Macy’s, Nordstrom said it saw a slowdown in March. But on the company’s earnings call, executives said sales improved in April, particularly at its outlet division, Nordstrom Rack.
“We’re encouraged by our momentum, especially given the uncertain macroeconomic environment,” CEO Erik Nordstrom said in the company’s earnings release.
During the quarter, Nordstrom opened seven new Rack stores, with 13 additional locations planned to open in the fall. To date, it has announced nine new locations for 2024 and one for 2025.
“Rack stores are a great investment with returns that exceed our cost of capital and a short payback period,” Eric Nordstrom said on the call. “They also represent the largest source of new customers for Nordstrom. We are excited to roll out to more markets as we expand our Rack footprint.”
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Nordstrom reported a net loss of $205 million, or $1.27 a share, for the quarter ended April 29, compared to a profit of $20 million profit, or $0.13 a share, in the year-ago quarter.
Excluding charges related to the wind-down of its Canadian operations, the company reported adjusted earnings of $0.07. Analysts had expected a loss of $0.10 a share.
Total revenue fell about 11% to $3.18 billion from $3.57 billion, topping estimates of $3.12 billion. Most categories were down in the first quarter versus 2022, which benefited from strong pent-up demand for a return to occasions after the pandemic, the company said. Activewear was the strongest category, while both beauty and men's apparel performed above average.
Net sales at Nordstrom stores decreased 11.4% over the same quarter last year. Net sales at Nordstrom Rack fell 11.9%. Digital sales fell 17.4% year over year, partially due to the closure of Trunk Club.
"We are pleased with the progress we're making against the key priorities we laid out for 2023 as we continue to enhance our overall customer experience, improve Nordstrom Rack performance, increase inventory productivity and optimize our supply chain operations," said Eric Nordstrom in the earnings release.
Nordstrom ended the first quarter with $1.4 billion in available liquidity, including $581 million in cash and the full $800 million available on its revolving line of credit.
Nordstrom maintained its outlook for the full year. It expects a sales decline of between 4% to 6% and adjusted earnings per share of $1.80 to $2.20.
As April 29, the company had a total of 347 stores, including 247 Nordstrom Rack stores, 94 Nordstrom stores, seven Nordstrom Local stores and one Asos/Nordstrom store.