Nordstrom Q3 results top Street with strong results from off-price banner, digital
Nordstrom Inc. reported better-then-expected top and bottom line results for its third quarter, fueled by increased sales across its regular and off-price Nordstrom Rack stores.
The upscale department store retailer sounded a confident note about the upcoming holiday season, but only slightly lifted its full-year sales forecast. On the earnings call, CEO Erik Nordstorm said the company saw a decline in sales trends around the end of the third quarter which factored into its conservative outlook.
“While we are excited about and well-prepared for the holiday season, there was a noticeable decline in sales trends towards the end of October,” he told analysts.
Nordstrom reported third-quarter net income of $46 million, or $0.27 a share, for the quarter ended Nov.2, compared with $67 million, or $0.41 a share, in the year-ago quarter. Adjusted earnings came to $0.33 a share, way ahead of analysts’ estimates of $0.22 per share.
Net sales rose 4.6% to $3.46 billion from $3.32 billion, topping estmates of $3.35 billion. Total company comparable sales rose 4%. Digital sales increased 6.4%, accounting for 34% of total sales during the quarter. (Sales were affected by a shift in the company’s Anniversary Sale, with only one day falling into the third quarter this year compared to eight days last year.)
By banner, Nordstrom Rack sales surged 10.6%, with comparable sales up 3.9%. at Nordstrom Rack. At the Nordstrom banner, sales rose 1.3% and comp sales increased 4%.
In the third quarter, women's apparel and active had double-digit growth, and shoes, men's apparel and kids were up mid to high single-digits, versus 2023, the company said. Growth in women's apparel, shoes and men's apparel accelerated sequentially from the second quarter.
"The continued sales growth across the company and strong gross margin in the third quarter indicate our team's focus and efforts are working," said Erik Nordstrom, CEO of Nordstrom. "Our customers have a lot of choices, and our results give us encouragement that we're on the right path. Looking ahead, we'll continue to improve our shopping experience as we strive to maintain the positive momentum we've worked towards all year."
Nordstrom also continues to expand Nordstrom Rack, adding 23 new locations so far this year.
"Nordstrom’s somewhat encouraging 3Q report contrasts with more difficult results elsewhere in the department store sector, demonstrating Nordstrom’s reliance on a higher end customer relative to peers as well as success in efforts to improve its full line and off-price businesses," commented David Silverman, senior director, Fitch Ratings. "Longer term, Fitch believes the company has the ability to produce stable results in a secularly challenged sector, given its exposure to more affluent customers, a good real estate portfolio, well developed omnichannel model and participation in the faster-growing off-price channel."
Nordstrom now expects full-year revenue to range from flat to up 1%, compared to its previous range of a 1% decline to 1% growth. It did not change its earnings outlook, which ranges between $1.75 and $2.05 per share.
In September, Nordstrom family members teamed up with Mexican retail group El Puerto de Liverpool to acquire the century-old department store company. The bid values the company at approximately $3.76 billion.
Nordstrom ended the quarter with a total of 381 stores, including 280 Nordstrom Rack locations, 93 traditional stores, two Last Chance clearance stores and six Nordstrom Local outposts.
