Nordstrom Inc. ended the quarter with 359 stores. (Photo via Shutterstock)
Nordstrom Inc. was not immune to the softening customer demand that has hit other retailers as it reported declines in both its top and bottom lines for the third quarter.
The upscale department store retailer, however, still managed to beat its expectations and stuck with its fiscal 2022 guidance.
Nordstrom posted a loss of $20 million, or $0.13 a share, in the quarter ended Oct. 29, compared to a profit of $40 million, or $0.39 a share, in the year-ago period. Adjusted earnings, including a supply chain technology and related asset impairment charge, came to $0.20 a share. Analysts had expected $0.14 a share.
Sales fell 2.9% to $3.43 billion, missing analysts estimates of $3.49 billion. Nordstrom said the shift in the timing of its annual Anniversary Sale had a negative impact on its namesake and digital sales.
By banner, Nordstrom sales were down 3.4%. Sales at Nordstrom Rack fell 1.9%.
Digital sales decreased 16.4% compared to the earlier year period and represented 34%. of total sales during the quarter. Reducing Nordstrom Rack store fulfillment accounted for the majority of the impact.
“We delivered both topline and bottom-line results in line with our expectations in the third quarter while enhancing our strategic capabilities," said CEO Erik Nordstrom. "When customer demand decelerated in late June, we took action to align inventory and expenses with the changing trends, which has prepared us to navigate the current macroeconomic environment. This quarter our teams continued to advance our Closer to You strategy and supply chain capabilities, as we focus on initiatives to drive profitable growth and achieve our long-term strategic and financial goals."
Nordstrom said its core categories, including men's and women's apparel, shoes and designer, had the strongest growth versus 2021, as customers continued to shop for occasions, travel, work and holidays.
“We are right-sizing our inventory levels and mix, and are on track to end 2022 in a healthy and current position," said Pete Nordstrom, president and chief brand officer. "Customers continue to respond to newness and fashion in our offering, and we are focused on remaining agile to respond to their changing needs.
On the company’s earnings call, interim CFO Michael Maher said he thinks customers are waiting longer to buy holiday gifts, partially because there is an extra Saturday this year between Thanksgiving and Christmas.
The company ended the quarter with a total of 359 stores, including 100 full-line department stores (94 in the U.S., and six in Canada) and 249 Nordstrom Rack stores (242 in the U.S. and seven in Canada), seven Nordstrom Local locations, one Asos/Nordstrom and two Last Chance clearance outlets.
At the end of the quarter, Nordstrom had $993 million in available liquidity, including $293 million in cash. Earlier this year, in September, the retailer adopted a limited duration shareholder rights plan, also known as a "poison pill," to prevent investors from amassing 10% or more of its shares. The move comes days after news broke that Mexican retailer Liverpool had acquired a 9.9% stake in Nordstrom, making it the company’s second biggest shareholder.
Nordstrom reiterated its fiscal 2022 guidance of revenue growth between 5% and 7%, and adjusted earnings per share between $2.30 and $2.60.